Making Multifamily Money - Dec 20th 2023

Real Estate Updates

The golden rule of real estate I always heard - location, location, location.  Despite this simple rule, I broke it with my mobile home park (probably why I lost money on the deal).  My mobile home park was in a D-class area and very high in crime.  The deal was priced well and had amazing upside, but what I learned is no amount of money can fix a bad area and location.  I fixed all the mobile homes to look nice on the inside, but couldn’t attract quality tenants since the area was bad.  Bad areas attract bad tenants.

I had to hire a part time security guard at night to deter criminal activities.  As part of due diligence before closing on the park, I went into the police office and spoke to the captain.  He mentioned the mobile home park was in the highest crime area in the neighborhood.  My property manager and consultant was with me.  Both forewarned me that all police officers are overly negative. This was their “marketing” strategy to get me to lower my guard despite being my consultant because they get paid if I close on the park.

My 20 unit is in a C-/C class neighborhood.  It’s near downtown and walking distance to a brand new stadium so it’s in the “path of progress”.  Unfortunately, that is where the homeless tend to hang around.  The prior owner actually rented out some of the units to a local homeless shelter which stopped once I took over the apartment complex.  As a result, homeless people were used to hanging around the apartment complex.  I had to install no loitering signs so that police can lawfully remove homeless once tenants called and got quotes for cameras.  Most of the tenants are new and most of the inherited tenants left.  This was needed to upgrade my renter base.  Now the unit is 19/20 occupied with better tenants (always 1-2 bad apples).  Keep in mind the average rent is around $500/month so the tenant base will be lower by nature.

My 26 unit is in a C+/B- class neighborhood.  Better tenants who pay higher rents that average $750/month.  Less issues with these tenants.  Less evictions.  Most tenants are on rent autopay using Paylease.

What’s the moral of this story?  Choose location over the deal.  Don’t be blinded by a good deal in a bad high crime location.  I will scale around my 26 units because I want better tenants and fewer issues.

What I Learned

42% of Americans are deficient in Vitamin D.  This makes sense since most white collar professional workers are trapped inside all day.  I’m just as guilty as I am working from a hospital basement.  Many don’t know that you can check your vitamin D level during your blood draw.  Just ask your doctor.  Mine is low.

What does Vitamin D do?  It helps with mood, energy, and bones.  If you notice your mood and energy levels declining during the winter months when daylight savings ends, then maybe you are low in vitamin D.

I now take a Vitamin D3 supplement every morning.  I bought it over the counter.  At night, I take a multivitamin that has some Vitamin D3 as well.  I try to get some sunlight exposure during lunch.  Hopefully this will help improve my mood and energy during the winter months.

Did you all forget that I am a pharmacist?

Weekly Self-Reflections

Despite building up a higher net worth and increasing my rental income, I have not had an inflated lifestyle from 2013-2023.  I’ve maintained a poor “college mentality” for over 10 years.  This helped me pay off $250,000 of student loans in 4 years and build up a 5 million dollar net worth by consistently buying real estate.  It’s easy to get caught in the lifestyle inflation trap as you make more money, you spend more money.

I have driven the same used BMW for 10 years.  My BMW just broke down and I am finally upgrading to a Tesla.  I can afford my dream supercar (Audi R8), but I know it will only bring me joy/happiness for maybe 1 month before I revert back to the norm.  For me, what would bring me true joy/happiness is to leave my W-2 job sooner.  Yes, my real estate income can replace my W-2 job now, but I want to see that consistent cash flow for at least 12 months.  I need to pay off a line of credit, build up my $150,000 real estate reserve fund, save up for a down payment on a primary residence, and pay off my whole life insurance policies.  This will take me a few more years.

Until all of that is taken care of, I will not inflate my lifestyle and continue to work.  Key self-reflection is to be very intentional in your actions.

Video of the Week

I host free Q&As every Wednesday at 7 pm PST. Click here to join!

New Mentorship

Tackling Student Loans - 8 step system I used to pay off $250,000 of crippling student loans in 4 years. This same system helped me save up for my first single family home which snowballed into 90 units of real estate. If you are interested in pre-ordering the course at discount with bonus coaching sessions, send me an email immediately.

Want to learn how I built a $5,000,000 net worth and make over $10,000/month in positive cash flow while working full time? Check out the mentorship program!