What are some of the ‘magic numbers’ with real estate, some of those benchmarks? What is the point where you can start selling your smaller stuff to start buying apartment buildings? What is the point where you start hiring a property manager to manage your stuff?
If I look at my history, once I got to about six or seven properties, I started selling some of my smaller stuff, and buying larger, faster growing and faster appreciating apartment buildings.
The other thing is once I got to about ten properties, that’s when I started looking towards a property manager to help me manage all of the tenants, manage all of the leases and really work much more efficiently so I could keep my focus on growing the portfolio, instead of just being in the weeds and operating.
How do you get your first five investment properties as quickly as possible? I think you should look at market arbitrage.
What do I mean by this?
Go out there, find a duplex that’s selling to investors only, and figure out how to flip it to owner occupied buyers.
Buy in one market, sell in another market. This allows you to take that arbitrage of the different markets and capitalize on that so you can quickly scale up.
If you can do this three or four times, you are going to get to five properties in no time.
Once you have owned three or four duplexes, when is it time to buy commercial real estate?
I would say you’re just about there. When you can save or find appreciation in your properties where you can pull out about $300,000 to $400,000 of equity, you can buy a ten to fifteen unit apartment building.
A lot of times, those apartment buildings are ignored by some of the larger investors and there's a lot of good value-add opportunities there which you can grow much faster.
If you’re at that point where you’re wondering, “what’s the next step?” Start networking, start talking to some of the brokers that sell some of the smaller stuff, start talking to some of the brokers that sell some of the larger apartment buildings, and go hunt down your next ten to fifteen unit apartment building.