One Rental At A Time: The Journey to Financial Independence through Real Estate by Michael Zuber

Author:Michael Zuber [Zuber, Michael]
Language: eng
Format: mobi
Published: 2019-01-21T16:00:00+00:00

Phase 4: Hit the Pause Button

After nearly four years of rapid acquisitions, it was once again time to hit the pause button on our investments. Our portfolio had more than doubled, and we needed to take stock.

The fact is, we were running so hard and so fast during the real estate crash that we never reviewed our portfolio; we were solely focused on closing our next deal. We never wanted to feel like we left money on the table, and we just kept hunting for deals.

When the hedge funds and big money players started making offers on MLS listings, we took it as a signal to take a breather and repeat the acquisition hiatus that had worked so well for us earlier.

We were happy with all our acquisitions, but now it was time to manage the portfolio that peaked at over 175 “doors” (in other words, 175 tenants paying rent checks). That’s a lot of tenants, and we wanted to take a break to just manage this portfolio for a while. We had been so busy running our assembly line of “buy, repair, lease, and finance” that we had ignored some basic management of our portfolio.

We spent several months reviewing each property to make sure there was no deferred maintenance that should be done, and that we were maximizing rent. Once we started to tier our properties, it became clear that some were long-term keepers and others weren’t.

Take Stock

During our break, we also found ourselves taking stock of where we were in our journey towards our ultimate goal of financial independence.

It had been about nearly fourteen years and we had never stopped to reflect back on our investment career. We were always looking ahead, which I now feel was a huge mistake. We should have taken time to enjoy the process a little, but I guess when I latch onto a goal I don’t let go.

I now recommend all investors review their progress every year. It’s a long journey, but you will get there one year at a time. We never did this, and constantly looking ahead to the next deal proved to be very stressful and not as fun as it should have been. We should have celebrated more, and were unaware that the process didn’t have to feel like work all the time.

Real estate investing is not easy, and challenges lie around every corner. I believe that this would have been much less stressful if we simply stepped back every now and again to discuss our portfolio.

Olivia Quits Her Day Job

One thing we realized during our second break was that if we stopped buying properties and performing required make-ready costs in REOs, we would actually have a very healthy monthly cash flow. This might sound odd, but when you have a full-time job that takes you all over the world and you are buying properties as fast as you can, you might not thoroughly parse the numbers and realize the distinction between one-time make-ready costs versus normal monthly expenses.

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