The Problem: $850K in Equity and Just $1800/mo
Yesterday I had a call with an investor by the name of Doug.
Doug reached out to me because he was unhappy with how much income he was getting from his rental property portfolio.
The current equity in the portfolio is $850,000 and the free cash flow is a paltry $1,800 a month.
The savings account at a bank would pay him more.
Doug is 55 and he started growing his portfolio 12 years ago. He’s a pretty savvy investor and did everything that the real estate investor books told him to do.
He bought good properties in decent markets and used professional management starting around year three.
He’s obviously thrilled with the appreciation in the portfolio but now that he’s getting to the point where the income is more important than the appreciation, he’s less sure of his strategy than he once was. Plus he’s really sick and tired of dealing with tenants.
Here’s the dirty little secret of single-family rentals: to get good returns you really need to supply your own labor. Self-manage, do your own books, handle turnover, negotiate the repairs, etc., and if you do all of that well maybe you get 10 to 12%.
However if you’ve got a job like Doug does and don’t have time to do all that, your return shrinks dramatically.
If you own some rentals, have you ever calculated your actual cash-on-cash return on all that equity? And I’m not talking about gross rents. I’m talking about net income after all of your expenses and maintenance reserves.
If you do that math, I’m willing to bet that your rate of return is significantly less than you might think.
My $100,000 Was Here
In 2021 I put a hundred thousand dollars into a multifamily deal and never saw
September 2, 2026
