Real estate investors lose track of underperforming rentals
11 posts across 2 communities in the last 90 days; 91% from r/realestateinvesting.
“Looking for some perspective from experienced investors, ideally with +10 properties. Has anyone gone through a period where it felt like almost every property had an issue at the same time? This year I’ve dealt with lengthy/difficult turnovers, voucher payment reductions…”
“I live in Canada and I'm seeing large swathes of rental houses going up for sale and just sitting on the market for months. These are houses that were bought by investors at least 3 or more years ago and now they're trying to unload them, but the market is obviously soft because…”
“Also in Boston, the student end and the higher quality non luxury units are having a hard time getting rented. Rents for 1,2 and 3 beds are basically flat going on two years now. The big institutional owners like CHR, Intercontinental, Nordblom etc. are doing incentives and…”
Landlords with large portfolios of single-family rentals (SFH) struggle to monitor performance across 30+ properties. They lack systems to track rent-per-square-foot or cash-on-cash returns, leading to neglected properties and missed opportunities for optimization.
SOURCES (28)
“Only smart answer I’ve seen on here. Market could crash tomorrow and u lose everything. Rentals can fail without proper research or sizeable down payments or just bad luck. [re: Real estate or stock market? Let’s do the math]”
“I live in Canada and I'm seeing large swathes of rental houses going up for sale and just sitting on the market for months. These are houses that were bought by investors at least 3 or more years ago and now they're trying to unload them, but the market is obviously soft because nobody is buying them. Absolutely zero has been done to them - siding is dirty or rotting, same with decking.....peeling paint, windows and roof rotting.....total slum landlords now trying to cash in. [re: Lots o”
“Also in Boston, the student end and the higher quality non luxury units are having a hard time getting rented. Rents for 1,2 and 3 beds are basically flat going on two years now. The big institutional owners like CHR, Intercontinental, Nordblom etc. are doing incentives and undercutting rent from smaller landlords who own only individual condos or maybe a multifamily or two. It's gonna be hard times for a lot of the small owners if this keeps up.”
“One thing I've learned from actually doing deals is that the numbers are a moving target. Taxes and insurance change yearly, mortgage interest rate wasn't what you anticipated, maintenance costs are way higher etc. Obviously you have to run ballpark numbers to see if its a decent deal or not prior to purchase but until you actually own and manage the thing its all just a rough guess.”
“DealGauge is ours. It is a free rental deal grader: put in price, rent and a few costs, and it grades the deal A to F after the expenses most first pass math skips (vacancy, maintenance, CapEx, management, real taxes and insurance). It also shows the most you could pay for the deal to still work, which turned out to be the number people actually need at offer time. Honest notes: no account, no email wall, nothing you type is stored, and every formula and weight is published on the methodology pa”
“A good tip is to compare rental demand, tenant quality, and cash flow in each area before choosing between a townhouse and a smaller sSH home”
What would you say is a more accurate annual appreciation number?
“Professionals in this space (i.e. REITs like $AVB) always have a few % of their units vacant. If you don't have any vacancy it means your rents are too low and you should maximize profits by increasing rents even if vacancies happen.”
“We have 14 doors and I think it really depends on what unit. We can stomach multiple 1200/mo 2br/1ba vacanies (we have 8 of those) or an 1100 1br/1ba pretty easily. Obviously we want them filled, but if we have a month vacancy here or there it's really not a big deal at all. But vacancies on our 3500/mo SFH and 2300 4/2 unit are definitely noticeable and do hurt. That said, that's the entire point of having cash reserves.”
“Wow that is amazing! How much do you cash flow from your portfolio in total? Is this your full time job or do you passively manage your units?”
“How are you at 40% vacancy? Is this a situation where you are buy $30k houses in the middle of the ghetto because cash flow is good… if you get lucky and actually get a reliable tenant? Around 10 units, the highest I ever had was about 20%vacancy in a month, though this was due to having 3 leases that ended the same month where only 1 renewed. I get the eviction part, though from horror stories around long eviction processes I intentionally avoid some states like IL, NY, CA, and NJ. I had a cowo”
“Looking for some perspective from experienced investors, ideally with +10 properties. Has anyone gone through a period where it felt like almost every property had an issue at the same time? This year I’ve dealt with lengthy/difficult turnovers, voucher payment reductions, tenants behind in rent, tenant-related issues that escalated into municipal enforcement. It’s been one thing after another. To be fair, I know some of this is a result of choices I’ve made. I intentionally invested in properti”
“Most investors say somewhere around 20 to 30 doors is when the law of averages actually starts smoothing things out, below that a couple bad units can wreck your month because they're too big a slice of your total income. The bigger fix isn't just more units though, it's building a vacancy and turnover reserve into your numbers up front, a lot of people run their pro formas assuming full occupancy and panic the first time reality doesn't cooperate. Ten units with three overlappin”
“sounds like the real trade wasn't the money, it was doors-per-hour of your life. same net worth, way fewer roofs!”
“What about large hit like roof or hvac…. even for multi family has to really hurt? That is why I invested synidcations instead of operator, but syndications haven’t worked out well for me either (missed golden age)”
“4 units almost 5 out of 10 empty hits hard. Is there a reason for the occupancy issues? Have you thought of converting over to a 55+ community? You really don't have many hoops to jump through while converting AND you're almost empty for the requirements to be met...an 80/20 rule.. 80% with at least one occupant in the unit over age 55 and 2 of your apartments you can rent to anyone you choose. Older people generally stay longer and you have less apartment trashing and remods, they have”
“I've got ten units and, like me name says, I'm a cash flow investor. My goal is to get the cash flow to a point where I can live off it. After a number of pretty good months, it seems everything hit at once. One tenant stopped paying rent and I've been locked in a lengthy eviction process with him. A duplex I recently bought is taking much longer to lease than expected. On top of that, I had a long-term tenant break their lease and leave me with thousands of dollars in damages. So de”
“I just wanted to write this for educational purposes, some may find it useful, and would love to hear your thoughts as well. I have been investing for 4-5 years now, and most of the properties I bought were turn key and have been doing well in terms of positive cashflow after vacancy, tax, maintenance etc. One of the tenants moved out, and it was in rough-ish shape, I am not handy at all but built a small team 3-4 people (family and one professional that was looking for a side gig) My plan was s”
“Cash flow doesn’t take into account debt service? And no I’m not bragging, I am trying to search out others with scattered site 100+ property portfolios. In the management space it seems to be rare. Probably due to the fact it’s not easy having so many houses on different lots. If I had 100 units all on one property, or even just a single subdivision with 100 homes it would make management much easier.”
“This explains rather simply why you've chosen to stay in SFH rather than scale to larger properties. In GAAP a qualifying capital expenditure is recorded as an asset on the balance sheet. It increases the basis of the property because it is a benefit to the property that extends beyond the current accounting period. And claiming a roof as an expense rather than a capital expenditure is tax fraud. Your expense would be disallowed and you'd likely end up with penalties. If you are actually”
“You sound like one of the IG bros who claim to own 1000 units with 30,000 other guys. Capex is capex. But I choose to show in my accounting it’s an expense against cash flow. Not some separate line item like the IG bros do so they can inflate cash flow. For example. Say you have a $1k a month rental. And your only expense all year is a $12k roof. The IG bros would show they are still cash flowing. I would show a loss. Since I didn’t make any money.”
“Congrats, that's a serious portfolio. how do you keep tabs on performance once you're past ~30-40 doors, specifically whether you're looking at things like rent-per-square-foot or cash-on-cash by property to catch underperformers, or mostly going on gut feel from managing them day to day. At your scale the range you mentioned ($1000-3400) makes me think a few properties are working way harder than others, and it might be worth flagging which ones consistently lag so you know where to”
“This is definitely the case. And there's no way the portfolio is well managed. 1 person with no life can barely manage 100 doors, but 100 doors across 100 buildings means a whole lot is getting neglected”
“100 SFH sounds like a headache to manage and run. At that scale you should have at least 3 Full Time Employees. 2 Maintenance team members and an office person to answer calls, do showings, schedule maintenance, and do accounting. Most investors realize that to improve margins they need to scale by having less roofs and more doors. Since you are also centrally located you become a political target owning that many homes. There is risk in regulation, news articles, and saber waving by politico”