Chipping away at that iceberg / Eating the elephant

[Chris Eaker]

I've come to realize that what you learn about a certain type of investing from a book is about 10% of what you really need to know to do it well and do it right. Call it the very tip top of the iceberg. But when you begin to dive into the details, you soon discover there so much more you have to learn. Then when you start investigating one thing, it brings up a dozen more questions you have to answer and topics you have to learn. That's the way it has been for me since I first read Lance Edwards' book How to Make Big Money in Small Apartments. This is a great book, but man does he gloss over the details in a big way. I know his goal with the book was to get people thinking they could do it, and then offer the more detailed education via boot camps. The more you learn, the more you realize you don't know and have more to learn. It's like eating that elephant -- one bite at a time. 

I've enjoyed learning and I finally feel like I have enough knowledge to take the first step. I'm still working on building a network of investors, but once that is in place, I finally believe I can do it. Thank you all for your advice and answers to my novice questions and for not brushing me off. I've learned so much from this forum and BP overall. It, and you all, are invaluable resources.

[Douglass Benson]

I am REALLY comfortable being the small apartment investor - First four units, then sixteen more, then twelve, then twelve again, then twenty, then seventeen.  All the while wanting to purchase a single 100+ unit complex!  

So it goes.  

Two of the deals I HAD to buy (the first 12 unit we purchased out of bankruptcy court, poured some money into it and now it is a cash cow - cashflows at 42% occupancy.  The second 12 unit the owner offered me no money down on a 6% L/C amortizing over 30 years so I took it, upgraded the building refi'd and paid him off.)  

The last two (20 unit and 17 unit) were buildings I had been looking at for years and when they became available, I was first at the door with an offer.  They have both turned into fantastic investments.

Regardless, make sure your numbers are good, make sure the building is good and make sure the neighborhood is good.  The building is probably affordable because the tenants are no good, not because the building is broken.  Don't lose a lot of sleep over the caliber of the tenants.  You will want to replace them with your own most likely anyway.  The last four buildings we purchased were all discounted because the owners couldn't stand dealing with their tenants.

I love my tenants.  They are buying six buildings for me and giving me extra cash to invest with.  All I have to do is provide them a nice, clean affordable place to live.