Bank is telling us to slow down.

[Mark Delosreyes]

We are fairly new real estate investors. We have acquired 25+ units in a little over a year, mainly using the BRRRR method, and all of our places are cash flowing generously. As an accountant, I'm pretty conservative and accurate with my figures. Now, our main lending institution is telling us to slow down and let our properties season, since we only have 1 1/2 years of tax returns on the books. I see their perspective, but slightly disagree. Has anyone run into this issue? I want to maintain the good bank relationship, but don't intend to slow down. Any advice would be appreciated. Thanks!

[Michael Ablan]

@Mark Delosreyes  Hey Mark.  First of all, congrats on your quick ascent.  I know first hand that it probably wasn't easy, and took countless 80 hour weeks. Nice work.

With that said, I wouldn't completely disregard their advise.  I went from 0-66 units in 3 years, and have spent the last 6 months battling all of the issues that come with over stressing your systems (if you even actually have any).  We would complete a project, pull out all our cash and then 100% invest the whole thing into more project(s).  Everything seemed fine and dandy, until it wasn't.  

Contractors who were once reliable, started cutting corners and doing crap work.  

Jobs would get put on the wayside because 4-5 tenant issues hit all at once, which diverted all our man power away.  Then once we get them handled, 5-6 more would hit.  All varying in degree of difficulty, seriousness and cost.

Tenants who were normally always on time with payments started paying late because of unforseen issues, like car problems. Our rent payments came in slower, but our mortgage, insurance, taxes, and  repairs  stayed the same.

I could keep going on, but I think you get the point.  Yes ,we handled the issues, did them in a timely fashion and did a good job. But they STRESSED our system to the point of breaking.  We weren't prepared for problems that came with the growth, and if not for our cash reserves, could have been taken to the cleaners.  In one week we had 2 furnaces and 1 boiler go down, 3 roofs spring mystery leaks (with 6" of snow on them), 2 entire house pipes freeze, 1 serious pipe burst, and  a police raid on a unit because one of our tenants shot someone with a rifle while riding home from a bar (this was a class B building mind you).

Evaluate your systems and run mock stress scenarios.  How much stress can you business handle before it breaks?  Your bank is invested in your success. They aren't making these recommendations for no reason.

Regardless, best of luck to you and congratulations on your success to far!