3 Reasons Fifteen Doors May Be Right For You

Last month, I explored the powerful financial benefits of owning fifteen single family homes. For this plan to work, you can’t own duplexes and count both doors, you can’t own a single apartment complex with fifteen doors or any combination of multifamily properties. You have to own fifteen single family homes and have fifteen doors.

You may be thinking this is a maddeningly prescriptive and arbitrary rule, and I would like to pose three reasons why fifteen doors, comprised of fifteen single-family homes may be what you didn’t know was exactly what you needed.

1. Single Family Homes Have Predictable Metrics

More than any type of investment property, single family homes hold value. During market corrections or surges, Single Family Homes maintain the safest pricing giving owners of this asset class something akin to a bond in terms of safety with a yield that far outpaces even the top market stocks.

Unlike apartments, duplexes or other multifamily housing, Single Family Homes attract tenants with a longevity mindset. Rarely will you find an apartment dweller who has been in the same unit or even complex for five years or beyond, but this is entirely frequent and common in single family houses. Even duplexes rarely attract long-term tenants. Since we all know vacancy is the largest expense of owning real estate, reducing frequency and duration is extremely beneficial.

And Single Family Homes are the easiest to value. Simply put, there’s an abundance of Single Family Homes, making an appraiser’s job easy. When you have a block full of comps, an appraiser’s job is predictable and straight-forward. That makes your job of knowing the market simple. The scarcity of multifamily properties makes their valuation more challenging. It also means the owner is subject to greater volatility.

2. Fifteen Single Family Houses For Yearly Refinance Options

We all know the power of other people’s money. If you own fifteen properties, you have the option to borrow other people’s money, fifteen times. Now, suppose you bought seven duplexes and one single family house. You’d have fifteen doors, but only eight properties to refinance.

You might argue, that duplexes tend to cost more, but rarely if ever do they cost twice as much as a single-family home. That means you have hardly half the opportunity to borrow other people’s money, should the need arise.

Fewer properties also means, if you’re an advocate of the fifteen-year-mortgage, there will be nearly fifty-percent of your years where you don’t have access to a full refinance.

3. Fifteen Single Family Homes For Diversity

We tend to think in terms of a single housing market and ask mental-exercise questions such as, “What will happen if the market corrects?” But the reality of housing is that there are hundreds of housing markets and they all fluctuate independently.

You may think, for convenience’s sake, that your own city is a single housing market, but this too is a mistake. Nearly every zip code in your city presents a different housing market.

Understanding the value and risk of a housing market can give you an extreme advantage in building your portfolio. For example: is the neighborhood you grew up in a five-star location. Has the best school district in your town shifted? Are all the working professionals migrating to new hot-spots in your area? If you answered yes to any or all of these, you’ve illustrated for yourself the power of diversifying your holdings.

In this regard, the more doors you hold, the easier it is to diversify your portfolio and protect it from market corrections.

Now, you may find that owning fifteen single family houses in fifteen states is a bit of overkill, but it may be worth targeting a handful of different neighborhoods or zip codes in the same city, and it could benefit you wildly to own a handful of out-of-state rental homes if a major correction hits.

Beyond Fifteen Doors

The purpose behind fifteen doors is not arbitrary. If you work diligently to purchase fifteen single family homes and own fifteen doors, you’ll progress toward a modest six-figure income, own a seven-figure net worth, and have the peace of mind to know your future is secured against tragedy.

You may choose to pursue more properties, or you may use your portfolio as the launching pad for other passions: travel, athletics, building a business, mastering a craft. Whatever your goals in life, if you have the discipline and devotion to building a fifteen-door portfolio, you can live a life financially independent, and that’s more peace of mind than most anyone will have in a lifetime.