Many people are often surprised when they hear that within two years of investing in real estate, I was able to acquire roughly 12 units. How did I do it? It was all done through leverage. Leverage is like a seesaw, and you definitely want to be on the right end of it.
Where many investors go broke is not necessarily due to over-leveraging but because they fail to properly calculate their profits and losses. From my personal experience, losses can accumulate slowly and unexpectedly, draining your resources over time.
My biggest mistake during my initial two-year period of investing was not accounting for turnover in my investment properties. I was dealing with a market that experienced high turnover every other year.
Within less than two years, I found myself covering many expenses and, in most cases, breaking even or losing money.
However, within the past year or two, I have finally stabilized thanks to market rent increases and appreciation. Luckily, I’ve also been able to sell a couple of properties.
With that being said, make sure you accurately account for all factors affecting cash flow, such as turnover, when investing.
