I used leverage to acquire roughly 12 rental units in two years. The harder lesson was learning that buying more properties did not automatically create reliable cash flow. Tenant turnover, repairs, and vacancy made the real numbers look very different from my initial expectations.

This video and account were originally published in July 2024. They describe that period of my investing experience, rather than a current portfolio update.

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.

The Biggest Hurdle: Flawed Cash Flow Calculation

In my case, I underestimated the expenses between tenants. Those losses accumulated gradually, even when a property looked profitable on paper. Borrowing helped me acquire properties, but it did not remove the need to plan for vacancy and repairs.

My Biggest Mistake: Not Accounting for Turnover

My biggest mistake during that initial two-year period was not accurately accounting for turnover in my investment properties. I was dealing with a market that experienced high tenant turnover every other year.

Within less than two years, I found myself covering many expenses (from repairs to marketing for new tenants) and, in most cases, breaking even or losing money. My paper profits looked great, but my cash flow was suffering due to constant vacancy and repair costs.

The Stabilization Point

By the time I recorded this in July 2024, market rent increases and appreciation had helped stabilize the portfolio. I had also sold a couple of properties to rebalance it. That was my experience during that period, not a promise about future rents or property values.

The key takeaway is this: When investing, make sure you accurately account for all factors affecting cash flow, especially variable and unavoidable costs like turnover and capital expenditures.

What stayed with me was the difference between acquiring units and running them well. The people helping you and the assumptions in your cash flow model both matter.

Related lessons from owning property

For a later perspective, read what owning 20 rental units taught me about time. If you are considering living in a property while renting part of it, watch my House Hacking Done Right presentation.

Have a property in mind? Send me the address and the questions you are working through.