How Does it Feel Owning 100 Rental Units

SPEAKER_1 (0:00)

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Michael Zuber (0:30)

So you want to own real estate. Perhaps you want to own hundreds of rental properties. You know what we're going to do today? Cody Davis and I are going to talk about what it actually feels like owning over 100 units. We will talk about the good, the bad, the ugly. We will talk about the pros and cons of getting to 100 units. Cody, I saw that you put out this amazing video on your channel. People need to check that out. But I thought it'd be fun for you and I both to talk about what owning 100 plus rentals feels like. Where do you want to start?

Cody Davis (1:03)

Well, let's start out in saying there's a whole lot of good. For people that are trying to get on this journey, it starts with one rental, and then you get another, and one day you may wake up and have 100 units. If you end up making it there, there is a whole lot of good. The scalability is nice. I have personally found it's easier to manage. And the wealth building, it starts to compound. The numbers I broke down in my video were, let's say you have 100 units at 100 grand a door. It's a $10 million portfolio.

3% appreciation is $300,000, which is incredible. If you figure you're making probably $100 to $150 a door, that's 10 to 15 grand a month.

If you raise around 100 bucks, it's an extra 10 grand a month of revenue, which most of goes to the bottom line. So I have found that if we're just starting on the pros, that is a beautiful piece of having a portfolio that size.

Michael Zuber (2:04)

Yeah, if you want to go to the pros, again, I like starting here. We'll definitely get into the negatives because there are plenty of those as well.

The other thing, having over 100 units is you can also, if you choose, you can really, in my case, outsource some of the tasks that you hate. Now, I know you've done self-management here recently, which is awesome, makes total sense for you. You live in the area. Dude, I'm not even in the same state anymore as my portfolio. So having that allows me to spend six figures plus on property management, and we spend that and more every year. But it buys us peace of mind. I'm not dealing with tenant issues, and I get daily reports and things of that nature. The other thing you're absolutely right is scalability. And some people choose to never tap equity, but that wasn't our case. And when I look at my portfolio today of tens of millions of dollars, we have zero, zero of our own capital in the portfolio because we've extracted it via cash out refis, things of that nature. So to think about a portfolio of that size with zero of your own money, obviously it doesn't start there.

We were like everybody else, putting 25 percent down in the beginning. But when you're in the game for a decade or more as you were continually building, you can do some spectacular things like have this 100 unit plus portfolio with zero of your own dollars in, which is an infinite return. You talked about that 3 percent growth. 3 percent growth on 10 million is 300 grand, but that 300 grand is on zero of your own money. That's really cool. That's an infinite return right there.

Cody Davis (3:46)

Yeah, and with the scalability, I found it's easier to get better debt products. It's easier to get lower labor costs. And the reason behind that is, if you have a one-off contractor job, they have to charge for their time. You figure they have a cost to acquire leads, right? So them getting your business costs them money.

Well, with 100 units, you're always going to have something going on. And so there's consistently projects for them to work on. And so that cost actually goes down to have the same project completed. And so I've been able to actually increase my cash flow with lower rents because of the scalability.

Michael Zuber (4:24)

Yeah. The other thing that I saw in our portfolio is obviously, when you're building a portfolio, you're always reserving money for every property, right? You're putting away 10, 15, 20 percent, whatever the number is for you. But when you start to get to three-digit rental units, that number becomes so large that you can really cap it. Because again, I've been doing this for 20 plus years, and we no longer reserve for every property, we just have a flat number that we keep, and when an emergency happens, we use it and then we refill it back up. So yeah, again, when you get these kind of numbers, all of that extra money, right? Above that reserve limit, for us, is 50 grand.