The Almighty (and unfailing inaccurate) Pro Forma

If you are like me, then you have a set of unconditional rules by which you run your business and for that matter, your life.   Some of mine are, "I will always try to do the right thing."   " I will renovate, maintain and manage my rental units to a standard I would expect, if I were living there." These are all well and good, and yours will undoubtedly be similar in many capacities, but I have one cardinal rule above all others...

"I will never speculate.   Buy on current Cash Flow, never on the speculation of capital appreciation."

Thus enters The Almighty Pro Forma.

I'm the best Tenant I've ever had.

Shocking right?

I know, I know, of course I am the best tenant I've ever had.  

Want to know something that really is shocking?

I once had a tenant sell showers to the homeless to make some extra cash...   keep in mind that I PAY THE WATER BILL!   To top things off, they later set the building on fire and generated a total loss on that unit, and caused extensive damage to several other units in the building, as well as to a business that I run on the first floor.

Want to know what is even more shocking than that?

They were not the worst tenant I have had the misfortune of working with...

(mis) Adventures in Property Management

Six years ago, my wife and I sat down for the first of many closings on real estate deals. Unbeknownst to us at the time, we were about to embark on an exciting, frustrating, rewarding and endlessly stressful adventure, which if known to us at the time, might have given us pause in that moment.

You see, we started this adventure as renters ourselves. That first closing was for a stately four-family Victorian, featuring a massive and well appointed owner unit which would be our first experience with home-ownership, at the same time as launching our dream of a vast real estate empire, generating passive income as we enjoy financial freedom, and a guaranteed and stable future... How rewarding it was going to be to rent to others, just like us.

Six years and several closings later, our quaint little misconception of the life of the landlord, still makes us laugh at just how naive we were...