When I first started in real estate, I thought that I wanted to buy 100 rental units. I was under the assumption that if I bought them for about 80% of appraisal that they would cash flow $100 per month per unit. If I did this, I would have a total positive cash flow $10,000 per month, and I would no longer require a job. Also, I would benefit from 4% appreciation per year, principle debt reduction, and tax depreciation. It really was a simple and elegant plan, but it was not founded on the reality of my market. I failed to realize that in order to cash flow $100 per unit, I would have to do everything myself. I would have to take the maintenance calls, fill vacant units, fix the problems myself, go to evictions court, etc. I also failed to realize that even if I did all those things myself, that I would still probably fail to come close to $100 per unit positive cash flow. I overestimated the percentage of rents that I should expect to receive, and I underestimated many of the costs associated with owning rental real estate. I am not only unqualified to handle all the details of property management, but I am also unwilling, unable, and unmotivated to do these things. I did not consider the time investment such a plan would take. Luckily, however, I did discover after 6 units that I did not enjoy managing real estate rentals, and I stopped buying them in the same fashion. Are you willing, qualified, and able to manage rental units? If you are, perhaps this would be an excellent strategy. If you can commit yourself to 60-70 hours per week, late night phone calls, difficult tenants, finding properties etc. perhaps you may want to consider buying lots of rental properties. Please don’t take this as a negative thing. Some people can commit themselves to the phone calls, difficult tenants, and maintenance. They make a great living doing this and they have an excellent retirement plan. It’s just not something I am able to commit to. In order for this model to work for me, I am required to hire out all those tasks. I am unwilling to show the rental, unwilling to fix the rental, and unwilling to go to evictions court. As a result, I do not show much positive cash flow. I actually show negative cash flow on some properties. I am in a position to handle the negative cash flow, and the appreciation of the 6 units will probably bail me out. I can handle the negative cash flow because the principle reduction is greater than the negative cash flow. However, I am not in a position to handle the same negative cash flow on 100 units. Had I stuck to my plan blindly, I could be in serious trouble. I do many of the things that I enjoy, and I receive an income that warrants my time involvement. Additionally, I reduce much of the risk associated with real estate investing because my profit is not dependant on market appreciation, but rather on my own ability to spot good deals. I rarely have to deal with tenants. I only marginally deal with contractors, and I rarely get involved with selling. It’s my system. Brad Zitzner is a real estate investor, coach, and realtor. Brad has bought or sold over 150 properties. His web based Property Management System “ZZZ Real Estate” helps real estate investors remove the chaos and paperwork from their real estate business. To get Brad’s FREE real Estate ebook go to www.zzzinvestors.com