Buying my first multifamily deal was life-changing, but I quickly learned how much I didn’t know. Mistakes cost me thousands, but they also taught me valuable lessons that helped me build a portfolio, leave my corporate job, and mentor others. Here are 5 lessons I wish someone had told me before I got started:
In this video, you’ll learn:
- How cash flow and cash reserves can make or break your investment
- Why property management is worth every penny—and the costly mistake I made
- The importance of knowing the neighborhood
- How to overcome analysis paralysis and take action
- Why starting small might be the smartest move for new investors
What I Wish I Knew Before My First Multifamily Deal
Let me take you back to the day I closed on my first multifamily property. I thought I was ready—I had read all the books, attended all the seminars, and run the numbers every way imaginable. But within 30 days of owning that first property, I realized just how much I didn’t know. I made costly mistakes—mistakes I wish someone had warned me about. Yet, I also learned valuable lessons that ultimately allowed me to build a portfolio of multifamily properties across the country. Those lessons helped me leave my corporate job, secure a financial future for my son (while being a single parent), and eventually mentor others on how to invest. If you’re thinking about buying your first multifamily property, trust me—what I wish I knew then could save you thousands now.
Lesson 1: Cash Flow Is King, but Cash Reserves Are the Throne
Many rookies focus entirely on cash flow but fail to plan for unexpected expenses. That was me.
My Costly Mistake
My first large multifamily deal generated $6,000 per month in cash flow, allowing me to leave my engineering job. Life was good—until disaster struck. Within the first year, a maintenance call revealed a hidden water leak inside the wall. When we opened it up, we found old cast iron pipes—and the entire plumbing stack for three floors needed replacing. The cost? More than I had planned for. With no reserves, I was scrambling for cash to cover the repairs—or risk a flooded building.
What I Wish I Knew
Always inspect big-ticket items before closing on a property. And more importantly, keep at least six months’ worth of cash reserves in a separate account. Because trust me, a rainy day will come and those reserves will keep you afloat and let you sleep at night.
Lesson 2: Property Management Will Make or Break You
A good property manager is worth every penny—and trying to save money in this area? That can cost you big time.
My Costly Mistake
Thinking I could self-manage my apartment building, I skipped hiring a professional manager to save the 8% management fee. What happened next? I inherited a tenant who carried a gun. Within 30-60 days, six people vacated, leaving me below break-even with negative cash flow. I was completely out of my depth. So, I hired a strict, no-nonsense property manager. It took six months for her to turn things around, but she saved my investment.
What I Wish I Knew
Budget for a professional property manager in every deal. Run your numbers with a management fee included and invest in the best—it’s worth every dollar. With the right manager, you can keep your cash flow steady, and more importantly, focus on scaling your portfolio.
Lesson 3: Know the Neighborhood Better Than Your Broker
Many beginners blindly trust brokers, demographic reports, or Google Maps for area insights. That’s a mistake.
My Close Call
I nearly bought a property called Hawaiian Gardens—a turnaround project needing repairs and new management. On paper it looked promising, and I got it under contract. Then I made a decision that saved me: I drove to the area at night. What I saw shocked me—loitering, gang members, loud music, chaos. During the day, it was quiet. At night, it was a nightmare.
Thankfully, the bank rejected my financing because they didn’t think I could turn the property around with my limited experience. That rejection was a blessing in disguise.
What I Wish I Knew
You can fix a property, but you can’t fix a location. In the case of Hawaiian Gardens, the property had potential, but because of where it was located and the people there, I would have failed.
Lesson 4: You Don’t Need to Know Everything—Just Enough to Get Started
If there’s one thing that holds new investors back, it’s analysis paralysis: the tendency to overanalyze, overprepare, and overthink until you never take action. I was guilty of this.
My Costly Hesitation
As an engineer, I believed that the more data, the better. So, I analyzed hundreds of deals, taking four pages of notes per deal, stacking up to over 800 pages, yet I never made an offer. Despite studying all the books, attending the seminars, and running the numbers, I felt like I needed to know more before making my move. The uncertainty of making mistakes and the fear of failure kept me stuck—until I saw my mentor get laid off.
He was world-famous in our industry, highly respected, and brilliant at his work. Then, one day, he was laid off—just like that. The kicker? The company planned to replace him with me. That’s when reality hit me: If they could do that to him—a top expert in his field—what would stop them from doing the same to me? That moment shattered my illusion of job security. As a single father, I couldn’t afford to let someone else control my financial future.
I had two choices:
- Stay trapped in fear, continuing to overanalyze every detail.
- Take action, knowing I would make mistakes but understanding that ownership would teach me more than any book ever could.
So, I jumped in and bought my first multifamily deal. Did I make mistakes? Absolutely. Was it life-changing? Without a doubt.
What I Wish I Knew
Analysis paralysis can steal your financial future. No amount of studying, reading, or planning can fully prepare you for real estate ownership. Education is critical because it equips you with knowledge. But only ownership will transform your financial future.
The fastest way to learn is by doing.
At Commercial Property Advisors, we educate our students—but more importantly, we guide them through ownership, helping them take that leap. Because real estate success isn’t just about knowledge—it’s about action.
Lesson 5: It’s Okay to Start Small
When starting your real estate investing journey, you may feel pressured to go big—to buy that 40-, 50-, or even 100-unit property right off the bat. But here’s the truth: Starting small might be the wisest move you can make.
Why Starting Small Was My Best Decision
My first multifamily property was small, just a handful of units. At the time, I didn’t realize how much that decision would work in my favor. But looking back, I now see that starting small saved me when I made my first real estate mistakes. When I messed up, I could write a check and fix it. Had I purchased a 100-unit as my first multifamily deal, I probably wouldn’t have had the financial flexibility to cover my mistakes.
Let’s face it, early mistakes are inevitable. Would you rather learn from them on a manageable scale, or struggle with costly errors on a much larger property? By starting with a small multifamily deal, I gained valuable experience without the overwhelming risks.
The Power of Small Steps
I love this quote:
“The man who removes a mountain begins by carrying away small stones.”
Think of your big goal as your mountain:
- Financial freedom
- Leaving your job
- Generating enough passive income to support your lifestyle
- Building a financial legacy for your family
That mountain may seem massive, but the way to conquer it isn’t in one giant leap, it’s by moving small stones, one at a time. Your first small multifamily deal is one of those stones. As you gain experience, you build momentum and build your portfolio over time.
What I Wish I Knew
Had I understood the power of starting small earlier, I might have saved myself from overthinking, hesitation, and unnecessary pressure. Real estate investing isn’t about making one big move—it’s about consistent, strategic progress. A small multifamily deal (4-12 units) might be your smartest move.
Every Successful Commercial Real Estate Investor Has a Mentor
Success in multifamily investing isn’t about knowing everything—it’s about taking the leap, learning as you go, and surrounding yourself with the right people. Whether you’re just starting or scaling up, seek guidance, and learn from those who’ve been there. Get your mentor here: Commercial Property Advisors Protege Program
If you have any comments or questions, text PETER to 833-942-4516.
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