A Moses Kagan inspired post:
We often get asked how many doors we operate.
An understandable question to get an idea of how much real estate somebody owns/operates.
However, door counts can be misleading.
Let me explain:
We’d much prefer to own 50 doors in a Class A area where we can receive the top-end of market rents and ultimately attract high quality tenants.
On the other side, we could operate 150 doors with a median rent of $800, in sub-prime areas.
5-plex in a desirable location with $12,000 in gross rents > 15-plex on the outskirts of the city with $12,000 in gross rents.
Given the choice of the two, we’d prefer properties located on good dirt vs. seeking out density.
Taking it a step further, we’re dealing with less tenants/leases/complaints given the smaller headcount but still receiving comparable gross incomes.
Prime locations with access to amenities typically appreciate at a higher rate than others and have more consistent demand.
With that said, we prefer to sacrifice scale for quality (location, renter base, general trajectory).
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