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The reality of long term tenants:
He partnered with two friends from high school, yet five years later, Kirby found himself in the exact same financial position as when he started: no assets.
After having bought and sold tons of properties, Kirby and his friend had made literally millions of dollars; yet it all went back into employees, marketing campaigns, and an office—all to build a business. But there was nothing left over.
Kirby decided to buy long-term rentals first. He just started building up a small portfolio of 26 properties, and the cash flowed. As he worked with a VA program that gave vouchers to homeless vets to pay for their rent, the cash flow was good. But for Kirby, it was very management-intensive.
Next Kirby moved from Chicago to Northwest Indiana, where he discovered rehabbing. He had heard about Airbnb and decided to rehab his basement into a one-bedroom apartment that had a separate entrance—a walk-out basement. In the first few months, they made $24,000, just from the basement. And from there they started buying more short-term and decided to sell off the entire long-term portfolio.It’s amazing how Kirby Atwell learned quickly after flipping into long-term rentals to now short-term rentals.
I asked Kirby his biggest surprise going from long term:
“I’m not totally down on long-term rentals,” he said.
“I think they can work. Initially, it was amazing for me, because I would target really beat-up properties. Like I was when I was flipping rehab and building a whole bunch of equity. And then, as I said, the cash flow was good and I could manage them. They were management-intensive, but I could do 1, 2, 3, 4. The problem was, once I started to scale [I learned] the economies of scale aren’t as easy as with a long-term rental—that’s extremely management-intensive, and you’ve got a lot of challenging tenants.“
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