Eighteen months ago, I owned zero residential rental properties.
I had plenty of experience in commercial real estate. I'd spent years working in capital raising, advising on fund structures, and building relationships with family offices and institutional investors. But I had never personally owned a portfolio of small residential rentals.
That changed when I realized something that should have been obvious much sooner: the best way to understand an asset class is to own it.
Today, the portfolio I advise on includes 47 doors. All 2-4 unit properties. All within a tight radius of major university campuses. And the journey from zero to 47 taught me more about real estate investing than a decade of pitch decks and conference panels.
Month 1-6: The Foundation
The first property was a fourplex near a state university. Purchase price: $420,000. I put 25% down and financed the rest with a conventional loan at 6.8%.
It took 47 days to close. Forty-seven days of inspections, appraisal anxiety, insurance shopping, and wondering if I was making the biggest mistake of my life. My wife was supportive but skeptical. "Aren't you the capital raising guy?" she asked. "Why are you buying a fourplex?"
Because I wanted to understand the numbers from the inside, not from a spreadsheet.
That fourplex taught me everything:
- Tenant screening matters more than location. My first tenant selection was based on who could pay the deposit fastest. Wrong approach. By property three, I had a systematic screening process that checked credit, rental history, and income verification. The difference in tenant quality was immediate.
- Standardize everything. I picked one paint color (Sherwin-Williams Agreeable Gray), one flooring product (luxury vinyl plank in a light oak), and one set of fixtures for every unit. This cut my renovation decision-making time to near zero and made vendor pricing predictable.
- Property management is not optional. I self-managed the first property for exactly 11 days before I hired a property manager. Those 11 days included a clogged toilet at 2 AM, a noise complaint from a neighbor, and a tenant who wanted to paint their bedroom ceiling black. I was done.
By month six, I'd acquired 14 doors across four properties. The cash flow was modest but positive. More importantly, I had systems.
The first property took me 47 days to close. The last one took me 12. Systems beat enthusiasm every time.
— Andrew LeBaron
Month 6-12: The Acceleration
Something clicked around property five. The process that once felt terrifying became routine:
- Source the deal (broker relationships, off-market leads, MLS monitoring)
- Run the numbers (same spreadsheet template every time)
- Inspect the property (same inspector, same checklist)
- Close and renovate (same contractor, same materials)
- Lease up (same property manager, same screening criteria)
The biggest unlock was moving from conventional loans to DSCR financing. Conventional loans qualify based on your personal income. After four properties, most lenders tell you that you've hit the limit of what your W-2 can support. DSCR loans don't care about your W-2. They qualify based on the property's income relative to the mortgage payment.
A DSCR of 1.25x means the property generates 25% more rental income than the mortgage payment. As long as the property cash-flows, the loan works. This was the key that unlocked scaling.
By month twelve, the portfolio was at 31 doors. The blended cap rate across all acquisitions was 6.8%, well above the 5.25-5.75% institutional student housing trades at. The portfolio DSCR was 1.35x, giving us a healthy margin of safety.
Think you know the real numbers behind these deals?
3 questions · ~2 min
Month 12-18: Portfolio-Level Thinking
At 30+ units, the game changes. You stop thinking about individual properties and start thinking about the portfolio.
Portfolio financing. Around unit 20, I started conversations with portfolio lenders who would consolidate multiple property loans into a single credit facility. The terms are better (lower rates, lower fees) and the administrative burden drops significantly. Instead of managing 10 individual mortgages, you manage one relationship.
Insurance optimization. Individual property insurance is expensive. A portfolio-level blanket policy with a commercial insurer cut our per-unit insurance cost by 22%. That's $200-$300 per door per year. Across 47 doors, that's over $12,000 in annual savings.
Management efficiency. Our property manager now operates a mini-business around our portfolio. She has a dedicated maintenance person for our properties, standardized lease templates, and a systematic turnover process. Unit turns that used to take 14 days now take 6.
The portfolio hit 47 doors at month 18. All in the same metro area. All within a defined radius of campus. All managed by the same team.
The Financials
I'll share the high-level numbers because I believe in transparency:
- Total portfolio value: ~$5.8M
- Total debt: ~$4.2M (72% LTV)
- Gross rental income: ~$485K annually
- Operating expenses: ~$165K (34% expense ratio)
- NOI: ~$320K
- Debt service: ~$237K
- Cash flow after debt service: ~$83K
- Cash-on-cash return: ~5.2% (on total equity invested)
- Total return (including principal paydown and appreciation): ~14.5% annualized
These aren't eye-popping numbers on an individual property basis. But they compound. And the principal paydown is building equity every month that I didn't have to save. And the appreciation in a strong student housing market is real.
What I'd Do Differently
If I were starting over, I'd change three things:
1. Start with DSCR loans from property one. I wasted time and paperwork going the conventional route. DSCR loans have slightly higher rates but far less hassle and no personal income limits. The trade-off is worth it from day one.
2. Hire a property manager immediately. The 11 days of self-management taught me that I have no business managing tenants. My time is better spent finding deals and raising capital. Let the professionals manage the day-to-day.
3. Buy faster in the first six months. I was too cautious early on. I analyzed 50 properties and bought 4. Looking back, I should have bought 8. The deals I passed on in months 2-4 all appreciated, and the tenants would have been in place by the time I developed my systems.
The Next Chapter
Forty-seven doors is a foundation. It's not a destination.
The plan is to scale this model to 100+ doors across multiple university markets. At 100 units, the portfolio becomes interesting to institutional capital and family office investors who want exposure to student housing at better yields than what purpose-built PBSH offers.
I'm also exploring the same scattered-site model for senior housing. The thesis is identical: smaller residential properties, located near healthcare and amenities, serving a demographic with structural demand. The silver tsunami is just as powerful as the enrollment wave at major universities.
If you're thinking about building a residential rental portfolio, here's my advice: start small, standardize everything, hire professionals, and be patient. The first property is the hardest. After that, it's just repetition.
And if you want to talk about how to structure this kind of portfolio, or if you're an investor looking for exposure to scattered-site residential student or senior housing, reach out. I'm always happy to share what I've learned, including the mistakes.
Eighteen months ago, I owned zero residential rental properties.
I had plenty of experience in commercial real estate. I'd spent years working in capital raising, advising on fund structures, and building relationships with family offices and institutional investors. But I had never personally owned a portfolio of small residential rentals.
That changed when I realized something that should have been obvious much sooner: the best way to understand an asset class is to own it.
Today, the portfolio I advise on includes 47 doors. All 2-4 unit properties. All within a tight radius of major university campuses. And the journey from zero to 47 taught me more about real estate investing than a decade of pitch decks and conference panels.
Month 1-6: The Foundation
The first property was a fourplex near a state university. Purchase price: $420,000. I put 25% down and financed the rest with a conventional loan at 6.8%.
It took 47 days to close. Forty-seven days of inspections, appraisal anxiety, insurance shopping, and wondering if I was making the biggest mistake of my life. My wife was supportive but skeptical. "Aren't you the capital raising guy?" she asked. "Why are you buying a fourplex?"
Because I wanted to understand the numbers from the inside, not from a spreadsheet.
That fourplex taught me everything:
- Tenant screening matters more than location. My first tenant selection was based on who could pay the deposit fastest. Wrong approach. By property three, I had a systematic screening process that checked credit, rental history, and income verification. The difference in tenant quality was immediate.
- Standardize everything. I picked one paint color (Sherwin-Williams Agreeable Gray), one flooring product (luxury vinyl plank in a light oak), and one set of fixtures for every unit. This cut my renovation decision-making time to near zero and made vendor pricing predictable.
- Property management is not optional. I self-managed the first property for exactly 11 days before I hired a property manager. Those 11 days included a clogged toilet at 2 AM, a noise complaint from a neighbor, and a tenant who wanted to paint their bedroom ceiling black. I was done.
By month six, I'd acquired 14 doors across four properties. The cash flow was modest but positive. More importantly, I had systems.
The first property took me 47 days to close. The last one took me 12. Systems beat enthusiasm every time.
— Andrew LeBaron
Month 6-12: The Acceleration
Something clicked around property five. The process that once felt terrifying became routine:
- Source the deal (broker relationships, off-market leads, MLS monitoring)
- Run the numbers (same spreadsheet template every time)
- Inspect the property (same inspector, same checklist)
- Close and renovate (same contractor, same materials)
- Lease up (same property manager, same screening criteria)
The biggest unlock was moving from conventional loans to DSCR financing. Conventional loans qualify based on your personal income. After four properties, most lenders tell you that you've hit the limit of what your W-2 can support. DSCR loans don't care about your W-2. They qualify based on the property's income relative to the mortgage payment.
A DSCR of 1.25x means the property generates 25% more rental income than the mortgage payment. As long as the property cash-flows, the loan works. This was the key that unlocked scaling.
By month twelve, the portfolio was at 31 doors. The blended cap rate across all acquisitions was 6.8%, well above the 5.25-5.75% institutional student housing trades at. The portfolio DSCR was 1.35x, giving us a healthy margin of safety.
Think you know the real numbers behind these deals?
3 questions · ~2 min
Month 12-18: Portfolio-Level Thinking
At 30+ units, the game changes. You stop thinking about individual properties and start thinking about the portfolio.
Portfolio financing. Around unit 20, I started conversations with portfolio lenders who would consolidate multiple property loans into a single credit facility. The terms are better (lower rates, lower fees) and the administrative burden drops significantly. Instead of managing 10 individual mortgages, you manage one relationship.
Insurance optimization. Individual property insurance is expensive. A portfolio-level blanket policy with a commercial insurer cut our per-unit insurance cost by 22%. That's $200-$300 per door per year. Across 47 doors, that's over $12,000 in annual savings.
Management efficiency. Our property manager now operates a mini-business around our portfolio. She has a dedicated maintenance person for our properties, standardized lease templates, and a systematic turnover process. Unit turns that used to take 14 days now take 6.
The portfolio hit 47 doors at month 18. All in the same metro area. All within a defined radius of campus. All managed by the same team.
The Financials
I'll share the high-level numbers because I believe in transparency:
- Total portfolio value: ~$5.8M
- Total debt: ~$4.2M (72% LTV)
- Gross rental income: ~$485K annually
- Operating expenses: ~$165K (34% expense ratio)
- NOI: ~$320K
- Debt service: ~$237K
- Cash flow after debt service: ~$83K
- Cash-on-cash return: ~5.2% (on total equity invested)
- Total return (including principal paydown and appreciation): ~14.5% annualized
These aren't eye-popping numbers on an individual property basis. But they compound. And the principal paydown is building equity every month that I didn't have to save. And the appreciation in a strong student housing market is real.
What I'd Do Differently
If I were starting over, I'd change three things:
1. Start with DSCR loans from property one. I wasted time and paperwork going the conventional route. DSCR loans have slightly higher rates but far less hassle and no personal income limits. The trade-off is worth it from day one.
2. Hire a property manager immediately. The 11 days of self-management taught me that I have no business managing tenants. My time is better spent finding deals and raising capital. Let the professionals manage the day-to-day.
3. Buy faster in the first six months. I was too cautious early on. I analyzed 50 properties and bought 4. Looking back, I should have bought 8. The deals I passed on in months 2-4 all appreciated, and the tenants would have been in place by the time I developed my systems.
The Next Chapter
Forty-seven doors is a foundation. It's not a destination.
The plan is to scale this model to 100+ doors across multiple university markets. At 100 units, the portfolio becomes interesting to institutional capital and family office investors who want exposure to student housing at better yields than what purpose-built PBSH offers.
I'm also exploring the same scattered-site model for senior housing. The thesis is identical: smaller residential properties, located near healthcare and amenities, serving a demographic with structural demand. The silver tsunami is just as powerful as the enrollment wave at major universities.
If you're thinking about building a residential rental portfolio, here's my advice: start small, standardize everything, hire professionals, and be patient. The first property is the hardest. After that, it's just repetition.
And if you want to talk about how to structure this kind of portfolio, or if you're an investor looking for exposure to scattered-site residential student or senior housing, reach out. I'm always happy to share what I've learned, including the mistakes.
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Andrew LeBaron
