Starting a business often comes with the romanticized idea of freedom and no more “bosses.” But as entrepreneurs, we’re really in the problem-solving business, and the bigger you want your business to be, the bigger the problems you’ll face. Owning 257 multifamily units and growing towards a goal of 1,000 units, alongside two other businesses (a coaching company and a real estate brokerage), has presented unique challenges. We want to give you a real, transparent look at what we struggle with, so you can navigate your own real estate investing journey.
Understanding that struggle is normal in entrepreneurship is key, and we’ve learned a lot along the way.
Struggle 1: The Leap from Solopreneur to Leader
Initially, when it was just us, we did everything ourselves. This “solopreneur” phase means your business is you – if you take a vacation, the business stops. This created anxiety around trips, as we were always working.
The biggest challenge has been transitioning from solopreneurs to managers, and then to leaders.
•Manager vs. Leader: A manager gives daily tasks, like a McDonald’s worker following precise instructions. A leader, however, sets an outcome and empowers their team to achieve it, trusting them to make decisions without constant oversight.
• The Double Work Trap: When we first started hiring, we found ourselves doing double the work – telling people what to do, following up, double-checking, and answering constant questions. This was a clear sign we weren’t doing something right.
• Giving Up Control: This transition requires giving up control. You need to show and teach your team in multiple ways, ensure processes are documented, check in on their ability, and then let them go and try it on their own. If there’s a system to follow, they should know how to complete the task.
• The “80% Rule”: For type-A control freaks, accepting that not everything will be done to your exact standard is hard. You might need to accept 80% on some things. However, some things, like Net Operating Income (NOI), are non-negotiable, as the business’s profitability directly impacts everyone’s job security.
Struggle 2: Hiring the Right People & Fostering Ownership
We’ve learned a lot about hiring through trial and error. For example, with one 100-unit apartment, we went through three managers in a year before finding the right person. You’d rather wait for the right person than make a desperate hire.
As a small business, we’ve had to be transparent with our team members: if the business isn’t producing, there’s no position for them.
• No Subsidizing: A crucial rule for us is not subsidizing the businesses with personal funds. If a property isn’t profitable, it means either we bought the wrong building or we have the wrong manager. This is why we were willing to fire three managers until we found the right one.
• Empowering Ownership of P&Ls: To address this, we’ve implemented a “huge tip”: we make each of our managers fill out monthly Profit & Loss (P&L) statements as if they were the owner. We share debt payment figures so they see the full financial picture. This creates a new level of ownership for them regarding the NOI and the bottom line, helping them scrutinize expenses more effectively.
Struggle 3: The Bottleneck of Small Deals
While starting with small multifamily properties is great, they become a challenge as you grow. We’re now trying to sell our smaller deals because of the management burden.
• Management Nightmare: Having vacancies spread across multiple smaller buildings (e.g., three or four vacancies in three or four different locations, with one location an hour apart) requires significant team time compared to having the same number of vacancies in a single large building.
• Mom and Pop Management: Smaller units (like 7 or 8 units) are designed for the owner to manage, as there isn’t enough income to afford a full property manager, landscaper, or pest control.
• The “Mafia” Tax Trap: We’ve successfully used tax strategies like 1031 exchanges (tax-deferred sales) and cost segregation studies (accelerating depreciation) to build our portfolio and pay less in taxes. However, this means we can’t simply sell these deals and take the money; we would owe more in taxes than we would make, which makes no fiscal sense. We are stuck, wanting to grow, but maximizing these deals means our management team is spread thin.
• The Goal vs. Reality: It’s hard to focus on an 8-unit property when you also own a 100-unit building with much higher income potential. Our goal is to reach 1,000 units, but we recognize it’s okay to give up “good” to go for “great”. The biggest struggle here is that the timeline for selling and acquiring larger deals isn’t aligning with our perfect timeline.
Overcoming Challenges: Mindset and Action
Despite these struggles, we don’t quit. Here are some key takeaways:
• Struggle is Normal: Don’t mistake quitting your day job for an end to problems; you simply trade old problems for new, bigger ones. The larger your business, the greater the problems you’ll solve.
• Fluidity and Flexibility: Business rarely follows your perfect timeline. You have to be fluid and flexible and not afraid to give up good for great.
• Patience and Faith: “God’s delays are not God’s denials”. Just because a deal isn’t happening today doesn’t mean an opportunity won’t arise tomorrow. It’s about staying patient without getting frustrated and trusting the big vision will happen.
• Focus on Personal Development: When business gets harder, we double down on our personal development. Focus on what you can control – yourself, your relationships, your health. This is what helps us survive the darkest times.
If you’re looking to sell smaller properties to move into larger ones, start the conversation with a broker. They can help you understand your equity, how many properties you might need to sell, and the timing needed for a 1031 exchange.
Ultimately, entrepreneurship is a problem-solving profession. We hope sharing our struggles and lessons helps you on your own journey, no matter where you’re at.
Ready to overcome the same challenges we’ve faced and scale your Detroit multifamily portfolio with confidence? Apply now for 1:1 Business Coaching and get the proven strategies, accountability, and guidance you need to grow faster and smarter.
