My Worst Investment Ever Podcast Litan Yahav – The Risk of Investing in Single-Family Rental Properties
BIO: Litan Yahav sold a startup, decided to invest a lot of the money he made into real estate - mainly syndications, and encountered a lot of (good) problems managing it. That led him to build a new startup to solve his problems and similar problems of millions like him.
STORY: When Litan sold his company, he and his co-founder decided to buy single-family homes in Ohio via a property management firm. The two never anticipated the challenges they’d encounter from tenants and the municipality.
LEARNING: Investing in single-family rental properties is never really passive. Buying a single-family home is riskier than investing in an apartment block. Buying properties far away from you is just full of risks.
“Investing in real estate is long-term and can generate excellent returns. But there’s also a huge chance it’ll be a flop.”
Litan Yahav
Guest profile
Litan Yahav sold a startup, decided to invest a lot of the money he made into real estate - mainly syndications- and encountered many (good) problems managing it. That’s what led him to build a new startup to solve his problems and similar problems of millions like him.
Vyzer is the platform for investors with complex portfolios to manage cash flows, get insights and build wealth.
Worst investment ever
Litan sold his company and made some good money. He and his co-founder decided to invest in index funds. They also wanted to get into real estate. So they met with friends and friends of friends and friends of their friends. The duo then decided to buy single-family homes in Ohio through a guy who did real estate there.
The idea was to work with a property management firm to help find tenants for their single-family homes. The co-founders settled on buying two single-family homes in Cleveland, Ohio. The houses were very cheap; each one was like $60,000.
From the moment the duo transferred money to the title company and bought the homes, it became one long sequence of bad events involving tenants and the municipality. Some tenants refused to pay rent, and others destroyed their homes. The municipality forced them to fix things that were under its responsibility. Eventually, the two decided to cut their losses and sell the properties.
Lessons learned
- Investing in single-family rental properties is never really passive.
- Buying a single-family home is riskier than investing in an apartment block.
- Apartment blocks, unlike single-family homes, allow you to diversify your risk across different tenants.
- Understand the implications of buying property abroad.
Andrew’s takeaways
- Buying properties far away from you is just full of risks.
Actionable advice
Always be in that mindset that investing in real estate is long-term and can generate excellent returns. But there’s also a huge chance that it will be a flop.
Litan’s recommended resources
Litan recommends reading the book Never Split the Difference: Negotiating As If Your Life Depended On It to understand the art of negotiating. This is because everything in our life is based, at the end of the day, on our ability to negotiate.
No.1 goal for the next 12 months
Litan’s number one goal for the next 12 months is to secure another round of funding so he can scale his business to bring value to as many people as possible.
Parting words
“You’ll never learn if you don’t fail. So take yourself out of your comfort zone and find a way to fail so that you can get better.”
Litan Yahav
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Connect with Litan Yahav
Andrew’s books
- How to Start Building Your Wealth Investing in the Stock Market
- My Worst Investment Ever
- 9 Valuation Mistakes and How to Avoid Them
- Transform Your Business with Dr.Deming’s 14 Points
Andrew’s online programs
- Valuation Master Class
- The Become a Better Investor Community
- How to Start Building Your Wealth Investing in the Stock Market
- Finance Made Ridiculously Simple
- FVMR Investing: Quantamental Investing Across the World
- Become a Great Presenter and Increase Your Influence
- Transform Your Business with Dr. Deming’s 14 Points
- Achieve Your Goals