The Lifestyles Unlimited Real Estate Investor Radio Show podcast

July 14, 2025 7 Hard-Learned Rules That Could Save Your Multifamily Portfolio

What if you could learn seven portfolio-protecting rules from someone else's costly mistake? Sometimes the most valuable lessons come wrapped in painful experiences that cost real money and sleepless nights.

Mike Harrison doesn't sugarcoat the reality of multifamily investing. While 90% of his investments have been phenomenal, he's willing to share the receipts on the deals that didn't go as planned - because that's where the real learning happens. When you're betting hundreds of thousands on properties you'll never manage directly, the margin for error shrinks fast.

What You'll Discover

Mike breaks down exactly what went wrong with his 2021 Class B yield play that stopped producing distributions after just four quarters. You'll discover why interest-only loans became dangerous during the fastest rate hike period in US history, and how even experienced lead investors can get overwhelmed when managing too many properties simultaneously.

But more importantly, you'll learn the seven specific rules Mike now follows to minimize risk across his portfolio. These aren't theoretical guidelines - they're battle-tested strategies born from real losses and refined over seven years of multifamily investing. From geographical diversification limits to his controversial "blue city" rule, each strategy serves a specific purpose in protecting capital while maximizing returns.

The episode reveals Mike's personal limit of 10% portfolio exposure to any single lead investor or geographical area, plus his strategy for maintaining 5% of net worth in cash as a "war chest" for future opportunities. You'll also understand why he actively moves money outside of Texas despite loving the state, and his approach to coastal property limitations.

Key Timestamps

04:00 - The 2021 Class B Property That Stopped Paying - Mike reveals the deal that had everything going for it: great lead investor, newer property, excellent projections of 100% minimum return, but distributions came to a screeching halt after March 2021

09:00 - The Three-Property Rule for Lead Investors - Why Mike won't invest with syndicators managing more than three active properties, based on learning that 20+ properties spread attention too thin

14:00 - The 17% Loss From Going Too Fast - How Mike's eagerness in 2018 led to a 17% loss when he didn't properly vet a first-time lead investor tackling a 50-unit property

19:00 - The 10% Portfolio Diversification Rules - Mike's specific limits: no more than 10% with any one lead investor, 10% in any one city, 10% in coastal properties, and his geographic diversification strategy

29:00 - The 5% Cash War Chest Strategy - Why Mike keeps 5% of net worth in cash as both emergency fund and investment opportunity fund, plus how this changes as net worth grows

FAQs

What makes a lead investor too risky according to Mike's rules?

Mike has learned that lead investors managing more than three active properties at once may spread their attention too thin. His rule came from investing with someone managing over 20 properties who couldn't provide adequate attention when problems arose. He also looks for lead investors whose career skills translate to real estate management, especially for larger first-time deals.

Why does Mike limit investments to 10% per geographical area?

Cities can change quickly due to political shifts that affect business environments and property rights. Mike learned this lesson when he became too heavily invested in one Texas city that later experienced oversupply from institutional builders adding 8,000+ units annually. The 10% rule applies to individual cities, not entire metropolitan areas, allowing investment in surrounding communities.

How does the 5% cash strategy work for real estate investors?

Mike maintains 5% of his net worth in cash, which serves dual purposes: personal emergency fund and investment war chest for opportunities. This isn't traditional saving - it's strategic positioning to act quickly on deals. When he invests from this fund, he rebuilds it as his net worth grows, though he may adjust the percentage as his portfolio scales.

Ready? Follow the Roadmap Today

Don't let costly mistakes derail your multifamily investing journey like Mike's hard-learned lessons. You don't have to learn these rules the hard way. The systematic approach and mentorship that helped Mike develop his portfolio protection strategies can guide your decisions from day one.

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The information and opinions on the Lifestyles Unlimited Real Estate Investor Radio Show are for entertainment purposes only and do not constitute investment advice. Please consult a professional regarding your personal investment needs.

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