Is it better to own ten $100,000 units, or three $333,333 units? Let's assume all these units are the same size, they just have different locations. Let's assume the % of gross rent is the same relative to the purchase price, but I think the Expenses will be different.
With 10 units, you would have to prepare future funds to replace 10 kitchens and 10 baths. A kitchen right now costs around $20,000 and a bathroom $10,000. That means you have to prepare a fund of $300,000 for 10 future kitchen and baths. Keep in mind with inflation you probably need $600,000 to replace 10 kitchen and baths if you plan to replace them 20 years later.
Wth 3 units, you only need to prepare 3 kitchens and 3 baths. That would cost $90,000 now, or perhaps $180,000 in 20 years.
I think 3 units would also have lower Insurance costs, repair costs, less management hassles, etc.
So if you do have 10 units, isn't it better to exchange them for 3 units (assuming the 3 units are equal value to 10 units)?
Also I'm curious, do you actually prepare funds for new kitchens and baths? For early retirement, you will be holding these units for 30-60 years.
Any thoughts?