A lot of people get into real estate the same way my brother Brian and I did. You buy a few properties on the side, learn as you go and assume steady growth will come from owning real estate long enough.
Before founding Roers Companies in 2012, we built a portfolio of about 20 residential and student housing properties near the University of Minnesota. It was a side venture we grew while working in finance — Brian as a CPA and me as a CERTIFIED FINANCIAL PLANNER® (CFP®).
At the time, we knew our local market well and had a strong network, but we were still thinking fairly small. We were focused on managing individual rentals instead of building something durable in the long run.
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Looking back, it’s clear we needed to shift our perspective on risk and growth. Investors today have less room for error than they did a few years ago, which makes long-term planning and risk management much more important.
While every investor’s journey is different, these are the three lessons that shaped our approach — and that every investor should understand from the start.
1. Smaller doesn’t always mean safer
In practice, smaller properties can leave you more exposed. If you own a duplex and one tenant leaves, a large portion of your income stream disappears overnight.
A major repair can wipe out most of the year’s profit. Even routine turnover carries more weight when there are only a handful of units supporting the property.
That was one of the first lessons Brian and I learned as we expanded beyond lease-to-own and student rentals. Larger apartment communities brought more operational complexity, but they also created more stability.
Vacancies, repairs and day-to-day issues had less impact on the overall performance of the property because the risk was spread across more units.
For individual investors, that doesn’t necessarily mean jumping straight into a 200-unit development. It means understanding that larger properties tend to absorb the ups and downs of ownership differently.
When one tenant moves out or an unexpected repair comes up, those issues don’t have the same impact they do when you only have a handful of units.
2. Diversification isn’t just for the stock market
Buying a resilient property is one decision. Building a resilient portfolio is another.
One of the most important experiences in our early years came during the oil boom in North Dakota. At the time, demand was surging, and we were developing in markets that were growing incredibly fast to house the influx of oil workers.
In the thick of the boom, it felt as if demand would never slow down. Then conditions changed.
That experience reinforced something that applies everywhere: No market stays hot forever, and no region is immune to economic shifts.
After that, we became much more intentional about diversification. We expanded into different states and different types of housing because we didn’t want the future of the company tied too closely to one local economy or industry.
For us, that meant — and still means — building a portfolio that isn’t overly dependent on any one market, property type or stage of the economic cycle.
Individual investors should think the same way. Too often, people build portfolios entirely around what’s familiar or close to home. That can work for a while, but it can also leave investors exposed to risks they didn’t anticipate.
This is especially true as regional markets navigate the supply-and-demand resets we’re seeing today.
Diversification in real estate is not only about owning more properties. It’s about reducing the likelihood that all your investments are affected by the same economic pressures at the same time.
3. Long-term value is usually built through operations, not luck
Many people enter real estate assuming the biggest gains will come from appreciation alone. Sometimes that happens, but relying on market appreciation as the entire strategy can create problems. Strong operators look closely at how a property performs.
- Can expenses be managed more efficiently?
- Are there upgrades that could make the property more competitive?
- Is management helping the property operate at its full potential?
Those decisions tend to matter more over time than hoping the market keeps moving upward.
Investors today also face a more competitive environment than they did a decade ago, especially in multifamily housing. In this sector, value is closely tied to the income a property produces.
Improving operations, reducing inefficiencies and making thoughtful improvements can all strengthen performance in a way that’s far more reliable than trying to predict market swings.
That shift in thinking changes how investors approach growth. Instead of waiting for the market to create value, they focus on building value through better execution and better long-term management.
Real estate can absolutely be a strong long-term wealth-building tool, and experience has taught me that success usually comes from focus more than momentum.
The investors who last are usually the ones who show grit when markets change and avoid making emotional decisions when things get uncertain.
That approach might not feel exciting in the short term, but it tends to create far more stability — and success — in the long run.
