Why I Bought Four Rental Properties, Not Two

Everybody talks about buying your first investment property. The gurus talk about building a 20-property empire. Nobody talks about the number that actually matters for most people: somewhere between two and five.

I own four apartments in Auckland CBD. Not because I had a masterplan, but because the maths told me four was the minimum number where the economics actually work as a safety net.

The Law of Averages Needs a Minimum Sample Size

With one rental property, any problem is a catastrophe. Tenant leaves? Your rental income drops to zero. Not 50%, not 75% - zero. But the mortgage, rates, body corp, and insurance keep going. You are now funding the entire property from your day job while scrambling to find a new tenant.

With two properties, a vacancy cuts your income in half. Better, but still painful. Two bad months can wipe out a year of cashflow.

With four, one vacancy means 75% of your income is still coming in. That is manageable. You can breathe. You can take the time to find the right tenant instead of accepting the first applicant who walks through the door because you are desperate for cashflow.

In almost seven years of self-managing four units, I have never had more than one vacant at a time. And even that has been rare - measured in weeks, not months. Having all four vacant simultaneously is statistically so improbable that it is not worth worrying about.

The insurance analogy is simple: you would not insure only one wall of your house.

The Income Replacement Calculation

I did not buy four properties because I wanted to be a property mogul. I bought them because I sat down and calculated how much passive income I would need if my day job disappeared.

I work in IT. It is a good career. My position is solid and will be for years to come. But I have been around long enough to know that "solid" can change overnight. Restructures, offshoring, AI replacing roles, companies folding - I have seen all of it happen to people who thought they were safe.

Four Auckland CBD apartments generating roughly $2,000 per week in rent gets close to replacing a professional salary. Not dollar for dollar, but close enough that if the worst happened, I could pay the bills and feed my family while I figured out the next move. Two properties would only get me halfway there. That is the difference between a safety net and a trampoline with holes in it.

I also joined the Navy Reserve. Not because I expect to need it, but because IT and defence run on different economic cycles. When the economy is good, IT pays well. When things go bad, defence spending typically goes up and reservists get called on. Diversification is not just for your investment portfolio - it applies to your skills and income sources too.

The Debt Question

People ask: if you have four mortgages, are you not just four times as leveraged?

Yes and no. Four smaller mortgages across four separate properties is actually less risky than one large mortgage on one expensive property. If one property loses value, the other three are unaffected. If one body corp has a special levy, it does not touch the other three. The risk is spread.

But the real game is paying them off. I am paying down debt as fast as I can. In less than five years, all four will be mortgage-free. When that happens, the maths changes completely.

Four CBD apartments throwing off $2,000+ per week gross with zero mortgage payments is proper financial independence. Even in a severe downturn - rents falling 15%, one unit vacant - that is still over $1,200 per week net. More than enough to live on.

The mortgage payoff is not some distant dream. It is a specific date on a spreadsheet, and every extra payment brings it closer.

Why Not Five or Six?

There is a sweet spot. Below three properties, you do not have enough diversification and the income is not meaningful as a safety net. Above five or six, self-management starts to become a part-time job and you lose the advantage of knowing every unit personally.

At four properties, I spend maybe 8-10 hours per month on management. That includes responding to tenant messages, arranging the occasional repair, checking rent payments, and doing the quarterly inspection. It is not zero effort, but it is nowhere near enough to justify paying a PM $10,000+ per year.

If I had ten properties, I would probably need help. But at four, I know every tap, every lock, every quirk of every unit. When a tenant says "the bathroom fan is making a noise," I know exactly which fan they mean and who to call. A property manager with 1,000 units does not have that.

The Cashflow Mindset

I bought every property based on cashflow, never capital gains. At each auction, I had a spreadsheet with my maximum bid calculated to the dollar. Weekly rent times 52, minus body corp, minus rates, minus insurance, minus a margin for maintenance. If the yield did not work at that price, I stopped bidding.

I watched people bid $30,000 or $50,000 above what the numbers supported. Every time, I told myself: good riddance. That buyer was buying on emotion, or betting on capital gains that may never come.

CBD apartments are a yield play, not a capital gains play. There is no land component appreciating underneath you. Supply is plentiful, and new towers keep going up. If you are counting on your apartment being worth more in ten years, you might be disappointed. But if you buy at a price where the rent covers everything and leaves a margin, it does not matter what the market does. You are getting paid every week regardless.

That is why four properties bought right beats two properties bought at any price.

The Self-Management Multiplier

Here is the part nobody mentions: the benefit of self-managing does not just add up across properties - it multiplies.

With one property and a PM, you lose roughly $3,000-4,000 per year in fees. Annoying but survivable. With four properties and a PM, you are losing $12,000-16,000 per year. That is a significant chunk of your yield, and on CBD apartments where yields are already tight, it can be the difference between positive and negative cashflow.

Self-managing four properties saves enough to make an extra mortgage payment every year. Over the life of the loan, that shaves years off your payoff date. The PM fees you are not paying are literally buying you financial freedom faster.

The Bottom Line

If you are thinking about investment property, do not stop at one. One is fragile. Two is better. Four is where the diversification, the income, and the self-management economics all start working together.

Buy on cashflow. Pay down debt. Self-manage. And aim for the number where a vacancy is an inconvenience, not a crisis.