Property Manager · Germantown, MD · Member since 2008 · 5 posts · 0 votes
Hello
I own a 2 unit double in Kenmore, NY(Buffalo). I purchased the house in 2002 and rent both units. After paying my mortgage I bank an additional $200. My question is this. I'm 30 years old now and would like to purchase another double in the same area. At this time, would it be smart for me to try and get anything I can out of this property in terms of equity, and put it towards that next property?
Rent minus mortgage payment does NOT equal cash flow. If you've only got $200 left over after paying the mortgage, you should expect to lose money on this property. Pulling any equity out will only make that worse.
or another way to look at it is if you can pull enough out to pay cash for your next property, then you add the rents together see if you are making more money by buying additional properties. With only a 200 per month to play with in terms of a loan, it's not likely that will get enough loan to pay cash for another property, but if you can increase your cash flow by another 200 bucks a month after all expenses, then perhaps taking on another mort payment would be worth it.
But as everyone keeps saying.. Don't over leverage or your out of business..