Going for rental #2 ... Is it too soon?

Question

Hello,

I purchased a duplex last April with 20% down. I am now ready to purchase another property but ...

I can't help but to ask myself: "Is it too soon"?
	After all, I don't really know what I'm doing. I didn't go to school for this, my parents don't own rentals, none of my friends own rentals.
	
	All I've really done was save a (considerable) chuck of change, buy a house and find some people to rent it to. Maybe I just got lucky. Maybe that luck is running out. Maybe I am gleefully walking toward my own destruction, oblivious to the myriad of dangers lurking in the shadows of real estate investing!

So I ask, is it too soon? 
	What is your advice to the beginner investor? How fast is too fast?

George Pan · Answer

Thank you for the great responses.
	The biggest thing I've learned from my first property is that I could have gotten into it for half the money. And that your realtor is not your best friend.
	
	To answer your question Jay C..
	I can afford the property I currently own without it being rented, however I cannot not say the same for the second one. If both went unrented I would be underwater. Does that mean I will be over leveraged by purchasing one more property?

Shawn Thom · Answer

@George Pan  if you can not afford both to go unrented, it sounds like you could not afford to replace the AC or roof etc etc.

Like @Steven Sample mentioned, emergency funds/reserves are important.

Justin Case · Answer

It is all about the numbers man. It is your business.

Steven Sample · Answer

I think as mention above that only you can answer that question. First of all you want to make sure you have some form of Emergency Fund put to the side just in case you have some type of major repairs come up....I did the same thing I bought a single family and then a duplex shortly after. Of course some major problems took place which I was expecting. So I fix that problem and did have the money to fix up the other property I had just purchase...but the good news I had the property and I fix it up little at a time... and now all the units are fully renting. Long story short its ok to feel uncomfortable. We have to learn to get use to feeling uncormforable and take some risks.

Timothy Riley · Answer

Sorr using cell phone - i meant to say double that amount and see if thats doable...

Timothy Riley · Answer

As @Shawn Thom said "only you can tell". With you Knowing your expenses on the first unit make sure you'll have enought to cover a few months of that without depending on the tennants. If thats doable that amount. Is that doable?

Hopefully you wont have any type of incident that will leave you maintaing two properties out of pockect without rent but  if the unlikely occurs and you'd still be able to handle it af few months, you are more than ready for you next purchase.

Good Luck...

Jay C. · Answer

Ok,

Answer these questions. Can you be alright if this property you currently have is not rented? How about if you get another and they are both no rented? Do you and your wife both work and if one of you or one of you lost your job and the home was not rented will you be ok short term?

I ask the obvious cause the last downturn was from people being over levered. It wasnt the banks. Those yahoo`s went and searched out those loans and signed on the dotted line. So in the end a bit of leverge can make you into a land baron but it can also take the whole thing down as well. Be careful and do not over extend cause you want more.

Good Luck

Jean Bolger · Answer

That's hard to say! I see you are pretty new to BP... my suggestion would be to pore over the articles and forums here for awhile and see what come up that makes you say "hmm, I never considered that..." Especially pay attention to the deals that people put up for analysis, and see if you can anticipate what the feed back will be. There may be very little that surprises you- in which case, fine! You're good to go. If you find that there are areas where you still have a lot to learn, well, this is the place to do it.

Jedd Braunwarth · Answer

@George Pan I can relate to you! I think only you can answer that question, however I bought my first rental property and then 5 months later closed on my second. The first one went so good and so smooth with repairs and quality of tenants that I just kept moving forward with the next. So far so good!

I do have to wait a little while now as I spent all my money, not all, but A LOT!

Shawn Thom · Answer

only you can answer that question.

What kind of mistakes did you make on the last one?  Did you learn from them?

If you make a mistake that cost you money, can you recover?

What things are going good that you want to repeat.

My answer is go for it, but I can't answer that for you.  The main thing is if you made a mistake, don't repeat it.  I did 2 rentals in my first year.  Made some mistakes on each one that I hope I won't repeat.  You will never have all the answers.