how soon should i buy my 2nd rental property

Question

Now that I closed on my first deal yesterday and already have tenants living in there how soon should I start looking into buying  another rental home? And also is it dumb that I am still renting while I'm doing the BRRR'D method or should I look into house hacking?

Andrew Johnson · Answer

@Gabriel Benavidez I'll be the unpopular respondent that says: "Give it 6 months".  See if you like being a landlord, see how maintenance costs map to your projections, see how you feel getting calls at random times, etc.  You might love it or you might hate it.  If you hate it, you can invest in real estate but you have to build in the cost of a property manager.  If you love it, then you can move forward with your acquisition strategy.  "Scale" does help you in real estate but if you're going to "learn a lesson" it's much less financially hurtful to do it with one property instead of three.  And, most of the time, there's always some unexpected hiccups that come with owning/renting/landlording for the first time.  Heck, there are lessons that you learn managing a property manager for the first time

Paul G. · Answer

@Gabriel Benavidez I have to agree with @Andrew Johnson.  Landlording is not for everyone.  In a short while, if you have high maintenance tenants, you may hate it.  More importantly though is how thin will it stretch your budget?  If you will still have a decent reserve even WITH another property, then it's less of an issue.  While 6 months isn't a number set in stone, I would caveat that with: spend one cycle of the worst weather in that area.   So... If you're in the North/North East, hold it for one winter before purchasing another.  For me in Arizona, it was after one summer.  I say this due to my past experience.

I got unlucky with my first rental and had the AC die within the first year of buying it.  We ended up with a 4K bill within 6 months of owning it.  Being in Arizona, AC is a HUGE DEAL.  It died the last week of May when temperatures were in the 100s.  Needless to say, summer is the hardest time on the AC in Arizona, and if it's going to die, it'll die then.  We had enough reserves that we were able to replace it promptly.  If we didn't have those reserves, we'd be in a potentially pretty bad spot.

So, in my opinion, assuming you have the reserves and made it though one cycle, go for it.

Shash M. · Answer

Here is I would do if I were you, as long as you find another deal, where numbers make sense, go for it. You may want to review your cash positions also. Remember every deal is different. Congrats on your first deal. Let me know if I can assist you in professional capacity. Cheers!

Bill Regan · Answer

As soon as you have funding or as soon as a deal comes along and you can fund it.  If you are asking the question you are probably ready!

Whether or not to rent depends on your market.  If you've got a great place that suits your lifestyle and its not a lot of money that you can cover with your REI work then go for it.  You might have something a lot nicer than you could maybe buy.

On the other hand, I'm a huge proponent of house hacking.  If you can save that $1k/month or whatever you are paying in rent, how much sooner could you get that next deal?  Plus you get to take advantages of cheap FHA type loans, mortgage insurance write offs and all that goodness.

how soon should i buy my 2nd rental property

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