Need advice on second rental proprty buy

[Sam Schlacter]

Hi All,

   I hope someone can help with valuable advice on following - I had bought my first rental property 6 years back and has worked out well. I bought it for 58k, started renting at 850 and currently renting at 1100 - I have always kept rent about 150 less as from day 1 I have the same tenant living there and maintenance cost has been very minimal. If I were to rent a brand new property there I would expect to get about 1250 in rent.

I am looking to invest more in real estate now and getting couple of more units in the same sub-division as this that I know rents very fast. However, the market value of the town home that I bought for 58k at the time when market was low is now 140k. So I am happy that my current property has appreciated well along with the rental it brings in but I am also hesitant now to pay up that much in the same sub division where in past I bought another property for half! :-)

Could someone help how I should look at this? For a property valued at 140k if I put 20% down and expecting rent about 1250 would it still be a buy? As a passive investor I am finding very different market now - 6 years back I could walk into many units and buy but now all real estate has appreciated higher. Thanks in advance.

[Joe Villeneuve]

So you're saying you wished the market didn't appreciate?

If it was me, and I had a property with at least $80k in equity, I'd probably sell it and buy more than one property...leveraged, that would cash flow for more than this one does.

You never said how much this property cash flows.  You never said how much your mortgage payment was on this one.  How can anyone possibly answer your question not knowing those numbers?