Just Closed on 1st Property, Is Immediately Getting a 2nd crazy?

Question

My business partner and I just closed on our first Investment Property last week, a single family home for long term rental in Pittsburgh.  While we were in Pittsburgh (we both live in LA, but from Pittsburgh originally) we started looking at other properties and found a great multi-unit in a great area.  Having just closed on property #1 a week ago, and not even having a tenant yet, is pursuing a second property too ambitious a move this soon, and is it even possible to get another loan this quickly since we're only 1 property into this endeavor?   Thanks for any advice/insight on this!

Johnny George · Answer

@Brian Person @Joseph Sangimino @Alex Deacon Thanks guys!  All very helpful insight on this... exactly what I was looking for.  We do have local property management in place, so we won't be managing from 3,000 miles away.  We do however, want to see how this first property performs before diving in deeper, but it's hard to turn away from a great deal.  One thing we've learned is that patience is key, so that won't be forgotten moving ahead.  Thanks again for the help!

Alex Deacon · Answer

@Johnny George I would sit tight and make sure this one performs and you have your RE team in place here. I buy and sell 4-8 homes in PGH a month and we manage over 650 for myself and other clients. I have over 25 years in this business I know when to put on the brakes. You are too new to this and especially from out of town. I have 20-40 clients that I help grow their portfolio here and they are from out of the country and out of state. The appealing thing about this area is its affordable compared to the rest of the world but believe me you can lose your shirt. If it was that easy then every local investor would buy up everything. With the volume I buy and the experience I have I still get burned 1 out of 10 times. If you need any further help you can feel free to reach out to me.

Joseph Sangimino · Answer

Congrats Johnny! That's fantastic, especially working out of state. I personally think if neither you or your business partner have managed investment real estate before, that you take the first property slowly. I think the learning curve is pretty steep on the first property and its better to take it slow, manage it well, implement systems to "perfect" the first one so that its easily scalable to a lot of others. Once you have the first one down and some systems in place your confident with, I think you can go crazy from there. My fear would be getting too deep into too may properties at once which leads to inefficiency and lots of wasted $$$ without a number of systems in place.

I agree with Brian though that it has a lot to do with your risk tolerance. If you happen to stumble across an unbelievable deal/opportunity right after the first one, then a little inefficiency can be afforded especially if its a long term hold.

Hope that helps...

I invest in Pittsburgh as well. Feel free to contact me if you'd like to discuss the Pittsburgh market or if you need some boots on the ground.

Brian Person · Answer

Johnny,

Congratulations on your first property. I'm sure you will get different opinions on this question, but it really comes down to your risk level. My dad and I just start investing this past fall, but we bought five properties within six weeks for a total of 10 units. We closed on our sixth property this winter, a triplex. Currently we are in contract for two more properties, which will bring us to a total of 20 units within the first 10 months. So to answer your question, I don't believe it is too ambitious, but everyone is different. You should not have a problem getting another loan this soon, but I would advise speaking with your loan officer to confirm this. They will be able to tell you what your buying power is.

Again congratulations on taking the first step. Good luck.