Investor · Sugar Land, TX · Member since 2017 · 97 posts · 71 votes
I have a not-quite-hypothetical situation that I'd like everyone's opinion on. The scenario is real, but I'm going to simplify it a bit.
Imagine that the house on one side of your current residence comes available. The owner agrees to sell it for $15K when it's worth $160K–170K.
Imagine that the house on the other side of your current residence comes available at the same time. That owner is looking for $150K–160K, and it is also worth $160K–170K.
Both houses would rent for about $1500 a month.
Of course you buy the first house. That's a no-brainer.
But what about the second house? It probably won't cashflow for the first few years, but the first house would float it. If you bought it, you'd own three 3BR/2BA in a row in a neighborhood that you expect to steadily appreciate.
you should evaluate each deal individually, unless they are being sold as a package of some sort or it gives you some other advantage.
you can use the 15k deal as leverage perhaps to lower the price on the second house. if you are not cashflowing at 150k-160k dont buy it, unless you wanna gamble on appreciation. also, by owning three homes next to each other you are increasing risk because all your eggs are in one basket.
Also, by owning three homes next to each other you are increasing risk because all your eggs are in one basket.
I hadn't thought of it as putting "all eggs in one basket." I suppose I thought that having three close together might protect the investment because it would ensure a certain quality of resident.
I think both arguments have their own merits. By owning three houses next to each other, you can protect them to a certain extent, but you also triple your downsides in a market downturn. Especially if the rental market dries up in that town. I personally would not do it unless it was an amazing deal.