I'm investing in Single Family homes. My question is, how do you know whether or not you're over-extending financially. I know this may be subjective and based on one's comfort level, and am curious what you other investors feel.
I'm looking at buying 2 more rental properties(would become 3 rentals + 1 for my own home, for a total of 4 mortgages) and after running the numbers, if all 3 properties go vacant and I have to float the mortgages myself; it will be tight.
But at the same time, I understand that commercial investors have no WAY of floating the mortgage should something go awry.
What is your thought process for your own comfort level or risk?
There is a simple test to determine one's risk tolerance level. You are overextended If you lose sleep over your investments.