From First Home to First Rental: What Should I Do Next?

Question

I recently bought my first home in Cincinnati, Ohio for $177,000, which I currently live in. It was undervalued at purchase and appraised shortly after for $200,000. Since then, I’ve added even more equity by completing several improvements, including cosmetic updates, painting, a kitchen refresh, and new windows.

I currently have about $15,000–$20,000 saved and am looking to use that capital wisely for my next real estate investment. Given my situation, what would you recommend as the best next step in continuing my rental property journey?

Marco Fiore · Answer

I would not advise on a HELOC. Keep your equity in your home, rent it out, and do a 3.5% or 5% down owner occupant loan. You can use this on a SFR or MFR.

In my opinion, if you go MFR, I would stick with a duplex. Triplexes are usually duplexes turned into a tri, making it a very unconventional layout. Quads are great because of the more doors rented, but they are taxed at a commercial rate (usually 3-3.5% of purchase price). This jumps taxes to 10K+ in certain scenarios. Duplexes are the way to go!

SFR are great because all of the utilities and lawn care is on the tenant. Owner just covers mortgage, taxes, and insurance. Also, SF homes tend to appreciate faster. This is due to MF appreciation being based on the monthly income (rent). If rent slows, that will slow the appreciation.

Just shot you a message! Looking forward to our connection!

Min Zhang · Answer

Hi Connor! Given your equity position and cash on hand, I’d slow down just enough to be intentional. A common next step is either exploring a cash out refi or HELOC to see what access to capital actually looks like before chasing deals, or keeping your current place as is and using that $15-20k toward a small rental that cash flows day one. Biggest thing I learned early: protect your liquidity, don’t over optimize the first few deals, and build a simple system you can repeat. Happy to keep the conversation going!

Arman Ahmed · Answer

@Connor Dougherty

Congrats on your first home and the upgrades, that’s a strong start! With $15k–$20k saved, you’re in a good spot to move into your first rental property, ideally something undervalued that can cash flow from day one. Duplexes or small multi-units in solid neighborhoods are great for building rental income while keeping risk manageable. Focus on properties where cosmetic or light rehab can increase value and rent, and make sure your numbers account for realistic expenses and vacancies. This approach keeps you growing steadily without over-leveraging.

Sam McCormack · Answer

Hey Connor, I recommend the duplex route whether it be a pure investment property or a househack. SFH, to me, isn't the route to go. You could get your current house appraised to see if you can pull equity but I might wait a bit on doing that and allow it to appreciate more, to do something bigger in the future. I'm an agent in Cincinnati and NKY, shoot me a message if you would like some help

Aaron Zimmerman · Answer

If you can rent out your current place and cash flow, I would do that for sure. Before you leave, do you think you could get a HELOC on the property so you have access to your equity if you needed it?

For your next property, a house hack is a great way to keep acquiring property. $15-20k is probably cutting it close but there are ways to structure the deal so you can keep more cash in your pocket (i.e. seller credits, closing earlier in the month, etc).

Caleb Brown · Answer

Can you rent out your current one and owner occupy another? Rinse and repeat by finding a deal and one where you can add value.

Drew Sygit · Answer

Don't make the mistake of thinking every dollar you put into cosmetic upgrades will improve the property's value.

Even new windows RARELY cover their cost via a corresponding increase in value.

Why aren't you thinking like an investor and doing STR with the other bedrooms in your home or renting them to friends?

It's often a good idea to get a HELOC on a primary residence while you still occupy it. The rates and percent of equity you can tap will both be better vs once you move out.
- The challenge will be staying disciplined and only tapping it for a true emergency!

For your next purchase, make sure you keep 6 months of reserve mortgage payments on the first property.

Then, you can look into the next purchase.

Check out the MFR market, but be aware that in many markets MFR units take longer to rent than SFR.

How will you buy under market again?

Best way is to buy an ugly house and use a rehab loan to buy & finance the repairs. Do as much work yourself as you can. Rent out the other rooms when complete, helping you save more money for the 3rd acquisition.

Repeat rest of above...

Juan Yepes · Answer

Hi Connor,

How much are comparable properties selling for? Renting for?

How much do you owe on your primary and at what interest rate?

Depending on this information, you might want to do a refinance to tap into your equity and/or reduce your rate. This would be an option if you decide to hold and rent it out. If you don't have enough equity to pull out (usually you can only start taking out equity after the first 20%), then you would only have the $15-20k for your next investment property.

This should be enough regardless if you plan to live in a SFH by yourself or househack a 2-4 unit multifamily and you roll in the closing costs into the loan.

The only potential issue is if you took out a loan on your current primary that requires you to live in it for at least a year. In that scenario you might not be able to get this type of low down payment loan again until after 12 months from that purchase. In this case, you might want to wait or consider selling the property to tap into all of the equity in the house. This could be a good option if you don't expect appreciation or good cash flow if you hold and rent.

Happy to connect and help you work through your options. Good luck!

Arman Ahmed · Answer

@Connor Dougherty

Hey Connor, Dayton also has some amazing opportunities right now with lower entry prices, strong rents, and solid appreciation potential, so it’s worth keeping an eye there alongside Cincinnati. Focus on B and C-class neighborhoods with long-term rental demand and good property management in place, and you can steadily grow your portfolio without stretching yourself too thin.

Zachary Elliott · Answer

I had a similar situation - purchased my single family home in Northern KY and now rent it out. It's been a great way to build equity while generating rental income. The key is making sure the numbers work for cash flow and having good property management in place. Happy to share more about my experience if helpful! Feel free to DM me and we can talk.

From First Home to First Rental: What Should I Do Next?

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