Three Rentals - Now What?

6 Replies

Afternoon Biggerpockets community.

Let me start off by saying, I have big dreams and passion to reach financial freedom- a place where the 8-5 is by choice, not by necessity. However, I also have a very cautious and diligent type of personality. With that said, after purchasing three rentals in the DC suburbs I have expended most of my cash. I currently have three rentals, with the following equity positions. These are conservative estimates.

Property 1 = $82k

Property 2 = $80k

Property 3 = $91k

I also have the property I reside in, which has $70k equity. I have a unused $42k line of credit on this one, since getting line of credits on the rentals could be quite difficult.

I feel stuck today, and not sure which direction to take. I am interested in continuing to add to my rentals, however, my cash-on-hand is very low on the personal side, and the cash for the rentals is intended to handle any risk/turnovers.

If any of you, have hit the position I'm in and was able to find a way to continue their expansion, I'm looking for feedback and ideas. Especially in today's market. 

I am in a similar situation but we are taking the time right now to refine our processes since we acquired several properties this year. During this time we are saving more cash and are considering partnerships if the right opportunity presents itself.
Not sure this helps but it is what my wife and are doing.

Daniel

Ive been there.  It's a matter of saving up your cash flow, and money from your income to build the down payment for the next purchase. Also at some point your risk of turnover and vacancy becomes muted because the cash flow from your other properties should make you able to absorb the vacancy without coming out of your own pocket.

How much free cash flow are you generating each month on the 3 properties, and how much are the payments?  If there isnt a substantial difference between your payment on one of them, and the cash flow generated from 2 of them, you might be overplaying your vacancy risk.

@Daniel P. - It's good to know someone else is in the same situation. I have also been focused on some debt paydown and saving to make the next purchase. Just seems to be a slow process at the moment. However, I suppose sometimes patience can also pay off. 

@Russell Brazil The three properties are not generating the cashflow I'd like, however currently the total stands around $1300 net. It's difficult to strike high numbers in the DC metro area. 

@Brandon Malone - With limited details on the post, I feel you are on super fast path. Being very cautious and diligent type of person you should have been bit easy.The general recommendation is to have one rental in first year, two in second and three in the third year and so on. Market is at peak  and some cash flow markets are showing the obvious I would work hard to stabilize these properties. 

One of my investor friend who has 1000+ properties has purchased one property this year and that too is through owner financing. Read following for more details:

https://www.apartmentlist.com/rentonomics/rental-i...

https://www.bloomberg.com/news/articles/2017-10-26...

Good Luck

Vivek

@Vivek Khoche Thanks for the feedback. I bought one property each year for the past three with the exception of this year, due to to finances. I'll definitely check out the articles. 

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