New Investor, am I building too fast
Hello Everyone,
My name is Sarah, I purchased my first property this July in Onslow county, North Carolina. I have an itch to keep going but I hesitate wondering if I’m moving too fast. I had savings to put a large down payment down on my first one and for my second one I still have some savings to use and can also use equity from my first house. Although I have income, a big fear is getting too many loans, (the crazy thought of loosing my job, can’t get tenants) and then can’t make all my payments. I could use some encouraging words or realistic grounding.
thank you in advance!
Hi Sarah,
Congratulations on buying your first rental property! I too just bought my first rental property in NC. The fact that you're even asking this question is already a good sign. You're being thoughtful about your business and future. Are your fears rational though? The one that would concern me the most is loosing your job. How long have you been with your company? Do you have any reason to think there's a chance they would let you go? If you've been there a while and your in a stable industry I wouldn't stress about it. I also don't think at this point you should be concerned about too many loans. It sounds like you would have 3 if you got another property (primary residence and 2 rentals), but this really ties into your concern about not getting tenants. How was the process of getting tenants for your first property? With sites like Zillow the process has been made relatively easy. Also remember, barring a unique situation with your property, someone will always rent it if the price is low enough, so do your homework on what the expected rent will be and get it at a price that allows you to pay your mortgage and other cost even if you end up having to rent it for a little less than the market rate. I wouldn't say you're going too fast either. You bought your first house about 5 months ago. I bought my first rental house a little over a month ago, and I want to buy another one in a few months. If you do buy another one and it starts to feel like too much/too fast there's no rush to buy your third.
I think all of your fears go away too with enough of a cash reserve. If you had an extra 100K in the bank would you still have these fears? Maybe increase your emergency fund before buying more property. Doing your homework and knowing your numbers can alleviate your fears and make you confident about the path your on too. My final advise would be to go at what pace feels best for you. It's easy to see all the 19 year olds on here with 100 properties and a $10 million net worth and think we need to catch up, but we're each running our own race. Personally, I'm okay with being the tortoise over the hare.
Bets of luck and keep us posted on your progress!
Congratulations on your first purchase! This is really the biggest hurdle that most people never cross so pat yourself on the back for getting into the game!
As long as the property can pay for itself then the loan shouldn't be too much of an issue. You should of course take into account for vacancies, cap x, and repairs but as long as you do this conservatively then the debt for purchasing these assets is "good debt". Every one of these assets will add to your ability to take on more "good debt" which will enable you to buy more assets and the cycle continues.
Try to negotiate a discount in you purchase price whenever you can so that you have "built in equity" in your properties.
And remember that as long as there are tenants that need a place to rent (which covers your mortgage and expenses) then you don't need to worry about what the overall values of real estate are doing. Just keep collecting rent. :)
Hi Sarah, One of the easiest ways of scaling in real estate today is to invest in turnkey properties out of state. If you have a busy 9-5 routine but have the money to get started and don't have enough time, turnkey companies provide some of the best resources to scale your portfolio. I have used that strategy so feel free to reach out if you want to discuss.
There’s nothing wrong with scaling . Before you do make sure that each property is cashflowing before moving on to the next project . Also have reserves for each property as well
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#3 BRRRR - Buy, Rehab, Rent, Refinance, Repeat Contributor
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No such thing, keep adding wood to the fire. Don't let anyone suppress you
Hello Sarah,
Most of the time you cannot move too fast. When it comes to taking out loans, use someone else's money when you can, and take advantage of it. If real estate investing was easy and fun, everyone would do it. You need to be smart when analyzing a deal, but once it makes sense, go full force. You are not alone as we all have those worries as well, but you don't know unless you try!
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Quote from @Sarah Schneider:
Hello Everyone,
My name is Sarah, I purchased my first property this July in Onslow county, North Carolina. I have an itch to keep going but I hesitate wondering if I’m moving too fast. I had savings to put a large down payment down on my first one and for my second one I still have some savings to use and can also use equity from my first house. Although I have income, a big fear is getting too many loans, (the crazy thought of loosing my job, can’t get tenants) and then can’t make all my payments. I could use some encouraging words or realistic grounding.
thank you in advance!
Not being able to get tenants is probably the least of your worries in this game. There are a million things that can and do go wrong in this business. That really isn't one of them though.