New Real Estate Investor

[Drew Vrska]

I am 19 years old and I’m about to buy my first rental. Looking for tips and help to add another property!

[Randall Alan]

@Drew Vrska

Make sure you understand Debt to Income ratio.  It's google-able, so won't try to explain it here... but often the biggest challenge of buying property # 2 is that they want to see a certain track record with property # 1 in order to offset the debt expense with rental income.  (Like 2 years of verifiable rent payments) as an example.  Without that, you have to be able to not only pay your own expenses, but also your first rental plus your second rental mortgage (at least on paper) with your other sources of income (ie money from your W2 job).  This can be a tall order for many just getting started.

Otherwise, one way to get around that is to buy a a new house that you will "house hack" where you live in one side, and rent out the other side.  This is considered a personal home - even though it has rental income, so you only have to have 3.5% down frequently, not the 20% down it takes to buy a true investment property.  Once you live in it for a year, you move out, rent out both sides, and voila, you have 3 doors.  Rinse and repeat!

All the best!

Randy