Getting from one to two

Jackson, Mississippi
Starting Out
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Getting from one to two

Stephen Lusk
Member since 2026 · 3 posts · 0 votes

Hello everyone,

31 years old here. I inherited my parents’ paid-off home at 26, lived in it a few more years, and a year ago I got married and bought a house closer to my wife’s work.

Now that we’ve had a baby, I am going to rent my old house out. I already have my first tenant lined up and am doing a deep clean on the house right now.

My long-term plan is to show a few years’ worth of positive cash flow on the books before buying my second door. In twenty years I’d like to have enough rental properties to make this my sole income.

So. What should I do?

Thanks!

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Ashish AcharyaBusiness Member
CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
7h

Stephen, I think you’re taking a smart approach by getting the first property operating well before jumping into number two. Since this was your home and is now becoming a rental, I’d make sure you get the tax and bookkeeping setup right from day one. Keep the rental income and expenses separate, document the date the property is placed in service, and make sure the basis and improvements are properly tracked for depreciation.

I'd also be careful about using "positive cash flow" as the only benchmark for buying the next property. I'd want to know what the property produces after repairs, vacancy, CapEx, taxes, insurance, and reserves, and then look at the tax picture separately. A property can have positive cash flow while showing very different taxable income because of depreciation. Since you're thinking about eventually replacing your income with rentals, this is also a good time to start thinking about the tax strategy alongside the portfolio strategy, rather than waiting until you have several properties.

Get the first one running cleanly, build your reserves, understand the actual numbers, and then let that experience help determine when property #2 makes sense.

Feel free to DM me, I’d be happy to send over a few resources that might be helpful.

[email protected]941-914-7779
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  • Ashish AcharyaBusiness Member
    CPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
    7h

    Stephen, I think you’re taking a smart approach by getting the first property operating well before jumping into number two. Since this was your home and is now becoming a rental, I’d make sure you get the tax and bookkeeping setup right from day one. Keep the rental income and expenses separate, document the date the property is placed in service, and make sure the basis and improvements are properly tracked for depreciation.

    I'd also be careful about using "positive cash flow" as the only benchmark for buying the next property. I'd want to know what the property produces after repairs, vacancy, CapEx, taxes, insurance, and reserves, and then look at the tax picture separately. A property can have positive cash flow while showing very different taxable income because of depreciation. Since you're thinking about eventually replacing your income with rentals, this is also a good time to start thinking about the tax strategy alongside the portfolio strategy, rather than waiting until you have several properties.

    Get the first one running cleanly, build your reserves, understand the actual numbers, and then let that experience help determine when property #2 makes sense.

    Feel free to DM me, I’d be happy to send over a few resources that might be helpful.

    [email protected]941-914-7779
    INVESTOR FRIENDLY CPA®5241 Reviews
    WebsiteView Page
    TaxMD® | Tax Planning Software
    WebsiteView Page
    1Reply
    • Stephen Lusk
      OP
      Member since 2026 · 3 posts · 0 votes
      3h

      Thank you! I will send you a message.

      0Reply
  • James JonesPro Member
    Investor · Collierville, TN 38017 · Member since 2017 · 707 posts · 517 votes
    3h

    You're in a better spot than most — a paid-off rental is a cash machine. Don't wait 'a few years' to buy the next one. Let that rent season 6–12 months, then refi it on a DSCR loan at 70–80% LTV and use the proceeds as the down payment on property two.

    The math that matters: the next one has to hit the 1% rule — monthly rent at least 1% of all-in cost. In the South that still works. I buy Memphis single-family under $100K, my 3BR+ Section 8 rents run $1,395–$1,950, and I refi at 70–80% LTV to pull most of my cash back out.

    The real bottleneck isn't time — it's deal flow. Spend those months building your buy list and learning your ZIPs cold, not watching cash pile up. One paid-off house is security. The second one is a system.

    1Reply
    • Stephen Lusk
      OP
      Member since 2026 · 3 posts · 0 votes
      2h

      Thank you for the insight! I’ve considered long-term strategy a bit. I’m thinking of targeting small to mid-sized towns that are not part of a metropolis. The only real city in Mississippi is Jackson. In my early years I really don’t want to jump from Small Town USA real estate to the big leagues, plus property taxes in small markets will be more friendly to me. With homestead exemption, the land tax on my house w/ 2.5 acres was under $150 for the year. Without homestead, it’ll be closer to $300.

      0Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    1h

    I think you have a solid plan. I would focus on moving out and renting your former house out. Once you have that stabilized I'd explore tapping into the equity of the paid of house to invest in another.

    0Reply
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