when did you feel comfortable purchasing your second rental property?

Question

I have been able to bank about 3,000$ off my first rental so far.  I was wondering when did most people feel comfortable purchasing another rental?  Me, myself I'm thinking @10,000 is where I'm going to feel the most comfortable.

Larry K. · Answer

as soon as I saw the numbers showing it "worked".  Meaning cashflowed and appraised well.

Walt Payne · Answer

@Nicholas Jasmine It is not a set time, it is when the time is right and when the deal is right. Even though you only have one property, take advantage of this time to set up scalable systems so that as you grow, your work load will grow at a much slower pace. When you think you are ready, start looking for a good deal. My first was actually not bought as a rental but turned into one after a while. I then set up systems and now I do almost the same work on three as I did on one.

BTW that is assuming that you also are banking enough reserve money to pay for a major capex or vacancy, etc.

Jak Dadi · Answer

I dont think there needs to be a set time between the transactions. As long as you are doing the due diligence and are able to buy the next one, you should. We bought our 1st ever property ( a 4 plex) in aug 2010, and then 2 more before End of the year. We got 2 more in 2011 and #5 and #6 in 2012. We were getting a lot of advice from friends and family that we were going too fast and we should focus on buying our primary home first but we were confident that the numbers made sense. As long as we were able to get bank financing, we kept buying. Of course , in hindsight 2 of the purchases were not optimal, but we sold them as soon as we realized that they were not a good fit for us, even though we had to take a small hit. Again, those losses were more than offset by the gain in the rest of the portfolio. Mind you, it still took us a couple of years  to figure out a good operating rhythm but we did not slow down the pace. In hindsight we should have continued to purchase in 2013 but were busy with offloading the 2. We just closed on a sfh last month in south bay and rented it out yesterday, and am already pinging my lender to qualify us for the next loan, so we can be ready for our next move once we figure out what it is. A long winded way of saying- continue buying as long as you can afford to and as long as the numbers make sense.

Annunciata R. · Answer

I sold my first ever property and was able to pay cash for my next. I felt free of something everyone else had. People talked about about their mortgage payments and I didn't have one. That was when I needed another rental. If you can make a significant dent in your borrowing or can pay a larger deposit for your next home, then its time.