I’ve had a rental property for the past few years that’s built up some equity (equity = ~45-47%). I’m just about at the point that I want to use it to finance another property.
In my head, I know that it’s time to make the next buy, but am hesitant to do so.
I’m pretty sure that I can do a home equity loan and end up with 2 homes with 20% equity in each. Problem is that in my area, this works out to just shy of positive cash flow.
I know that this sounds like I’m being way conservative compared to many on this board, guess I am. The plan I have always had was not to impact household income at all in doing this, but to make the investments always carry their own weight.
I am fairly confidant that in my market/the houses I am interested in, once I can get to about 6 units they can produce enough income/appreciation on average to finance a single purchase every year thereafter.
Am just looking for opinions. Am I being too conservative to ever make any real progress, does anybody think that I should adjust the plan and be willing to put 1-200 a month into expenses for a short time until the second unit can stand on it’s own.
My plans have always been longterm. I want to build to about 15-20 units over the next 10-13 years.