When did your part time rental business depend on rental income?

[James H.]

This question is directed mostly toward those of you who have a "day job" and real estate is only supplemental to your income and/or retirement fund.

I will likely be buying a third property (for a total of two rentals and one primary residence) by the end of this year. At that point, I will be a the absolute theshhold of debt that I can manage with my paycheck if (in theory) my two rentals went vacant for a prolonged period of time. Any rentals I acquire after my third property will absolutely have to perform to pay for itself. So, future property number 4 will be a on a different psychological level in regards to risk.

So, I was just wondering, have any of you come up to this threshold I have described? Was it even something you considered? Did it change your approach to subsequent properties? Did it cause you to have larger cash reserves? Did you decide to form an LLC?

Really just looking for food for thought for an investor approaching this point in his/her portfolio life.