How to maximize rental income from 1st property for 2nd property?

Question

Hi BP,

When I made the purchase, I spent well below my "purchase power" if you will because I wanted to ensure my 9-5 job could cover not having a tenant (which at the time wasn't an issue because there was a tenant). Short run down, I purchased a place and sat on it for a year plus until I discovered the upside to real estate outside of "saving on taxes".  So, the apartment got rented but for the last year plus my income has just been covering all expenses. The tenant that was there shortly moved out and I didn't move as quick as I should.  I feel like I just got myself a raise since now I'm getting rent payments each month!

Quick edit : I think right now I'm looking mostly for buy and hold. Not sure if that matters to either of the questions below.

Couple quick questions:

1. With the new "income" is it better to save the cash for the next property (higher yielding savings account, Alley at 1%) OR aggressively pay down the mortgage and gain more equity in the apartment to utilize for property #2 (110k left at 3.875%)?

2. Is it worth going to a real estate investing club in a state you're not investing in? Seems like i'd be wasting people's time once I say "Well, i'm looking for properties in Fl. I'm just here to...chat?"

Thanks BP!

Leor

Sebastian Marroquin · Answer

#2

I don't think you will be wasting your time: you will be surprise how many invest in other places too. and you can mastermind with them just like you are doing on here.

You may even meet people with relationships in the areas that you are investing in and they may bring you deals that you would otherwise not know about.

Open up to new adventures and new people- learn from them but always be weary because some people may have a hidden agenda.

#1: you have good options: you may want to drop the money on the current home as you may always refinance later and pull the money out anyway...

also think about a rainy day: what if you lose your job... what if you need renovations: i.e. plumbing... etc

always have reserves: 6 to 12 months of mostly mortgages incase something happens: once you have the reserves- think about leveraging into the 2nd and 3rd properties (maybe a duplex that will be almost the same purchase price but will yield more money.

Better - find off market homes to buy: let me know if i can se you up with someone that can help you with that in the city you are investing in!