How Do I Scale

[David Bell]

Hi all. I'm trying figure out my first acquisition for buy and hold and I'm wondering if I go the turnkey route, how will I ever scale and get my second property considering I won't be able to get my money back out of the first one. I'm limited on funds. Any advice is appreciated. Thanks! Dave

[Anton Ivanov]

@David Bell

I'm not sure why you say that "you won't be able to get your money back" out of the first property. If you are using financing, which you should probably be, you will only be tying 20-25% of the purchase price, and if you're purchasing cheaper properties (< $100k), that's not that much cash.

If you continue saving money out of your regular income and all of the cash flow you start receiving from your first rental property, you will likely have enough money to buy your second in about a year. As your rental income continues to grow, you will be able to save down payment funds quicker and buy rental properties faster. It would help if your regular income and your savings rate grew as well in the mean time.

The process is slow at first (1-2 properties a year), but as time goes on, you will be able to grow faster and faster.

Mind you, this is just the traditional approach, which doesn't involve any crazy financing or anything else but bread and butter buy & hold.