just bought #3: Am I missing something?

[Randall Williams]

Hi, 

So, I just bought a second rental duplex. The structure seems bulletproof, but I wanted to run it by y'all to see if I'm missing something - thanks for any feedback you can offer.

I bought my primary residence for $168K, and paid the mortgage down like a mad dog. 5 years later, I did a cash out refi (30 yr fixed, 3.9%) for $120K, which paid off the $34K left on the note, and used the dosh to buy an $82K rental duplex. The $840 mortgage and expenses are covered nicely by $750 in rent (housemate on my primary residence) and $1550 in gross rent on the duplex. 

Last month, I took $90K in a cash-out refi on the duplex, and used it to buy an $80K duplex, putting $6K into renovations (ARV $110K or better.) It's rented now at $1550 as well, on a $540 mortgage payment (5.85% 5/20 ARM.)

I estimate a net return of $5K yearly on each property after expenses (thanks, BP calculator!) I'm keeping the rental income liquid as emergency money until I get to a certain level, then I'll transfer it to investments - and I have some easily accessible cash to manage any big issues that come up with the property.

My question is - I plan to buy two more similar duplexes next year and repeat the same process. Anybody see holes in that plan?

Thanks for any help you can offer - much appreciated!

- Randall