I think it is time for my second property

[Bily Elliott]

Here is a little background about myself. I am 30 years old, married, have an 11 month old son and my wife is a stay at home mom. We both love this, I never want her to work, nor need her to for the money. I make pretty good money, take home pay is around $1200 per week. Our mortgage is $900 a month, taxes and insurance included. We have one paid for SFH, very small, 600sf and rent is $450 a month. I have had the same renter there since I bought the house. We have a little savings, around 10K, not counting emergency fund and our monthly checking account. I would like to buy another rental property and I have a few ideas I would like to float out and get some input. I would like to get into multifamily housing soon, would really like a quad or two and then get into small apartment complexes. I would like to keep my debt as LOW as possible. I don't want much risk. I would rather have 3 or 4 paid for units than 15 units with a note attached to them. There is a foreclosed duplex close to me. Not a great area, but not bad either. I would not be scared to be there at night, so it is a good area I would say. It is listed at 40K and has been for sale at that price for over 6 months. It would take a little work, but not much to be ready to be rented.

Here is my dilemma. I want to pay cash for things, but it will be several more years before I have enough to buy another property. If I decide I want to take some risk and get a cash out loan on my existing rental that I know will pay for this duplex should I? An 80% loan on my existing property would be plenty to buy the duplex (or another similar property in this area), fix it up, get it rented, then I can use the cash flow from 3 units to pay off the one note. I would be able to sleep well at night know that if I have a unit that is unoccupied for a few weeks I can still pay my bills. That way I don't have to get the first person who wants to rent it in the unit so I can pay the bill. It sounds like I have made up my mind that this is a good idea, does anyone have any advice?