Am I leveraged too much?

[Matt Hendrickson]

I'm struggling to know when I'm ready to make my next move and purchase more real estate. I currently own two properties. It has been almost one year (August 1st) since I purchased my first property. I then purchased my second property in a tight cash flow/high appreciation area. My first property has brought me a 34% net return in year one. It has been extremely successful for me. I purchased the second property 7 months ago. Between the two properties I cash flow around $1,000 per month.

I've found another property that I feel confident will bring me a similar return as the first (same city, about 3 blocks away, similar price, similar SF, same Bedroom, more baths), but I'm not sure I should buy 3 properties within 1.1 years as it will make me leveraged to the tune of about $550,000. I have sufficient funds to purchase the property, but struggle with knowing whether or not I'm growing things too fast. Here is a quick snapshot into some of my situation:

• $8,000 emergency fund for my two properties that I'm trying to grow to $15,000-$20,000
• $25,000 in liquid-able assets aside from my emergency fund
• To purchase this property I would need around $13,000

Please let me know your thoughts/experiences. I'm concerned I may be buying at a high point. The property is located in Utah which has seen strong economic growth in the past few years.

Thanks in advance!