Scaling My Small Rental Property Business in Madison, WI

[Lance Jenks]

Hello all. First time poster here, although I have been a lurker for a few months now. I need some advice on scaling my business.

Aside from my primary residence, I currently own two single-family houses. One of the properties is completely paid off, is valued at approximately $375,000, and rents for $1,950 per month (tenant pays all utilities). The property is older and needs some upkeep, but is located in a desirable neighborhood (very walk-able and in close proximity to the downtown). The property is likely to continue steadily appreciating in value. The second rental property (which I recently acquired and have been fixing up) is valued at approximately $580,000. It is currently vacant as I finish fixing it up. This property is located on a nearby lake, approximately 15 miles south of Madison. I have approximately $200,000 of equity in the property. I am not sure yet as to whether I will simply rent it out to someone wanting to sign a long-term lease, or perhaps Airbnb it (the former is probably the better option for now because of COVID).

I have 20% equity in my primary residence, have a good W2 job as an engineer making a bit over six figures, and the two mortgages that I do have are 30 year fixed at 3.25%. I also keep plenty of cash reserves for unanticipated repairs, etcetera.

Is there anything that I am doing wrong here? If you were in my shoes, what would you do to grow the business?

[Colin Wyatt]

Originally posted by @Lance Jenks:

Hello all. First time poster here, although I have been a lurker for a few months now. I need some advice on scaling my business.

First, welcome to the Bigger Pockets community! Like you, I was a lurker for a long time before finally making any posts and I feel like now I'm actually a part of it. 

As others mentioned, if I were you, I'd make sure my goals were well defined so I could make sure my strategy was helping me get there. To me, cash flow makes more sense than counting on appreciation, so I'd make moves to maximize my cashflow. 

Running the numbers on the lake property to see if short term rentals make sense and getting to know that market would be my first step and if it couldn't work out, I'd likely sell it to find something that fit my strategy.