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Updated over 7 years ago,
What am I doing wrong? Or am I doing things right?
I currently have 4 rental properties. 2 are older (30+ years) in an area that is around 300,000 people and growing, but a little lower cost.
2 are in a major metropolitan area and > 10 years old requiring minimal repairs and, although they cost more, the rents are a lot higher and pay almost the same cash on cash with more appreciation potential than the 2 older homes. These homes are in a primo prime location and would be expected to appreciate well over time (although I didn't purchase them for just that purpose - I actually worry about them appreciating too much and my not being able to raise rents fast enough to offset property tax growth).
All 4 of these homes provide positive cash flow each month and if repairs and vacancies are minimal, generate about $3,000 of net profit per month in total.
I have approximately the following equity in each home:
- Older home 1 - 50%
- Older home 2 - 25%
- Newer home 1 - 30%
- Newer home 2 - 30%
All have had full occupancy the last couple of years. I haven't been through a recession or a big downturn since I've become a landlord, so I don't know what to expect there (any insights would be appreciated).
I work a regular job that pays well and could have all 4 of these paid off in the next 6 years if things go average. Sooner if things go well and much sooner (maybe 3 years) if other investments do really well. I plan on having the cash saved up in the next 6 years to pay them off.
Until then, I am keeping these on 30 year notes ranging from 3.75% to 4.125% and make the minimum payment each month
They cash on cash around 8-9% for the newer homes and around 12-14% for the older homes.
I am not planning to add any new houses to my portfolio in the next couple of years while I build up my powder again. I could technically quit my job and live off the profits from these 4 homes today but I am more risk averse than that and would like to have more cash reserves after they've been depleted a bit to acquire these homes.
I'm always amazed how people are able to build a portfolio of 40, 50, 100 homes and haven't quite figured out how to do that unless most of those homes are under $100,000 (or much less) and they've been doing it 10+ years, but you do hear of it on the Bigger Pockets podcast.
So, given all that:
1) What am I doing right?
2) where am i taking on too much risk?
3) what am I doing well?
Any thoughts or recommendations would be greatly appreciated. Thanks!