Ideal Purchase Frequency

[Kyler J Sloan]

I know this is going to vary by market and personal circumstances, but I cannot help but notice that it is the prerogative of most investors to buy cash flowing properties as aggressively as possible, and as soon as one acquires leverage. Why not save longer for premier properties rather than obtaining multiple average properties?

i.e. Rather than getting two 500 K properties in a market where that is the average home value, getting one 1 M dollar property 2-3 months later after saving during that time. 

In general, it seems smarter to me when starting out to extend one's buying frequency regardless of one's income to perhaps once every 6-12 months. Particularly with STR's, there is less headache with management, and greater pride in the quality of what you offer, as it will stand out from the competition.

Has anyone else had similar thoughts? 

[Nathan Gesner]

Quote from @Kyler J Sloan:

There are pros and cons to both. When growing, leveraging your money on as many units as possible is the most likely path to successful growth, but it comes with extra work and problems.

Read a few books on real estate investing to learn the power of leverage. I like the Unofficial Guide to Real Estate Investing. Here's a very basic explanation to get your juices flowing:

Assume a house costs $200,000 and rents for $1,500. The market appreciates 3% per year.

Pay cash for one house and rent it for $1,500. After five years you'll have earned $90,000 in rent income and gained $34,000 in appreciation.

Buy four houses with $50,000 down on each. Mortgage payment is $1,000 on each house, so you're essentially earning $500 per house or $2,000 a month. After five years you'll have earned $120,000 in rent income and gained $136,000 in appreciation. You've earned $132,000 more by splitting your money and leveraging it.