Just bought #3: am I missing something?

[Randall Williams]

Hi,  So, I just bought a second rental duplex. The structure seems bulletproof, but I wanted to run it by y'all to see if I'm missing something - thanks for any feedback you can offer. I bought my primary residence for $168K, and paid the mortgage down like a mad dog. 5 years later, I did a cash out refi (30 yr fixed, 3.9%) for $120K, which paid off the $34K left on the note, and used the dosh to buy an $82K rental duplex. The $840 mortgage and expenses are covered nicely by $750 in rent (housemate on my primary residence) and $1550 in gross rent on the duplex.  Last month, I took $90K in a cash-out refi on the duplex, and used it to buy an $80K duplex, putting $6K into renovations (ARV $110K or better.) It's rented now at $1550 as well, on a $540 mortgage payment (5.85% 5/20 ARM.) I estimate a net return of $5K yearly on each property after expenses (thanks, BP calculator!) I'm keeping the rental income liquid as emergency money until I get to a certain level, then I'll transfer it to investments - and I have some easily accessible cash to manage any big issues that come up with the property. My question is - I plan to buy two more similar duplexes next year and repeat the same process. Anybody see holes in that plan? Thanks for any help you can offer - much appreciated! - Randall

[Damian S.]

Sounds like you are doing great so far! In the future I would probably move towards larger multi family buildings, that way you can tend to just one property rather than ten different ones and at the same time keep track of all the bookkeeping on each one, maintenance schedules, etc.