Hi everyone, my partner and I are considering whether to buy our fourth rental home. My partner earns $250K annually, and I make around $135K (going to school for my MBA, fully funded). We currently live in our third home, planning to rent it out next year. All our previous homes have been rented out. We paid 20% down for each home. We understand the long-term benefits of homeownership and rental income, but we’re hearing mixed opinions about our current strategy given the market. Here are some questions we have: Is this a bad idea? Would it be smarter to invest elsewhere, like in stocks or retirement funds? What key considerations are we overlooking?
It’s a math equation. Are you cash flowing or just hoping the market increases your equity?
The renters are paying $500 more than the mortgage, and we are putting that all directly into the payment.
Save that extra for maintenance.
You need to run the numbers as if you’re buying at market value. You might do better investing elsewhere or in a different market.
Consider running a 10-year forecast comparing cash flow with and without real estate investments.
Can you cover the mortgage if a house doesn’t rent? Consider setting up an LLC for protection.
We have conventional loans, and the rent is covering everything. We don’t have an LLC; should we consider it?
With high prices and interest rates, cash-flowing might be difficult. Consider keeping cash in a high-yield savings account for safety.
If you already have good RE assets, it might be better to invest elsewhere unless you find a strikingly good deal.