Adding Additional Properties to the Portfolio

[paul85s10355]

Hi Fellow Investors



I am 25 years old have a good job with good steady income. I have 1.5 rental properties as I split my last one with my father. The one cash flows about 300 a month and the other about 400. My question is how do you going from owning 1 or 2 to these people you see with 30 or 40? Are you better to pay your mortgage down and pull out equity. Pay the minimum so you can have a tax advantage and just stockpile cash? Anyone have any good strateigies or experience?



Thanks

 

[GaryMcGowan]

The quick answer



> Education

> Mortgage Broker who understands how to take you from 1 to 5 and possibly more.

> You NEED to have partners. Partners who will provide the capital and mortgage qualifying. There are very few who can buy 30+ properties on their own.

> You will need to learn the art of the Joint Venture. (education)

 

[Thomas Beyer]

To buy more properties you need more cash. Cash comes from a variety of sources: your own jeans, the seller, people that know you, people that do not (yet) know you. Try all 4 ..

 

[paul85s10355]

So am I better to pay down my mortgages and then pull the equity out, or just pay the minimum mortgage and keep the cash on the side?

 

[Thomas Beyer]

Both are good options .. Depending on when you need the money .. Paying down a mortgage has the benefit of lower interest cost overall but at the expense of not having this cash readily available. You have to decide what is more important to you, in light of your overall goals or desires in life ! What is better: roast beef, pork, chicken, fish or vegetarian burger ? They all have their benefits or drawbacks !

 

[bizaro86]

[quote user=GaryMcGowan]> You NEED to have partners. Partners who will provide the capital and mortgage qualifying. There are very few who can buy 30+ properties on their own.




I agree with everything in your post except for this. I realize I can't do so from experience, since I do not own 30 properties at present. However, I have a perfectly realistic plan to do so without partners.



Having partners allows one to purchase properties at a more rapid rate, but not having partners doesn't preclude buying more properties. It will require more time/saving etc, but is certainly possible.



There are upsides and downsides to both approach, but as Thomas mentions with his culinary analogy, not every course (of action) is for every person.



Regards,



Michael

 

[jonathanb]

Well said Michael,



I'd say buying properties rapidly without partners was easier a few years ago than it may be today- but i still maintain that you can aquire a decent portfolio of investment properties on your own if you do it right.



The question is, if you believe that real estate will continue to increase in value and rent will also continue to increase, then does it make more sense to purchase additional real esate with partners now, instead of years down the road when prices and rent are potentially higher?



Jon

 

[bizaro86]

[quote user=jonathanb]I'd say buying properties rapidly without partners was easier a few years ago than it may be today- but i still maintain that you can aquire a decent portfolio of investment properties on your own if you do it right.



The question is, if you believe that real estate will continue to increase in value and rent will also continue to increase, then does it make more sense to purchase additional real esate with partners now, instead of years down the road when prices and rent are potentially higher?





A portfolio without partners is certainly possible. It is possible (even likely) that one might make more money buying more properties with partners, especially in a boom market. On the other hand, running a larger portfolio comes with more work. And taking on partners adds other types of risk (reputational, relationship, etc). Some may be willing to take on that work and risk for the incremental reward, and some are not.



Regards,



Michael

 

[jonathanb]

agreed



jon

 

[housingrental]

A big risk with partners, though not often discussed, is forced sales at the wrong time.

Many paper millionaires have been reduced to little from having partners that make poor choices. Be very careful with who you JV on. Real estate does not always go up, does not always operate profitably, and your partner might not always act rationally or in your best interest!

 

[paul85s10355]

all great advice..thanks

 

[qdsouza]

Hello Paul,



What's your goal from owning a portfolio of real estate? If we understand more about what you are looking for you might have better success with regards to strategies towards success. Its not a race to own x number of properties but the end goal that's most important.



Take Care,



Quentin

 

[Thomas Beyer]

[quote user=housingrental]Be very careful with who you JV on. Real estate does not always go up, does not always operate profitably, and your partner might not always act rationally or in your best interest!


Some true words of wisdom from Adam .. finally !!

 

[housingrental]

Thank you for the kind thoughts Mr. Thomas

The sun must be shinning out west today



[quote user=ThomasBeyer][quote user=housingrental]Be very careful with who you JV on. Real estate does not always go up, does not always operate profitably, and your partner might not always act rationally or in your best interest!


Some true words of wisdom from Adam .. finally !!

 

[Thomas Beyer]

It is indeed .. And apparently in Waterloo, too !