In my opinion investment properties that have combined mortgage payments higher than 50% of the scheduled income are a bit too risky, unless of course, you have adequate back-up resources o pay for negative cash flow. When you acquire properties with financing, which most of us do, you should always insist on long-term pay backs, the longer the better but nothing less than 10 years. I’m always satisfied when my mortgaged properties earn me a small positive cash profit consistently every month. Little profits allow to buy more properties which in turn provide me with additional profits! First thing you know, little profits add up to big bucks
Walt Disney was delighted to draw the first cartoons that moved on a big theater screen. He was paid just $12 apiece for each one, but he kept drawing lots of them, over and over again. Needless to say, his $12 drawings eventually made Disney a very wealthy man. It didn’t happen overnight, by any means, but when you consistently keep the profits rolling in, you have the money to take on bigger and better opportunities when they present themselves.
After many years of trying different strategies to make money with real estate, I can tell you without the slightest “hiccup” – It’s not a sound idea to buy houses that don’t pencil out on the day you acquire them or shortly thereafter! (PLEASE RE-READ THAT SENTENCE). There’s only one reason in the world that I know of to buy investment real estate, THAT’S TO MAKE MONEY. If it don’t or can’t, then I don’t want it regardless of whatever else I may like about it.
I have been “sucked-in” on FUTURE VALUE, HIGHER POTENTIAL and PRIDE OF OWNERSHIP so many times; I’m embarrassed to admit it! Fortunately for me, I learned my hardest lessons early in my career before I lost the ranch.