Now when you purchase these homes you do need to make sure that they will rent or more or for at least the same as your mortgage. You are not going to make a lot of money on the monthly rent but in the years to come these people are paying off your mortgage. If you keep these up and keep renters in them they do make for a great second income for your retirement.
So you have your first rental property and it is rented out and everything is going well. Why not do it again. That is great but one thing to understand before doing this right away. If you are typical middle class worker and getting mortgages on these homes you will need to be a landlord and collecting rent for at least a year before the bank will recognize that rent coming in as income or at all. You may not qualify for another loan right away. Just wait that year and then go for it.
Let’s look at one more scenario when working with rental properties. Lets say you have owned a property for a number of years and there is quite a bit of equity built up. You would like to sell that home and take that equity and put it into two more homes. You need to look into a 1031 exchange. That is deferring the equity from taxes by re investing it into a home that is the same or priced higher than the one you just sold. Now you can defer that money for ever if you never take it out and use it. Lets say you want to leave these homes to your kids. That is great and when you pass away so does the taxes that you deferred on these properties.
As you see there are many ways to invest in real estate. What you have to decide is do you want to invest for the quick money or the long run. Both work and I have only touched on the tip of the iceberg with this article. There are books written about these subjects and I would always suggest you read more extensively on this before you attempt it.