You might be looking to acquire your first rental property, or you might already own several; either way, how many properties you should own is an important question to consider. There’s no hard and fast answer; like most things in life, how many properties you should own depends on your financial situation, the effort you’re willing to put into them, and your goals for the properties. For many folks, one property is plenty; others might even own dozens of properties.
The first thing you’ll have to analyze is your own finances. One of the most important questions to ask yourself is how much risk you’re willing to take on. Generally speaking, the real estate market is fairly low risk; people always need a place to live. That said, mortgages can be somewhat risky; to pay for new properties, most people go into debt. You need to be willing to take on a certain level of debt in order to expand the number of properties you own rapidly; if you’re not keen on this, opt to pay cold, hard cash for a new property, and limit your expansion to what you can pay for out of pocket.
The next question you want to ask yourself is what your goals are for the properties you’re going to acquire. For some, renting out properties is a means of generating passive, supplemental income; you might use profits to go on a family vacation or to renovate your own home. For these folks, less is probably more; low-risk properties with good tenants in a good neighborhood are certainly the way to go, and expanding your portfolio may just serve to expand your risk. For others, real estate is a significant investment in their financial portfolio, to be used for early retirement or other financial security. For these folks, a larger number of properties may be better, as they’ll sell all of the properties for a large boon to their liquid assets when they retire. In some ways, this is a riskier investment; more eggs in one basket, as it were. That said, real estate does tend to go up in value, so it’s worth considering, especially if you’re already financially secure.
How much time you have on your hands is another potential bottleneck; if you don’t want to put significant effort into upkeeping several properties, sticking with one or two might be the best idea. That said if you don’t have the time, but you do have the willingness to invest, there are reputable San Antonio property management companies who can handle most of the day-to-day work of landlording for you, including maintenance, finding tenants and more. Time doesn’t have to be a bottleneck!
There are a couple of other considerations that go into acquiring new properties. First, some areas have laws with more stringent requirements on individuals who own multiple homes, in order to protect tenants and financial markets. Second, not every home you acquire will necessarily net a profit; acquiring properties on the cheap in low-income neighborhoods might seem like a good idea, but if you can’t find a good tenant who will pay rent on time, is it worth it? Make sure you have enough cash on hand that any unexpected expenses won’t lead to you losing more money than you’re making.