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We are now in the process of buying our 2nd rental house.
In 2003 we bought a house and lived in it until 2007, we then bought another house and started renting out the 2003 house. In my opinion this is a good way to build up a portfolio of houses... live in one for a while to build up some equity, let area rents go up then move. The old house will then cashflow a little easier than if you bought it and started renting it right off the bat.
Anyway, I digress... back to the 2nd rental house, we have a contract on a Fannie Mae house in a good neighborhood/good school district. We are buying at roughly 80% of fair market value, which means it should cashflow well right out of the gate. As we race toward closing and run around all busy-like trying to get applications/documents/whatever together for the bank... We've learned to not get too excited about a deal until the last page is signed at closing. At this time I become a pest... I'm on the phone either daily or every other day with the title company/our agents/our mortgage broker asking if there are any outstanding issues that need to be addressed. I usually can tell that they are thinking something along the lines of 'don't worry, we still have *plenty* of time until closing'. Well, I would rather head off potential issues now rather than later. We had a contract on a foreclosure that fell apart the day before closing because the bank put the wrong house number on the foreclosure documents and they didn't notice until everyone scrambled to get ready for closing the next day. They then had to breach our contract and re-foreclose on the home (i.e. it had to go back on the courthouse steps again). Why wait until the very last? Get all your ducks in a row at the beginning, which is why I become a pest almost... to nudge everyone along early. I would also rather close sooner than later... because as time goes on, more things can happen to cause the wheels to fall off of a deal.
So we are now guardedly excited... this one will be a nice addition to our young and budding RE portfolio.
11/26/08 *Update* - check here for an update on this house.
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