How do people who already own a house buy another one?

We used to own 2 rentals in the Denver market but have sold them this year (due to the housing market there being INSANE).

The first house was our first home we owned. We are not stupid and bought something we could easily afford on 1 salary - now this is anecdotical because we both made 60k+ at the time. One thing we did here though is this house was solely in my name (we weren't married).

Then I got a new job making more money on the other side of town. So we moved and bought a new house that that we could easily afford on 1 salary (this house was bit more expensive, but not by much, and this house was solely in her name - still not married).

Instead of selling the first house - we rented it out. It also helped that rents in Denver are insane as well. We had a total mortgage/hoa payment of $1000 (we put down 20% on purchase) and rented it for $1600/month.

Then I got a big promotion on my job that had us move to Phoenix (where we are now - have been here for 1 year). Since our first house had been a success, we rented the 2nd one out too. We rented it for $1500/m while it had a $1200/m total payment.

When we moved to Phoenix, we bought a house here (in my name).

Then the housing market in Denver EXPLODED.

Sold the first house for a 75k+ gain and paid 0 taxes because on since it was solely in my name due to a section 121 exchange (principle residence for 2 out of the last 5 years).

With the success of the first one, we said fuck it, let's sell the other one. Our tenant wanted to move out and in with her boyfriend (which we were cool with because she always paid on time and was a good tenant), so we put the 2nd one on the market and made a 50k+ gain. Paid zero taxes on this one because it was in her name (section 121 exchange again).

The reason who's name is on the note is important is because you can only do a section 121 exchange once every 2 years. We got around this by not being married. Didn't plan it, just worked out.

Notes -

  • We had a property manager handle our renters. Single guy who did this for a living, no corporations.

  • We bought the first house in 2010. Second house in 2012, third house in 2014. Everything was bought right after the crash. Denver real estate started booming in 2014. AZ real estate started picking up right after we bought the house here - so hopefully we will get lucky on the current one too.

  • Again, the selling for positive gains was all luck. However, we had no issue bringing in positive cash flow each month. We sold because of the gains and because it's easier to make money off securities and dividend stocks than real estate, IMO.

Again this is purely anecdotal, but it's how we owned multiple rentals. Good luck.

/r/RealEstate Thread