I have wondered the same thing. I live in Tucson and it seems that you either have many properties or 1. I think it takes a good amount of cash to get started but then like a snow ball the more you have the more you can get. A guy I work with last year had 4 houses now he has 8. His trick is using the owner occupied status so he moves every year. Once he puts that house up for rent he uses all the profit from his other properties to pay that one off. Me I have 2 rentals and it is a serious pain in the butt to try and come up with the 20-25% down payment on an investment property! Another tip I have learned is go through a mortgage broker vs. a bank, much better deal and they may be a little more flexible on lending. I was told by my lender there is no way you can be owner occupied in a multifamily home, talked to a different one and they said it was no problem at all.
The investors I know all had other business ventures to move their money around. They started out with one or two properties, flipped them (made a killing on them), and then reinvested. They usually purchased foreclosures or bought handyman specials, fixed them up and then sold them for a significant profit. Many of them had construction companies to be able to fund the fixer uppers.
It's all about the snowball affect. Work your tail off, or get lucky early in your career and build your empire over time. If you were able to acquire just a single rental property per year from the time you are 25 to the time you are 40, you will have built a very solid base for your future. If you do it full time you would certainly be able to do more than one per year.
Just like compound interest in a retirement account, the earlier you start the better off you will be.
The Money Track
Independent Financial Advice & Personal Financial Planning
Good question, I am sure we have some posters here that either wonder the same or have some answers for the rest of us.
If anyone has any insight, please do share...