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I'd like to buy a 2nd rental property in the next few years without taking money out of the 1st one - it will be paid off in 3 years...

So you have time to shop around, for a rental AND a bank loan (if needed).

Best case scenario (and what I did 7 years ago), paid off the mortgage on my first rental property, then bought my second. Used some cash flow from my 1st property to help pay down the mortgage on my 2nd quicker. At that time I still needed 20% down even though have a FICO score of 820 and rental properties have good cash flow. Could have been that I was dealing with a smaller bank in a smallish city.

If you find your dream rental deal next week, refinance current mortgage which should free up cash flow to use on 2nd property.

Either way, good idea to start talking to bankers now and get the paperwork moving. That way you can shop around for best rates/deals and have "loan in hand" when you start talking price with sellers.

As an aside, I'm a proponent of LLCs. And I hold my separate rental properties in separate LLCs. Offers some protection but that varies from state to state.

JLC
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