If the sister doesn’t pan out, is there a market for one bedroom condos? If there is, this could be good opportunity. ( bear in mind, or bexar in mind, lol!, I am but a small-time landlord, 4 little houses a dozen years in the biz. But, I do love when a good opportunity knocks. )

If tenant is a good tenant, and recommends her sister, assuming tenant has respect for you, she likely has a sister that is also potentially a good tenant. If ONE good tenant is out there looking for a place, such that they are putting feelers out there, likely others are looking. And looking. Research what is available in the tenant pool for those wanting one bedroom. If you are in a big city, and its a nice area, I would suspect demand is good.

Condo's have homeowner associations which can change the rules. Then you are at their mercy.

If you want to buy something, why not get a small place on the edge of town or in the country. There, if necessary, you can add some travel trailers that might pay rent and perhaps grow vegetables for food if needed.

I agree with everyone else.

Regarding pulling out equity in general:

I like to get a HELOC (Home Equity Line Of Credit), not a mortgage/second mortgage - so I have instant funds available when a good opportunity shows up.

I can use the HELOC money to fund a quick, cash deal.

There has been quite a few negative responses which I agree for the most part I want to share some positives - these are the things you are doing right in my eyes.

1) Cash Flow: As long as you have the great cash flow, debt is not only okay, it is wise. It allows you to use leverage which allows you to grow. It also offers a certain level of asset protection.

2) Referrals: You are getting referrals and some of them are as good as gold. You should probably reward this behavior so they are inclined to repeat that behavior. A card for an unsuccessful referral is a good start, and a $50 gift card for successful referrals is a good start.

3) ROI - You understand the importance of this which tells me you know how to forecast and understand leverage.

4) Relationship banking - I applaud you for understanding the importance of this

Now for somethings I wish you would work on:

1) Buying - You are off the MLS. I believe the majority of investors start out this way. Time to learn how to find off market deals and you will get blown away real quick on your projected ROI and especially the cash on cash returns.

2) Financing - Does your bank offer portfolio loans? There is a limit on government loan you are suppose to have. There are a couple of work arounds but a portfolio lender opens up so many more doors.

3) Types of investments - I am not a fan of buying in condos. Consider looking at other types of places instead.

4) Screening - Consider that you might be doing all the work you have for someone who might live there for only 6 months before they buy a place. Screen your referrals before acting on them.

There are three rules when buying condos...

1) Don't.

2) If still in doubt, See #1.

3) Drink a beer to congratulate yourself for following rules 1 and 2.

Imagine having to live under the constant scrutiny of a group of petty bureaucrats whose lives revolve around snooping into your business and fining your because they don't like the color of drapes your tenant installed. That's a COA (Condo Owners Association). I'm thoroughly convinced they are peopled by former Middle/High School Student Body Government persons who never let go of the glory days when they had a name badge that said "Vice President" or "Treasurer".

So to avoid all that hassle and mayhem in your life, just remember the 4th rule.

4) DON'T.

Just a thought about condo/ hoa associations- many on here espouse the idea of being ' just the manager' so they can blame a mythical boss if they need to tell a tenant no. Wouldn't the condo/ hoa function the same as that mythical boss? Certainly, one could have in their rental agreement something about violations of condo rules are tenants responsibility, if deemed tenants are at fault. Or some such, needs better wording.

Of course, a landlord would need to be well-versed on condo/ hoa by-laws, perhaps serve on the board.