Two properities with mortgages...what should my next move be?

[Lindsay Rudolph]

I have two multifamily properties in Cincinnati OH. Fully rented. Both have mortgages. I just started traveling with my job, but would like to continue to invest in properties. I have a management company managing my two current properties. Should I save up to buy my next property with cash? Should I pay off one mortgage before I invest in another property? I would love some feedback on what my next move should be! Also, pro/cons for single family houses vs multifamily houses in Cincinnati Oh? Thank you!!

[Jason V.]

Leverage is basically the amount of debt you use to finance your property. The more leveraged you are, the higher your return will be on investment. Paying cash for a house reduces leverage and your rate of return. For example, spending $80,000 cash on a house requires no leverage and little risk, but you have a $80,000 house. Taking that same $80,000 and buying four $100,000 houses with $20,000 on each houses increases leverage and gives you $400,000 in property. Your leverage really depends on your comfort level. Some people lose sleep knowing that they are leveraged heavily while others sleep like a baby.