Front load my mortgage or save extra money

[Marc Appel]

Thanks for your suggestions below. I bought my first rental property 3 years ago for 336K. It’s now worth 470K. Mortgage including taxes and insurance is $1750 a month, and rental income is $2500. Right now I’m paying $2900 a month towards my mortgage. I’ve been putting extra income toward the mortgage plus the full rent. I’m also putting $250 a month into savings for repairs. My question is, if I’m looking to purchase my second rental property in 3-5 years is it better to front load the mortgage and then take equity out of the house when I’m ready, or should I be saving all the extra income in a savings account. It amounts to roughly $1400 a month I could save instead of front loading the mortgage. Also note, I currently have enough emergency life savings. Thanks, Marc

[Thomas S.]

Paying down a mortgage does not increase cash flow. Equity generates a separate income stream on a property drawing income away from the property income stream. You are buying income not investing.

Equity is the most ultra conservative investment approach and generates the lowest returns on investment while also turning a asset  into a liability.