Long Term Strategies

[Justin S.]

Hey BP. I currently own about 10 rentals, and am actively purchasing more. The goal is to get to a steady cash flow that pays all of my monthly bills and then some, and then benefit in the long term from mortgage pay down and rent increases. All of my loans are 5 year arms at decent rates, but I'm trying to decide what the best plan of action is long term. In the next five years, I'd like to start primarily living off of the cash flow of the properties, but my question is in regards to what the best way to benefit from the mortgage pay down is. I've heard of a number of people refinancing all the properties every five years, pulling out money, and using that money for major repairs, personal spending, etc. I've also heard of people taking the lower balances, and refinancing that over a longer period in order to lower mortgage payments and create higher cash flow. I've also considered refinancing them, pulling out the money, and buying a couple more properties with cash (paid off) to increase cash flow. My mortgage pay down is quite substantial, but as I grow older, I am certain my monthly expenses will continue to rise. I have not been in the business long enough to get to see steady rent increases, and given the slow recovery, believe it could be a long time before I really see these kinds of benefits. I'd love to hear from people who are using a buy and hold, or flip and hold strategy. How are you structuring your business to create a lifetime of wealth?