Dilemma: Save up to buy 1 more or begin paying down properties more aggressively

[Kuriakos Mellos]

HI everyone:  I keep on going back and forth on this but want to ask others who have made moves in either direction this year (or gone down the route of paying off properties early in general).  The higher interest rates and more challenging (but not impossible!) landscape this year has given me the opportunity to really pause and look at my portfolios performance.   I cut costs,  maximized efficiencies, raised rents accordingly (that alone will increase my cash flow this year by about $1,000 per month); and streamlined landscaping/pest control/rehab work and on.  That being said,  I started calculating the interest paid per month and was a bit astonished. Yes, I am fortunate that a lot of the properties are 3.75% or lower, but I do have 4 above that, and all with mortgages under $140 K.  (One is $61K, one is $124 K, one is $133 K and one is $134K).     

I got into this journey to provide a easier retirement for my parents, and provide cash flow for them. I do enjoy my day job and hope to stay there as long as possible, with the hope of peeling off by 45 (just turned 40 this month) and after that would consider maybe using the cash flow to benefit me a bit.  Beginning to pay down properties more aggressively will help get to not only having more income coming thru each month; but also help me when I am ready to maybe buy more down the line with less mortgages tied to my name?   Yes, I know I will lose some of the tax benefits by doing so; but owning something out right sounds appealing to me.  Has anyone done this?  I do intend to keep saving a little on the side for another future purchase but realistically don't see that happening till maybe January? 

Help! Perplexed, confused and banging my head against the wall.

K-Man

[John Morgan]

Quote from @Kuriakos Mellos:

@John Morgan appreicate the insight. What is OPM mean?  I've thought about doing cash out refis as well but does that only work with a primary or would it be doable with an investment home that has quickly appreciated?

OPM is other people’s money. Leverage your way to wealth with only 20% down on each property. Yes, I’ve done 7 cash out refis (6 on rental properties) to scale up. I usually buy 3 new rentals for each cash out refi. I use the cash for 20% down payments and all my closing costs. I’ve bought 12 rentals like this. And they didn’t cost me a penny out of pocket. It’s an easy way to buy rentals for free. Learn the power of leverage and scale up. Your ROI off a 20% down payment will be around 60-80% when you factor in principal pay down on your mortgage (which your tenant is paying off), 5% normal appreciation and monthly cash flow. Many of my houses are earning 100-140% ROI when you factor all that in on a small 20% down payment. You can pull out equity every 4-6 years and keep repeating with cash outs. My goal was only 10k/month cash flow then eventually pay them off. But it’s too much fun to keep buying and letting my tenants pay these things off.