Strategy: Build A Passive Income By Paying Off Mortgages

[Arturo Fernandez]

Hello,

Mortgages take a big chunk of cash flow out of holding a rental property. Assume that each year an investor acquired a triplex or quad. Assume that the cash flow produces 100-200 after mortgage is paid and operating costs are allocated. Assume that the properties acquire equity and can be refinanced to pull out more money for investing.

If after 6 years all properties have cumulatively appreciated in value and cash flow has been set aside in savings, would it possible to either pay off one triplex/quad or simply buy one for cash so that no mortgage exists?

Can this process be repeated until 3-4 cash units have been purchased?

 If this process is repeated a few times couldn't an investor sell the other properties that carry mortgages after he has enough multi family units to support his living expenses?

Thoughts and feedback appreciated!

Arturo

[Ali Boone]

Yes, but you can do that still with the mortgages. Your returns on your money will actually be higher if you keep everything leveraged (dependent of course on your comfort levels).

Check this out to understand the math-

https://www.biggerpockets.com/renewsblog/2015/04/1...

So if you buy into the numbers (pun, ha), you can do exactly what you are talking about but using the equity towards down payments on more mortgages. 

With the money you use to pay off a house or two, you could fund several more.