Improving my business

[Chad Jarrah]

Hello Bigger Pockets community, hope everyone had a good holiday. Had some questions on my mind for a while but wasn't sure who to ask so  figured I'd pose this to the community. I've been investing in real estate for about 14 years now, initially part time, and full time for the past 5 years. I have rentals with good equity and do flips as well. I can give more details as far as numbers if needed.

I'm looking to sharpen up the way I run my business. I own some rentals outright, but have mortgages on all the rest and I use LOC's on that equity to fund flip purchases and rehabs. Is it better to pay the minimum mortgage amount to maximize cash flow and drag out the mortgage to take advantage of "free money"? Better to pay some extra principal only towards the highest interest rate mortgage of the rentals? Or only towards the mortgage of my primary residence since I gain nothing from that as far as cash flow (this is my lowest interest rate of them all). I grew up learning to be debt averse and it's been a struggle undoing that learning in favor of embracing good debt.

Also, I know I should be more business minded as far as my investments are concerned, but tough to disassociate myself sometimes since I've had some for so long and tenants are all good and set. Would it be wiser to sell everything off and buy something bigger and in one location that would bring more cash flow and greater return? I hesitate because why fix what's not broken? And who knows how long it will take me to find this larger multi unit with three right numbers. Also, a whole different animal than what I'm used to but know I have to live more out of my comfort zone. On the other side, it seems to make more sense to do that as far as present and future gains.

Thanks in advance for any input!

[Ryan Webster]

@Chad Jarrah

You need to read some of robert kiyosaki's books to understand good debt vs bad debt. And really understand what money is because it's not what most of us think it is. Debt that your tenants pay is good, debt that you pay is bad. Right now interest rates are low and money is cheap you should secure as much long term cheap debt as the properties can support. Any money you take out as debt is not tax free even if you put it in your pocket. ( all though I recommend you invest most of it. ) the rich frequently pay them selves with "good debt" and why wouldn't you its tax free. However don't over leverage your properties, when the next economic contraction occurs they will all lose value and you could creep over your loan to value and be required to make a capital call.