Buy and Hold Investing

[Steven Wertheim]

I am having a difficult time trying to decide which is a better strategy for buy and hold investing.  Is it better to invest in as many rental homes/units as possible as I make money from my job/the rental I own or use the money to pay down the loans on a property before acquiring any new properties?

[Steve Vaughan]

@Steven Wertheim good question and congrats for being in a position to have to consider it.  Glad you have options.  A lot of folks don"t.  Just peruse all of the "I have no money but want to invest."  Talk about an oxymoron!

As I have grown in my career I have become more open to paying things off. It is so peaceful!  When I was starting out, I was just focused on growth and my risk meter was broken.  This was in the 6.5% mortgage rate world, but prices were lower.  It's not hard to beat 4% return-wise, so financially it makes sense to leverage and grow.  Just don't forget risk.  100% of foreclosures happen to a property with a mortgage on it!  

Whichever you decide to do, I would stay away from credit cards and car payments.  Once I got completely consumer debt-free, my disposable income skyrocketed.  Do what is comfortable for you.  If there was such thing as 'good' debt, it is real estate.  No wrong answer here.  If you want to grow, use leverage.  I would only have a paid off house or 2 without it.  With it, I haven't had a w-2 job in over 12 years.  Good luck and please keep us posted!