Cash Flow: Pay Off Principal, Reinvest, or Income

[Phillip Stagg]

So the way I have my real estate loans structured is a 7/25 intrest loan with a balloon payment after 7 years.  The discussion keeps coming up as to wether during those 7 years I should put any cash flow towards the principal, take the cash flow and reinvest in more homes, or use the cash flow as income.  I would only have to refi the homes at the end of the 7 years for another 7 and keep doing this.  Ideas??

[Joe Villeneuve]

Reinvest it first, expanding the base amount of money you have to invest.  This allows you to invest in multiple properties at the same time.  Once you have the base large enough, or as large as you can handle at one time, you use that cash flow as income.

I would never help my tenants pay off my mortgage for me.  Why would I when they are doing such a great job of it all by themselves.  If I use my cash flow to do this, I am turning a possitive cash flow property into a negative one.