Make extra payments to mortage, pay down debt or save for down payment?

[James H.]

My question is: With the relatively small amount of disposable income I have, is it better to separate some of that off to make extra payments to the house mortgages to pay them off sooner, or should I just let the mortgages sit for 30 years and save save save for down payments for new properties? I am 32 years old and just getting started and would love the idea of quitting my day job to do real estate investing. But after you calculate the cash flow after expenses on a rental, I would need about 20 houses to comfortably support myself assuming each house was "throwing off" 300 a month - which from my research requires a very very discounted purchase price. If it takes me two years to buy a new house, I'll be 70 years old purchasing my 20th house. How do those of you who have 20+ properties get said properties? What can I do to accelerate my acquisitions and control my debt burden at the same time? What is a good blue print to follow now that I am already 32 years old and am just now purchasing my second house and have the first house just breaking even (hopefully).

Background:

I am in the process of buying my second house. This second house will make a great rental but we will have to live in it for a couple years due to FHA financing. We will rent our first house, but it won't make much positive, if any cash flow. It could easily go negative depending on the tenants we get. However, this is our first step to acquiring a new property and then multiple properties. Once we can move out of the second home, it will rent for good cash flow.

I work as an engineer and make a modest salary, but have about 50,000 in student loans. No debts on cars right now (but the wife's car is in pretty bad shape!). No big cash reserve (mostly eaten up from new property, say 5,000). Mainly enough cash to protect the rental property-barely and not much of an emergency fund, but that is the risk I choose to get a great deal on a new house in this market. I was not thinking like an investor when I bought the first house and realize I made a mistake - but that is bound to happen right? I can't sell that house for what I owe on it and even if I could I could not recover the money I invested to improve it (new windows and hadri plank siding).

So now you know my situation. I want to acquire more properties with good cash flow. But I don't want to be over leveraged. With my current earnings, it takes me about two years to accumulate a new property because (A) I need that much time to save 20 percent and to show rental income from previous property to satisfy DI ratio, or (B) it takes that long to qualify for new owner occupancy financing and also show the two years rental income from previous property to satisfy DI ratio.

I hope that when my wife graduates her income will help with rate of savings and I, in turn, will also be making more money. In the mean time, I have to assume job earnings will remain the same and just take future improvements as a bonus.