Mortgage Paydown vs down payment for another property

[Mindy Templeton]

I currently own my personal home and two rentals, and I'm also currently looking for my first BRRRR deal. I used my own cash for down payments so far, and bought properties that didn't really need much work, but now I'm ready to roll up my sleeves and try to put in the work to pull my cash back out at the end.

I have currently been paying extra towards my smallest rental property mortgage and have considered doing the debt snowball method on my existing mortgages. (owe around $75k on smallest one) My mortgage payment is $600 and I have been putting an extra $500 towards it each month. I have been torn on if this makes sense, or if I should be throwing that extra $500 into savings until I have enough for a down payment on another property (this would be on top of the BRRRR deal as I have funds set aside for that deal down payment also).

It’s appealing to me to have fewer free and clear properties to maintain than to have a larger number that all have mortgages from an immediate Cashflow and ongoing maintenance standpoint. It’s also appealing to have more properties that only cashflow a little now, but as they start getting paid down, then the cashflow potential is greater. (Think 5 free and clear homes bringing in $4,000 a month after expenses vs 15 homes with mortgages each cash-flowing around $270 a month to get to that $4,000 a month, but then could be closer to $12,000 after expenses as the mortgages get paid off)

I wanted to get everyone’s input on what you would do in this scenario and why? Go for 5 or 15? Feel free to ask me questions also! Thanks

[Bjorn Ahlblad]

@Mindy Templeton Congrats on your properties! I like leverage when the market is climbing strong and dislike leverage when the market is still or going down. I also like paid for properties! Fewer and better works for me. To your continued success!