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Updated over 4 years ago on . Most recent reply

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Jeff Douthart
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Is it better to pay interest or taxes? Right offs vs payed off

Jeff Douthart
Posted

So many thoughts on the subject. If you have no loan your cash flow is substantially more so that means more taxes. If you have a loan your paying a small fortune in interest.

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Ron Flatt
  • Investor
  • Hillsboro, TX
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Ron Flatt
  • Investor
  • Hillsboro, TX
Replied
I will give my two cents on this subject, my siblings are split on the subject.  Example: both sisters and one brother, go without financing.  They pay cash and move on.  One brother and myself tend to go with the leverage.  The reasons we use leverage:
1st:  Currently the interest rates are so low, the use of other peoples money lets me expand.  (Note:  I only go with fixed rate 15-20 year notes).  I do not want an adjustable rate, someday the rates will increase.
2nd:  Using other people's money, gives you more money to invest.  The key is not to over leverage, not I try to stay between 60-70% leverage.  Currently at 50%
3rd:  I am not as sweet of a candidate for a lawsuit, because of the leverage.  If you have a property laying out there without a loan, it is easy picking for ambulance chasers.  

The taxes are not the issue, as much as being able to increase my buying power,



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