Paying Off Mortgage Quickly for More Cashflow

[Patrick Dunn]

I will preface my question by saying that I am brand new to real estate investing and I lack just about all knowledge on the subject so forgive me if this is a stupid question.  I have it in my mind that I would like to buy a relatively inexpensive duplex and live in one side while I rent out the other side.  Obviously the tenant on the other side would be covering the mortgage payment and more on top of that for rent so I would be living basically rent free.  My plan would be to put all of the tenants rent payments toward the mortgage plus payments of my own to pay off the mortgage as quickly as possible so I am making straight cash flow on the property.  After the mortgage is paid off I would buy another duplex and repeat the process.  My question is, is this doable and am I simplifying this?  Is there any downside to this approach?  Thanks in advance for any advice!

[Joe Villeneuve]

Why would you do that?  Keep this in mind.  Before you show any profit, you have to recover all the money YOU put into the property.  This is the down payment, and any other money (like adding to the payoff) you put in later.

If you put all of your cash flow in, you would be behind by the down payment for as long as it took for you and your tenant to pay off the property.

Also, you are assuming all goes perfectly, which it won't, for rent payments, no vacancies, no added costs (CAPEX, etc...), and more.

On the other hand, if you let the tenant payoff the mortgage for you, it should take you no more than 3 years for the cash flow to add up to the DP...and start making a profit.

The tenant has one job, and that is to pay off the mortgage.  Let them.