What to do next to increase my cash flow

[Kristian L.]

Hi all. Need some advice :)  

My current situation....
4 rental condos and 1 house. (1 more house that is going to be a rental but live it at the moment) 
Equity (4 condo + 1 house) ~ $370K
Cash flow per month - $1900
Cash on Cash avg. 13.9%
Manage it all myself. 

My main goal is to get a "passive" income of around $6000 in around 7 years. Quit my W2 job and just manage the rentals. 
Have around $80K cash.

So what to do next to get to my goal the fastest. 

I can.. 
Option 1: Just focus on paying off the loans I have now and get some of them paid off and increase cash flow
Option 2: Focus on getting the next rental property, use the cash I have as down payment. Could be either a house, two condos or maybe a duplex. Would love to get a four-plex and live in one unit myself. But in Vegas there are no four-plex's I would live in :) 
Option 3: Sell what I have. Prices are good and interest low. But then I have to pay capital income tax or do a 1031. Doing a 1031 would be great (done that before) but getting a good deal in Vegas is a little hard now.
Option 4: Sell everything and get into commercial, maybe a 8+ unit complex. But that would probably have to be somewhere else that Vegas. I see there some better options on Arizona. 
Option 5: ??? any recommendations. 
 

[Kenny Dahill]

@Kristian L., you know the market and scenarios best, do a deep level proforma for each scenario.  Trust your gut with the right choice.

My quick feedback:

• Opt 1 Pay off loans:  Debt can be a great thing.  Helps with taxes, tenant pays P&I and it frees up your money.  Don't pay your mortgage off in small doses, i.e. monthly increases.  If you do this, wait until you can pay a mortgage completely off.  Also, how are your rates?
• Opt 2 New Rental:  This sounds like it gets you closer to your passive income goal.  Can you utilize equity from your other rentals?
• Opt 3 Sell:  You never lose money when you make a profit.  But if your goal is passive income, make sure you reinvest that profit into the next deal.  People can get a solid portfolio with 1031's.
• Opt 4 Commercial:  Commercial is attractive for many reasons.  Mostly, you can force appreciation.  If you like to add value to your rentals, this could be a great opportunity.  More risk, more reward with commercial.
  
  If you decide to purchase another rental, figure out how to get a bigger property.  10% is 10%.  However, 10% of $1M is a lot more money than 10% of $500k.  If you want to add appreciation/networth into your outlook, having a higher worth property can help generate more wealth as well.