Investor · Nashville, TN · Member since 2016 · 15 posts · 0 votes
So currently the market I'm in, homes sell for an average price of 250K and range from 200K to 300K. I don't plan to sell any of my investment properties and plan to hold and rent as long as I can. That being said, I was wondering if I should buy a 200-250K home (that I can pay off quicker) or buy a 300K home?
My thought process is to see the rent rate for other homes near the area, see which house profits more after mortgage, figure out the average pay-off date, and go from there.
Sorry in advance if this post is a little messy, if anyone can point me to an article or provide insight on what strategy works best please let me know!
PS: The reason why I'm even contemplating this is that the first house I bought for 156K ($800/mo for the mortgage) is renting for $1,620 so I know there is more cash flow opportunity from cheaper homes.
@Peter Kim Why do you plan to pay off properties "faster"?
You're on the right track with your thinking. A simple BP calculator analysis will help to answer the question. Run analyses for multiple properties (e.g. $175k, $250k, $300k). Review the results and compare based on monthly cashflow, CoC return and IRR.
The intention is to pay it off sooner so I can cash flow the full rent amount. Granted the pay off date between a 250K and a 300K property is only a couple years but still!