Skip to content
×
Try PRO Free Today!
BiggerPockets Pro offers you a comprehensive suite of tools and resources
Market and Deal Finder Tools
Deal Analysis Calculators
Property Management Software
Exclusive discounts to Home Depot, RentRedi, and more
$0
7 days free
$828/yr or $69/mo when billed monthly.
$390/yr or $32.5/mo when billed annually.
7 days free. Cancel anytime.
Already a Pro Member? Sign in here

Join Over 3 Million Real Estate Investors

Create a free BiggerPockets account to comment, participate, and connect with over 3 million real estate investors.
Use your real name
By signing up, you indicate that you agree to the BiggerPockets Terms & Conditions.
The community here is like my own little personal real estate army that I can depend upon to help me through ANY problems I come across.
Innovative Strategies
All Forum Categories
Followed Discussions
Followed Categories
Followed People
Followed Locations
Market News & Data
General Info
Real Estate Strategies
Landlording & Rental Properties
Real Estate Professionals
Financial, Tax, & Legal
Real Estate Classifieds
Reviews & Feedback

Updated over 5 years ago on . Most recent reply

User Stats

24
Posts
18
Votes
Michael Mulroy
  • Rental Property Investor
  • Cleveland, OH
18
Votes |
24
Posts

Strategy for Property #3

Michael Mulroy
  • Rental Property Investor
  • Cleveland, OH
Posted

I am looking for advice on adding my next property. I currently have two condos with the following financials:

Unit 1: cash flows positive $235/mo, with about 10 years left on the loan ($23k remaining at 3.84%)

Unit 2: Land contact, negative cash flow -$400 with 3 years left ($33k at 5%)

At this point, I have been focusing on gaining equity because the first unit is cash flow positive, with such a low rate. My second unit is gaining $750 in equity a month, so it's basically been a forced savings. That said, I would like to focus on my next move. Should I pay down the 5 year note faster, to get a $500 positive cash flow on the property, so a $900 swing? 

Obviously I want to have positive cash flow, but do I be patient, keep saving for my 3rd property or pay down aggressive and then pull equity to buy the next property? Using the equity later will be a higher rate and longer terms, hence my dilemma 

Thanks!

Mike

Most Popular Reply

User Stats

13,365
Posts
19,402
Votes
Joe Villeneuve
Pro Member
#4 All Forums Contributor
  • Plymouth, MI
19,402
Votes |
13,365
Posts
Joe Villeneuve
Pro Member
#4 All Forums Contributor
  • Plymouth, MI
Replied

So you're asking if you should buy $265/month (approx $3200) at a cost of $23k?  You realize two things, right:

1 - That $23k comes out of you pocket, and would be paying for something you tenant is already doing for you. and,,,

2 - It will take you 10 years to recover that $23k you spent unnecessarily (see #1)...which means it will take you 10 years (if all goes perfectly) before you start to see a return on your spending.

...and (OK, 3 things)...

3 - I'm sure you could spend that $23k on another property as a DP and get an immediate return better than what you would have gotten in 10 years.

Loading replies...