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Updated over 5 years ago on . Most recent reply
![Michael Mulroy's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/654187/1621494773-avatar-michaelm514.jpg?twic=v1/output=image/crop=390x390@12x0/cover=128x128&v=2)
Strategy for Property #3
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
![Joe Villeneuve's profile image](https://bpimg.biggerpockets.com/no_overlay/uploads/social_user/user_avatar/149462/1621419551-avatar-recaps.jpg?twic=v1/output=image/crop=135x135@22x0/cover=128x128&v=2)
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.