What to do with all this cash flow???

[Chidi Osuji]

My two partners and I are making about $1500 per month in Cash flow only deducting the mortgage. If we put 10% away for maintenance, repairs and vacancy, we're left with a little over $1200 per month. What to do with that extra money is a topic of conversation. We can:

1) Take the cash flow and split all of it 3 ways to help with our personal finances

2) Take no money out and aggressively pay down the mortgage over a few years (we owe ~$82K) to get it off our records, own the place free and clear and eliminate mortgage payment (P&I ~$412/mo). Re-invest in RE with the equity

3) Take no money out and accumulate cash reserves to re-invest in building #2

4) A combination of 1 & 2 or 1 & 3. 

My thinking is there's no tax benefit to paying down the mortgage principal and I could use the extra money ($400/mo) now to pay bills. But don't want to be too short-sighted.

What do we do?

[Account Closed]

How long have you been having this great cash flow? If it's only been a few months wait and see what your true cash flow is over a longer period of time. You will have good months and bad months and it seems to me you are on a good run. Which only means one thing...something is about to happen! :). Repairs, vacancy, disaster, ect. In my 9 months of investing I have already learned this lesson. It's important to have cash reserves for these unexpected maintenance costs that pop up every once in while. For me it was a flooded basement thanks to the unexpected heavy rains in Indy. If all continues to go well and you are able to build a reserve. Then I would start reinvesting the profit. But make sure you have those reserves first. You just never know when a big ticket repair is going to come crashing down on you.