All Forum Posts by: Chris Hill

Anyone else have experience like this where you decided to NOT pay off your units, and instead invested more?  Particularly where you could look back 10 years and say I’m glad I did that, and cash flow is much greater because of it?

Quote from @Paul Moore:

Hi @Chris Hill! Congratulations on your success so far. You are in an enviable position and have done better than 99.x percent of the population. 

You can clearly do the math and you got some great advice above. I'm going to answer from a different angle. I am going to ask if you really want to manage condos and other properties on your own as you enter your 50s, 60s and beyond. There is absolutely nothing wrong with managing these properties but as you know, the hassle factor can be significant. Maybe it isn't for you but I find the vast majority of real estate investors I speak with find there is a bigger hassle to expect when managing properties. If that's what you want to do it seems like you are on a great path. 

On the other hand if you, like me, and many other investors I know want to get rid of the hassle and some of the specific risks of owning and managing properties yourself, the syndication route is the obvious way to go. 

I know I am significantly oversimplifying this but I am just throwing this out there for readers to remember the hassle factor and how it should be figured into your decision. Good luck and happy investing! 

Great point.  I have self managed for the past ten years as they are close by, newer, and minimal maintenance.  But yes, when I’m older, I would turn it over to a pm.  If I hit my monthly goal, it would be more than sufficient to cover pm.

i gotta say, I’m leaning towards pay off.  I know what the end result will be, even if the cash flow is less. 

Quote from @Doug Garrison:

Hey Chris,

I did number one. 

10 years ago I started to see retirement looming. At that point in time I had about 10 mortgages on 12 properties. Most were 4.5 to 5.5 percent interest so the math was a little easier. We put in a little extra cash from outside but for the most part I just made sure that I didn't draw anything out of the rental business and used all the cash flow to pay down mortgages. Even as rates fell I resisted the urge to refinance anything and stayed with the plan. We also had a chance to buy a 12 unit package of duplexes but I resisted taking on extra debt even though the numbers worked.

Now we have 14 properties and one remaining mortgage of about 1800 per month. Nothing crazy long distance either, all are within 20  minutes of my house in my hometown.

It's not 40K per month but it's more than enough for us to live on.

This is great!  Exactly what I was hoping to hear.  Looking back, are you glad you paid them off, or do wish you would have used that cash to buy more?  What helped you make your decision?

Thanks for the responses.  Is there anyone out there who had a similar decision (pay off rentals or buy/invest more) that can look back 10 years and say “I wish I would’ve done this over that?  Ultimately that’s my question.  If I start paying them off, 10 years from now, will I be saying man I wish I would’ve used that cash for investments instead of buying down?  Paying down should reach my goal, but I prefer to learn from others experience 

Quote from @Kevin Ludwig:

Easy.... Use HELOC to buy 5 or more single family investment homes. Use the cash flow from these investments to paydown your apartment loans quicker. Let these homes appreciate in value (most homes double their value in 10 - 15 years). Sell these homes to payoff your apartment loans. Live on the beach and enjoy pure cashflow without debt. Enjoy your coconuts.

Interesting idea. I would probably have to buy out of state to pull it off, and unfortunately, I don’t have much experience there

Quote from @Jay Hinrichs:

seems to me this is just a math problem and since you have been so successful to date I dont see why you would come to the internet for advice you should be giving advice on how you were able to do so well so far.

direct ownership has least risk and most control.. 

syndication your not in control .. so there is that.        

Definitely agree with control comment.  I like option number one because it is simple, I know it will work, and I have sufficient knowledge to pull it off. I know the simple concepts, blocking and tackling, but I’m guessing there are other ways to achieve the goal faster.  

unfortunately, my advice would all deal with luck. Buying the condos when they were dirt cheap and rent has gone crazy. But I’ll take all the luck I can get.

I'm 41 and want to retire in 10 years.  I have a few options to reach my goal of 40k a month, 10 years from now, but need some help.

Background:  I have two investment types. 

One -  I have 14 condos, all with loans/leveraged. 7 of them are on one commercial loan at 3.9%  which is a 10 year term (8 years remaining) at which point I will need to refinance. The other 7 loans are all on 30 year loans between 2.5-4.8%. Current cash flow is $10K a month.   Gross rents, 24k.

Two -   I'm in 10-15 syndications.  They are all class B, and I plan to reinvest all of them after the first event, and do it again.  If those successfully do 1.5X, twice, over a 10 year period, at which point I would put all funds into a class A (9-10%) for the remaining future, they would produce $20-25K a month.  Obviously, lots of IFs there, but very possible.   I would need to continually find future deals to keep that CF going indefinitely.  I've been in them for 3 years already and all are performing above target. 

Here are my two options as I see them, and I'm sure there are others.

1.  Pay off condos - If I take all current condo CF, and snowball all 14 loans, those will be paid off in 10 years, and combined CF from condos and syndications in 10 years would be roughly $45k.  Goal reached.  I know it doesnt make sense to pay down low interest rate loans, have the renters pay it off over 30 years, etc.  But I dont want to wait 30 years.  I have the discipline to put 10k a month towards loans for 10 years, knowing the end goal is in sight.

2.  Reinvest the 10k (120K per year) into more syndications.  If the 120k did 1.5X, twice in 10 years, and then I cash out each year after 10 years, it would be roughly $30k a month.  But I would have to continually put 120k in per year indefinitely. 

MY QUESTION - which option would get me to my goal of 40k in 10 years?  I think my math is sound, but could be wrong.  Option two would appear to have greater cash flow at year 10, but I'm not as clear.  Option one is very clear to me.  Which option helps me achieve the goal faster, and with less variability.   For easy numbers, I'm leaving out taxes. 

I'm not trying to start a pay down vs reinvestment argument, just curious which route is more effective. As yes I could diversify more, CRE, STRs, flips, more SFR out of state, etc, but they aren't my wheelhouse.

Thanks for reading, hoping for people smarter/more experienced than me can chime in!

amazing calculator, thanks JJP

https://financialmentor.com/ca...

This is my thinking as well.  If i'm hitting my goal, why buy more?