All Forum Posts by: Chris Hill

1. current cf with debt is 10k

2. cash flow excluding debt is 20k (gross rents minus hoa/insurance)

3. adding 10k a month

4. loan balance 900k

5. its a 10 yr commercial loan at 3.9.  At 10 years, i would likely have to just refinance and do it again.  The balance would not be paid off at 10 years if i dont add extra payments.  It would probably have 700 remaining at 10 years.

6.  if i add 10k cash, the 900 would be paid off in 7.6 years, no balance

i should add i get that paying 2m towards loans, to get 10-15k more in cash flow is terrible roi.  but if my goal is my guide, why not hit the goal and be done, regardless of roi?  

that made my head spin! :)  thanks for thinking that through.  for the past 10 years, I've been of that mindset, dont pay off, buy more units until the total CF once paid off reaches the goal.  Based on your instructions, at 10 years, do you feel I would have more cash flow?  Again, gross CF now is 22k.  If paid off in 10 years, lets say its 25K with rents inching up. Would taking 120k per year for 10 years and buying more doors beat 25K?  I get the argument of now i would have 50 properties all being paid off by tenants.  I just dont want to be 70 when i hit my monthly cash flow goal, i want to be 50.

joe, what would you do with the 120 a year to get to 25k CF in 10 years?

The 900k loan is a commercial loan at 3.9, that i will have to refinance at 10 years (im in year 1).  I'm assuming it would jump to 5-7%, but that guessing 10 years in the future.  It would take 7.6 years of 10k payments to have that done, which yes would take discipline.  But that would help me hit the goal.  

Thanks for posting on the original question, I think that makes sense now. 

This has morphed into payoff/dont pay off which is great too.  Joe,  I do agree with your thinking.  Years ago I paid 5k to recast a mortgage to save a few bucks.  Total waste.  However, focusing on my 45k a month goal, and that is my one and only goal, can you share with me how you would go about achieving that in 10 years?  (I'm assuming take the 120k a year, over 10 years, 1.2 total, and buy 40 homes.  At 400 a door, that would be 16k cash flow, plus my current 12, so I would be at 28k in 10 years).   

However with my plan of pay all 14 off (gross rents are 22k, net 12), and add the passive syndication of 25, I would be at 47k in 10-12 years. I'm having a tough time poking holes in that.  Sure the syndications could underperform, but so could other things.  

Please poke holes in that plan.  Again, sticking to my goal, that gets me there in 10 years.  Help me see another to get to that number in 10 years without paying them down and using the current cash flow for a different investment.  I'm open to learning.
  

Yes 45 is a ridiculous number, but why not ;)

So just confirm, monthly payments instead of one lump sum at the end of every year would pay it faster?  interest getting smaller faster correct?  Would the lump sum not put me at same interest payment 12 months later?  

Matthew thanks, that answers that question.

My goal is 45k passive a month.  With 14 rentals I’m at 12k.   I’d have to buy a lot of rentals to get to 45k, and that’s more doors to worry about (I self manage). Seems like it would take 20-30 years to get to 45.  Maybe I’m wrong? My payoff plan would achieve it in 10-12 years, with no additional doors. 

Help me understand other ways of getting to 45k in a shorter time than 12 years.  Is it possible another way?

To clarify, the extra 10k is coming all from the rental profits.  Technically yes it’s my money, and k could use it for other things, but the extra payments are definitely not from my day job.  It’s all the tenants money I would be applying to pay the loans down.

My thinking was at some point when you have sufficient doors/cash flow, then pay it all down. I’m 40 and by 50, I want to quit my day job, with more than enough cash flow.  If my “plan” works with the syndications and paying off the rentals, cash flow would be about 7x my living expenses and current spend.  

But I like the differing opinions, keep them coming.  I want to make sure I’m making the best choices. 

I’m with you so far.   I’ll be very disciplined. Unfortunately my one commercial loan will go up in 9 years, and that’s the biggest loan.  I was thinking that one first.  The rest are residential.  

Do you know of a good calculator online where I can run different scenarios versus manual adding up like I’m doing now?  I’m real curious what the best order would be.  But I’m looking at interest rate, and what the paid off loan adds to cash flow.