All Forum Posts by: David Killough

I'd love the map, too! Please?

me too! I want to come...

Hey everybody, I have a question for you all. I have a deal that's been presented to me on an additional rental that looks to be pretty good. The numbers look good, cash flow is strong, and the house is in good shape, requiring very little to make it rent ready. I'm not really asking about the whether it's a good deal or not. In my current situation, it'd be a no brainer. 

Here's my snag: I may be changing jobs in the next 6 months to a year, and with that job change comes a concomitant substantial pay decrease. The job change would be voluntary and better for me and my family in the long term, so it's not like I'm worrying about the sky falling. It's more of a planning question. I have some money in Roth's and IRA's, the principle which could be used to pay off some of the notes on my existing portfolio. One strategy would be to do that, and for a very short term, use the cash flow to keep our lifestyle closer to what it is before the job change.

What gives me pause is the idea of taking on another payment when I really need to be able to depend on that cash flow income for a little while. I've heard Brandon Turner say on a few of the podcasts that they get to a point where they just want to let the portfolio rest and recover for a while before stoking the fire again. For those of you who rely solely on rental income, how quickly to you add to the portfolio?

I admit, it may seem Ramsey-ish, but I'm not necessarily saying I want to pay off all the notes. I have a spreadsheet with amortization schedules on all the notes, along with the properties' performance each month, so I can play different scenarios and see the effect of using the cash flow, along with my additional personal input. I also understand the details here would affect the decision. But I'm not really looking for the specific results. It's more of a philosophical question for you guys. Here are some loose variables:

If there are 3 years left on two of the loans, but you could pay them both off in a year and add the mortgage payment's worth to the cash flow column, would you then still save the money for a down payment? What if you're only 25 years into a 30 year note? I kinda feel like there's some break even point. Everybody's different, with different goals that affect the philosophy. I'd just like a few opinions. 

So, I have a few rentals, and some of them are paid off, some still have a note. I have a certain amount of money in the personal budget that is being set aside for our real estate ventures. Here's the question: would you rather save that money for a down payment on another place, or use it to accelerate the payment of another of the properties? 

I can see different viewpoints on the matter, depending on the size of the mortgages. If, say, the loans were quite large, and the money set aside would not really make that much of a difference on the time you were going to save on the life of the loan, then it makes sense to save up for another down payment. But what if you were really snowballing on these things and if you just threw all that set aside money at it and you got it paid off by middle of next year? And then you could snowball the next one and have it paid off in another year? Two more houses paid off in 18 months? 

That's my predicament (it's a good one, I feel). I'm kinda leaning toward paying these suckers off, getting about half of the houses in the portfolio free and clear, and maintaining that balance until it gets time to hang up my hat at work.

Whatcha reckon?

Hey everybody. Dave here, I've got a few properties as a part of the family business out of town with the inlaws, but I'm interested in getting started at home in Kansas City. I've got lots of questions, and hopefully can get some help around here.