All Forum Posts by: Freeman Schultz

I would say it depends on what stage in rentals you are in, right now I am in a growth phase so I'm in the camp leverage is king and I'll take any equity out I possibly can, cash on cash return is highest this way and it is what many of us will suggest.  Once I reach 10 houses though this is all I want, I have no plans for more and it will be time to start my paydown so my cashflow is higher without having to add the work of additional rentals.  My plan is pay down my primary first depending on the gap between that and my mortgage properties.  I'm looking for my personal to be free and clear with an open heloc so if I find something I absolutely have to buy I have this line I can tap.  From there the plan is to pay off 5 to increase cashflow.  For those that say that you are not paying the interest the tenant is this is true to an extent and I use this thought to justify my high use of leverage early on.  Remember in economics though there is no free lunch and everything has an opportunity cost.  Sure your tenant is paying the interest but if they weren't they would be paying you and you would have more money in their pocket.  For those that also feel like it is unwise to pay off the loan as you loose the interest deduction, this is also true but if you pay 10k in interest at a 22% tax rate you are still paying 7800 in interest, again money that could go to you.  To add another layer of complexity interest rates are incredibly low, do you think you could do better investing this money in something else that would yield a higher return, if so that may be a better play.  After this rant I'll leave you with a good solid maybe, it just depends on what your goals are and if you have any better uses for the money. 

If you plan on buying more rentals, you can use the money to save for a down payment rather than paying extra on the mortgage.

Let the tenant pay it off for you.  Money that comes from your pocket just adds cost to you.  The interstyou are saving doesn't exist since you are not the one paying it.

@Freeman Schultz I would file on the tenants insurance first, and then and only if they don't cover, then file on their own owner insurance policy. As always, if the damage is minimal, don't file on your insurance at all, pay the expenseyourself and then claim on the tenants security deposit.

The lease is clear that they can't sublet or sublease. I also limit parking to vehicles belonging to residents. No boats, trailers, RVs, off-road vehicles, unlicensed/unregistered vehicles, project cars, etc.

Lease is very clear absolutely no subleasing of anything for any reason without express written consent. (which you will never get) There is not a lack of parking where I am, but if there was I would probably require license plates of what is supposed to be parked there. I also require that all vehicles be legally registered and operable so they can't just leave junk cars and other things around.

Why are you getting heartburn over this?

Hey Freeman,

My advice would be to be very specific in your lease. Make them identify their cars in the lease and only allow those cars to park on the property. Maybe allow for a guest to park (if space permits) for a specific period of time (ex. 1 or 2 nights). Good luck.