All Forum Posts by: Gary West

Robert,

Thanks so much. Ill take a look at it now.

J. Scott,

Thanks for the perspective. Tons of people have mentioned the multiple properties plan. Currently Im a one property at a time guy. Its just feels easier and more secure as I am nearing pay off of my first SFR. I work a very demanding full time job so multiple projects at once seems a bit intimidating. However, I realize that the math is positive if I choose to go that route. I just have to get the gumption to do it. Maybe by my 3rd or 4th property, when multiples will be the norm and not so scarey. I just want to see how much weight several properites put on me compared to the one i have now. Eventually I will need a property manager, but for now I am enjoying the lack of expenses.

Do you employee a property manager? If so did you start out that way or did you do it yourself for a while?

George,

I guess Im focused on maximizing income. If there are mortgages owed then Im paying out a portion of my earnings. Whats better than 100 percent earnings?

Please elaborate oh how less liability and no tax deductions equals more money in my pocket? I view tax deductions as a plus while your paying the mortgages off, but to my knowledge they arent as valuable as the income off of a free and clear property.

I know a lot of people share your view point, but I just dont understand how a portion of money is better than ALL of the money.

Great replies Ryan. I think this has put me in motion to make a great decision. Maybe the answer lies in paying off the debt that is most damaging and not worrying about the rest.

I do want to give you a bit of perspective on saving income vs earning income. As I am racing for retirement income (43yrs old) I can tell you that money saved on interest may not be as valuable as money earned on investments. Money saved is great when you have an ongoing income. However once that income is gone investment earnings will matter the most. If income is zero, all that debt you paid off wont matter much. So with limited time paying off debt may not matter as much as ensuring an ongoing income.

For instance if I have 10 years and only 10 years of income left from my job, I have that amount of time to get my investments going. If it will take exactly 10 years to achieve my goals without paying off other debt then my focus should be just that. If paying off the debt and then investing my income takes 9 years, then I should do just that.

See what I mean. I feel like time is running out. I feel like income is running out. So I have to do exactly the right thing.

In this scenario it might be better to secure the income and then pay off the debt once that's complete.

I just wanted to add that if I stopped investment spending right now. It would take me approximately 16 mos to be completely debt free.

This might be important if anyone is trying to do the math and come up with an answer. :o)

Ryan,

I read Ned's post. It gave me more substance on which to make my decision.

Ill base some of my calculations on that.

I am in agreement that paying off debt can be thought of as a return on your money. As he says a return on your investment. However its not an investment that pays you money, its one that saves you money.

My thoughts are that one day I wont have a job. When that time comes making money will be a priority over saving money. My perspective is that my debt may always be there but my job wont be. So I think the focus should be on solidifying my retirement and real estate portfolio and preparing for the day that my "day job" is no more.

The only way that I will pay off my current debt at the cost of postponing investing is that when the pay off for doing so will catapult me into an investment and earnings rate that will far exceed putting the debt aside for now.

So my question remains, does forfeiting investment spending today to pay down personal debt help me to achieve my goal slower or faster than keeping the debt and putting all of my current disposable income into investments?

Pay off debt VS Investment spending?
Less investment spending now VS More investment spending later?
Normal investment spending Now is (4k/month plus SFR income)

Currently my plan is to pay off my current and only property off by Feb 2014. Then Ill buy another and use my disposable income from my job and my SFR earnings to pay it off (within 24 mos). Rinse and repeat until I have 15 properties. That's 1.5 million in assets that generate an income of 15000 dollars per month.

I may change my plan at some point to acquire more than one house at a time. For now my comfort zone is one at a time.

What I have not done is sit down and figure out how long it will take to acquire 15 houses using this method. I think that is what I need to do next.

I totally appreciate you Bill.

My purchase prices will be in the 100k range. Most likely with zero down. Im expecting 1200 dollar rents.

Speculation tells me that forgetting my non investment debt will yield the fastest path to the goal. I think that was the opportunity cost you mentioned.

My spouse wants to pay off non investment debt and then use the "freed up income" to invest later. I was hoping to find a spreadsheet that would consider all possibilities and show mathmatically what each choice would do to our goals.

I mean if we pay off 2000k worth of non investment debt and then use that "freed up money" to pay off more non investment debts and so on and so forth.... AND THEN use ALL of our money to pay investment debt....would it be faster to our goals? I think not. I just want to know for sure.

After thought: Realizing that my income and ability to pay off mortgages increases as each home reaches a zero balance.

Hi Bill,

I totally see your point. Other members have pointed out that acquiring 4 homes vs one at a time is faster to the goal.

However in paying these homes off with the goal of 15 being free and clear ASAP.

Does it make sense to pay off other debt and use that "freed up" money to reach my goals OR do i forget the other debt and use all of my net income to pay off the investment mortgages?

Hello All,

I need someone who is strong in math and or spreadsheets to help me with goal setting.

Here is the situation: I want to own (free and clear) 15 properties as soon as possible.

The first one will paid off in February 2014.
Then ill buy another and put 4k per month towards its pay off. (110k loan)

Rinse and repeat x15. Each time using the income from the previous properties to pay off the next one. Add 4k per month of my own money to the payments.

As you can see each property gets paid of at an increasing rate.

MY QUESTION: Will paying off other debt and using the extra money for investing slow my progress or speed it up?

My thoughts are to not worry about my current non mortgage debt and put all my cash into investments. Can you prove mathmatically that I should pay off debt first or even concurrently with investing? Can you show me the benefits of such?

Whats faster? Paying off debt (80k at 8%interest , 9 different loans w varying amounts) using a portion of my 4k per month investment budget or focusing on investment property soley?

Which path is best/faster for achieving the 15 properties free and clear?

Thanks so much.