All Forum Posts by: Isaiah Cuellar

There is always more potential for cash flow in lower class neighborhoods in my opinion.  Your process seems like a good way to determine cash flow / potential of an investment property, if you have a realtor you can have them pull rental comps for a decent picture of the rental markert as well. 

Hi Isaiah,

Property deducted expenses from your rental property can reduce the taxable income generated by the property. Buy and hold rental income is generally considered a passive investment income unless you are a real estate professional. Losses from passive activities typically cannot offset active income (W-2). This is a major reason some W-2 employees get into STR, as managing STR could classify you as a real estate professional with enough activity. With that being said, it's probably advisable to use a tax professional on this topic!

Alabama has the second lowest property taxes in the nation behind Hawaii.  That might help your numbers work out a little better.

 This is some wisedom to take note of. To Joe’s point as well, if you have the ability to put $4000 extra towards principle per month, in 3 years we are talking $144k. You could easily have enough to purchase 2-3 more properties, achieve your goal of $1500/mo cash flow and grow your net worth exponentially. 

If the CD rate is lower than the mortgage rate, you pay the extra towards the mortgage. If you haven’t closed on the property yet, a 15 year mortgage usually has a lower rate. If you are solely interested in the cash flow you can continue to pay extra towards the mortgage and if your situation changes refinance it as a 15 year mortgage at a lower rate on a lower rate which will lower your payment and increase your cash flow. If your plan is to have more properties, don’t pay extra here. If it’s simply to have one super safe, no payment property to help you pay your bills and work less, you’ve got a decent plan. 

It will be almost impossible to lose the property and the cash flow will still be at least slightly tax advantaged because of depreciation. You don’t want to lose the property if t government decides tenants don’t have to pay again. I’m sure almost every landlord who lost their properties in the last 4 years was expecting their tenant to pay for it. 

Good luck. 

It depends on what your interest rate is and what return that you can get in the market.

If the mortgage interest rate is 5% and you can get 7% by investing, then you should not pay off the mortgage.

If the mortgage interest rate is 7% and you can get 5% by investing, then you should pay off the mortgag

It depends if your loan has a prepayment penalty. Most DSCR loans will carry a 5-year penalty, so I suggest waiting until that is over before paying more than your minimum payment , or you will incur additional fees.