All Forum Posts by: Justin S.

Is that above or below zero?

I agree with @Matt Motil even if you are buying this property with equity from another property it isn't necessarily no money down. The equity you are using for the loan has an opportunity cost which should be considered. That being said I would calculate what the return would be if you are putting money down and see if it works. I would also be looking for at least $100 per door per month minimum if you are calculating 100% financing.

Hi @Justin S., 

Thanks for the post!  Did you buy that house?

Best regards,

Xiaojun

If you know your market and the historical rates and you have some business sense then that should not be a worry.  My figures are over 4-5 decades.  Generally prices are sticky on the way down and if there is a true long term decline in your market it will take years to play out and that's when you adjust your plan. 

If you know your market and the historical rates and you have some business sense then that should not be a worry.  My figures are over 4-5 decades.  Generally prices are sticky on the way down and if there is a true long term decline in your market it will take years to play out and that's when you adjust your plan. 

Would you rather have a paid off $800,000 property and no cash or a $800,000 house that increases in value 9%+ a year plus rents that increase 6%+ a year AND $400,000 tax free cash in your pocket that is being paid for by rent increases?

The only argument I've ever seen from the pay off mortgage camp is to sleep better.  That does not make sense. 

@Justin S.

I wouldn't pay them off aggressively, for the reason that principle is not a tax deduction.

My goal is to accumulate so many properties, 100's of properties, create so much mayhem, so much cashflow and equity.... that is drives me crazy and I just freak out and sell everything and flee the country with millions....

Frank  

It will depend on your market.  If you have little rent growth and minimal appreciation you will probably have to pay them off to receive enough cash flow to retire.  But basically you are just getting the money back that you stored into the equity.

I have retired and am taking money OUT of my properties.  They are in high rent growth and high appreciation areas.  I just pulled out about $400,000 of equity appreciation on one property that will be paid for by the rent increases on a couple of properties.  At this point I am only accessing gains from appreciation so my net worth stays the same despite an extra $400,000 in my pocket to spend.  In a couple of years I will repeat this on another property.  And in that few years my cash flow will be increasing from new rent increases.

Paying off these properties would be foolish.