All Forum Posts by: Matthew McCarty

@Matthew McCarty and @Aileen Ouyang

Investing in anything is specific to each individual's goals. How fast do you want to scale? Are you OK with getting wealthy slowly or are you trying to do it as quick as possible?

If I were in your position, I would look for a bank or credit union that will give you a line of credit against the rental property. They are hard to find, but they do exist. The line of credit will give you the access to the equity in the property without having to pay interest on it. You pay to open it up, but you won't pay monthly unless you take money out. You will only pay interest on the amount of money you use. This gives you the flexibility to find a deal on your own timeline and to act quickly when a deal does come up because you won't need to get bank approval to use the line of credit. 

@Aileen Ouyang I understand where coming from. 

If you want to grow a portfolio, the math is clear, you must sell to Pyramid UP. 

$250mnth is not good performance. Think on it, how much does $250mnth buy for a furnace, a/c, water heater, carpets, really any reno at all? Next to nothing, right. 

So, in reality every month your moving close and closer to sucking out months/years of profits via items aging out, cap-x coming to bear. 

The real key item here is the equity. I am curious is the total equity $100k, or is that the accrued equity? 

See, when building a portfolio, appreciation is key, and the #1 factor that will dictate things. Cash-flow is for "keeping the lights on" as in covering operational expenses to defend against any need for additional capital investment. 

It's understandable to think a paid off property will "make more $" but it's just not true. Keep in mind tax's. When a property is paid off, you have all that tax, and your not getting that $, your getting a % of that $. 

But when it's equity gains, no tax, only at time of sale and if you 1031 Uncle Sam let's you continue to use that tax-$ for investing purposes. That's HUGE right there. 

Paid-off hurts, not helps portfolio growth. 

There is life stages to investing, and the math is clear that strategic debt use, strategic leverage, pyramiding, appreciation, is the wealth generator. 

Debt paydown, getting to 0 debt, that is the "reaping" phase of things. 

So I say selling is most likely your best course but regardless, to grow your portfolio stop doing 15yr terms.