All Forum Posts by: Nik Corbaxhi

Thank you Aaron K. for your input. Definitely something to think about from a pure financial perspective.  

I currently own 2 investment properties, which are working out pretty well and have enough capital to pull the trigger on a 3rd one, 20-25% down with the rest being financed. My first 2 properties are financed 30 Year mortgages with fixed interest rates.  Current interest rates are at a point where refinancing to a 15 year mortgage might make sense, financially speaking. Here is the dilemma that I am facing and hoping to get some good insight from all of the real estate investor gurus out there:

Option 1 - 
Refinancing to a 15 year mortgage with a lower interest rate. Monthly payment will increase, which will probably eat away from my monthly cash income, but will definitely save interest in the long run, plus I would be owning these properties outright in 15 years instead of 30. (I am currently 34 years old, so some great sense of security to have them paid off by the time that I am 50)

Option 2 -
Stay with the current 30 year old mortgage, continue collecting and saving, and potentially increase the number of properties. This will be slower but steadily continue to contribute towards growing my portfolio. The equity+interest on my current properties is being paid by the tenants, so I am not affected by that much, unless there is a shift on demand for rentals in the area. 

Please feel free to share your thoughts with me. My experience so far has been that there is not one way of doing this right as there are multiple other factors that can influence one's decision. 

Payton - Congratulations on your investment. Huge accomplishment to be able to do what you have done. 

To emphasize on Tom's point above. I was always a believer of living debt free, if I could afford it. The first few years out of college, all of the extra money that I could save was going towards the principal in my personal home, in order to pay that down as quickly as possible and one day to say I was living debt free. I always saw investing in RE as a risky business until I made the leap to purchase the first rental property (20% down) near a private university. Renting to students, cash on cash return was over 20% and It took less than a year for me to realize that this was a much better use of my money than to put in my personal property. Within the next 4 years, I kept saving and repeated the process 2 more times. Now I own 3 properties with an average return of around 30% CoC. The point I am trying to make is that depending on one's situation, it might be worth to diversify your investment and purchase more properties with less down, and take on some of that debt, because it in the long run it could pay off. Other factors need to be considered in this decision but from a principle point of view, it can work.

Best of luck and keep sharing your story!