All Forum Posts by: Justin S.

Quote from @Lakea Perry:

I am trying to connect with people in the Buffalo,  NY area. Can someone please reach out to me.

Lakea A Perry-Burton 

 We are here, what are you looking for?  There is a ton of data on this site, and a monthly meet up of investors held on the second Wednesday of every month. 

Correct. However I’d also like to get some cash flow as well. Not just appreciated value that I won’t see until I sell 30 years from now

Neither.  Why would you want to pay off your properties ASAP.  All you're doing is adding cost. That cash flow you think you're living off of is just the tenant paying you back for doing their job for them...and they would have done it for free. Living off refis is a good idea but not the way you're thinking 

Im definitely not going to pay them off asap   
can you elaborate on why living on Refis is good but not how I’m thinking?  

I view my properties as my retirement account, therefore I do not do cash out refis.

In 30 years when my retirement account is fully funded I'll cash it out and retire. In the meantime I have a line of credit secured against the portfolio which I use to obtain more properties, and then pay off the line with cashflow.

It depends on your situation. It'll take you a long time to get enough properties paid off so that each of them combined gives you enough money to retire. As you pay off each one, it doesn't do anything to decrease your mortgage payments right up until its completely paid off. It would be preferable to keep that money you would have been using to pay down debt and put it toward the next property. You'll reach whatever monthly income you want to retire on much faster by leveraging debt.

Quote from @Justin S.:

I’ve talked to a few people with different takes one this question.  If I’m looking to retire on my rental income, should I try to pay off properties ASAP and live off of cash flow or not worry about paying them off and just cash out refi every 5-7yrs and live off of that(assuming the rents can sustain the mortgage and expenses) 

You might consider a third option of paying off some of your properties to make sure you have a good cushion. You can always access that equity through a HELOC to be able to take on additional cash-flowing properties to help you support your income and pay back the HELOC. That might be a cheaper option for you in the long run when compared to a refi every time.

The most important thing for me when looking toward retirement is comfortability and minimizing stress. If you have some rentals paid off I'd think you'll have enough flexibility to find the cashflow balance you're looking for.

TLDR: set up cheap debt to be comfortable/flexible/adaptable to the market conditions

I dislike both of those ideas.

A paid-off rent property is a bad idea for a number of reasons. First, it is a lawsuit target. Second, you aren't maximizing either your cashflow or your ROI. Assuming you are in one of the many markets in the country where you can buy cashflowing properties, do the math. If you are buying them right, you can always get higher cashflow from more leveraged assets than fewer paid-in-full assets. Finally, with a few paid-in-full properties, you won't have enough depreciation expense to offset your cashflow. You will pay tax on the cashflow and you wouldn't with leveraged assets.

Living off of cash-out refis is an absolutely terrible idea.  Do you really want to be running out of cash and find, due to factors beyond your control, there is some sort of financial crisis and you can't get a loan?  Your financial empire will come crashing to the ground.

I'd just keep building your portfolio, growing with reasonable leverage and cashflow until you reach the point where our cashflow exceeds your expenses.  Its the safest and most sure way to financial freedom.

Hello Justin, thank you very much for your response

WOW - yes that would be awesome - thank you for the offering

My contact information is included on my profile, please feel free to text me and/or call me

We are planning a trip to Buffalo next Friday, maybe we have the chance to meet for coffee then,

Kindest Regards and thank you again !

Marc