Two properities with mortgages...what should my next move be?

3 Replies

I have two multifamily properties in Cincinnati OH. Fully rented. Both have mortgages. I just started traveling with my job, but would like to continue to invest in properties. I have a management company managing my two current properties. Should I save up to buy my next property with cash? Should I pay off one mortgage before I invest in another property? I would love some feedback on what my next move should be! Also, pro/cons for single family houses vs multifamily houses in Cincinnati Oh? Thank you!!

Why not keep on investing in multis with reasonable leverage?  Seems like you have something working for you right now with the two multi's and management company.

What do you mean by reasonable leverage? I just am not sure financing wise what would be a good option...should I pay off one of the mortgages first before buying another property or should I go ahead and try to get financing on another with the two outstanding mortgages? I would be able to afford a single family home by fall in cash...I just don't know which would be the wiser route at this point.

Leverage is basically the amount of debt you use to finance your property. The more leveraged you are, the higher your return will be on investment. Paying cash for a house reduces leverage and your rate of return. For example, spending $80,000 cash on a house requires no leverage and little risk, but you have a $80,000 house. Taking that same $80,000 and buying four $100,000 houses with $20,000 on each houses increases leverage and gives you $400,000 in property. Your leverage really depends on your comfort level. Some people lose sleep knowing that they are leveraged heavily while others sleep like a baby. 

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