Accountant · Fargo, ND · Member since 2016 · 24 posts · 17 votes
I'm currently learning all the basics to REI and one thing came to mind - is it better to take the cash flows from renting out a property and pocketing them or putting them towards the principle on the loan? I'm assuming this is a situational question, but I'd like to hear your guys' opinions.
Developer · Kansas City, KS · Member since 2015 · 84 posts · 9 votes
9y
Matt it depends on your situation. Do you have cash in the bank as reserves? Lets say you have a cash reserve of 10k. Well that is plenty to replace a roof or hvac on a sfr or small multi. Remember having a reserve gives you peace of mind.
Investor · Roswell, GA · Member since 2008 · 231 posts · 104 votes
9y
Not sure anyone can fully answer your question, because the answer is.............. it depends.
I would make sure you have at least a couple grand set aside for each property for things like an HVAC or hot water heater. After you build up some reserves then I think its ok to start pocketing some cash or putting some on the principal.
Developer · Kansas City, KS · Member since 2015 · 84 posts · 9 votes
9y
Matt it depends on your situation. Do you have cash in the bank as reserves? Lets say you have a cash reserve of 10k. Well that is plenty to replace a roof or hvac on a sfr or small multi. Remember having a reserve gives you peace of mind.
Rental Property Investor · Gulf Breeze, FL · Member since 2014 · 1k+ posts · 733 votes
9y
@Matt Finneseth - I have a post coming out on the 12th where I show how I calculate cash flow - hope you'll check it out. It'll probably help make sense of the remainder of my. I just went back and re-read and I don't talk about your question.
However, we are focusing on acquiring more properties so all but 10% of the cash flow goes into a savings account used for a single purpose - property acquisition. The 10% is our small monthly reward to help remind us of why we continue to do this.
@Matt Finneseth - I have a post coming out on the 12th where I show how I calculate cash flow - hope you'll check it out. It'll probably help make sense of the remainder of my. I just went back and re-read and I don't talk about your question.
However, we are focusing on acquiring more properties so all but 10% of the cash flow goes into a savings account used for a single purpose - property acquisition. The 10% is our small monthly reward to help remind us of why we continue to do this.
Hope this helps.
I'd like to check out your post when you make it. Could you @ me or remind me in any way when you do make the post? Thanks!