need a push

5 Replies

I am at a delima. I have one rent property paid off and bringing in 1,050 in rent. I have a second house that cost em about 500.00 a month giving me 500.00 in income. I have my present home that I am putting $5,000.00 extra amonth in pricnipal. I thnk I should continue to do this untill I pay off my home and then pay off the second rental, save up and by the next rental cash and so on. I should have my home and 2nd rental paid off by August 2008. Is this the right frame of thinking Or should I borrow aginst the equitys and by more rentals?

my 2 cents:
(and remember, I know absolutely nothing about this, so ignore me! :roll: )
I'd pay off the residence with extra principal payments on top of mortgage payments, while making regular mortgage payments on both rentals. Then keep that extra principal payment on the residence, saving it for the downpayment on the next.
Or, reduce the extra principal only payment by half, and save the rest. But SAVE it, don't nickel and dime it to death. Some lenders used to limit the number of mortgages for people like me--not a lot of money! I don't know if they still do or not.

I was thinking about borrowing half the amount on the paid off property and buying another property and renting it out and increasing my cash flow. I don't think that it would affect paynig off the residence or the 2nd rental.

Your decision will have to based on your personal risk tolerance and investment goals. Leveraging with debt can accelerate your growth and profit potential, but it comes with more risk.

Check out the following post for some more insight on the subject.

http://forums.biggerpockets.com/viewtopic.php?t=6143

ryan,

what types of questions would you ask a bank to inquire about their best loan types to increase your ability to continue growing and avoiding seasoning issues which will inevitably slow down many "investors"?

or

what ways might an investor deal with seasoning from banks?

[leave out HML options]

What exactly are you referring to as seasoning issues?

I'm guessing you mean how long you've been doing this. In that case a smart banker is going to look at your track record. If you have some experience, some assets, and/or good credit, they may give you a little rope to see if you hang yourself or not. When I started with my banker we made sure that the deals we initially took to him were the best we had, and we did everything we could to move them as fast as possible. At first it was on a deal by deal basis, but as we proved ourselves he opened up the floodgates. My banker doesn't even look at our deals anymore. He trusts us, but we went above and beyond in proving ourselves.

In reference to finding out about their best loan programs, I would just ask them. I'd recommend getting in with the highest banker on the totem pole that will talk with you, and just sit down and talk about what he or she can do for you. I would also ask what they can do for you as you progress in your relationship (lower interest rates, longer calls, lower downpayment, etc.).