How would you guys play this hand?

Question

Hey guys and gals,

I’m 45 and working my butt off to get going on this REI journey. My present state: $260K annual salary. $6K a month toward savings. I only have $10K saved toward the $42K for emergency fund. Debt: primary residence $1800K/mth ($185K owed) 1 rental SF owe $85K, mortgage $900, rent $1500. Mattress owe $8K @ 0% int 60mth. No other debt.

I am unclear on if I should pay off rental property and there after buy distressed properties cash, pay off rental then used bank funding, or not payoff rental and cash/bank funding.

Maybe there are other options I’m missing all together. I’d like for you guys to look over my shoulder to give me some assistance to play this hand that I’ve been delt. Thanks in advance

William Baptist · Answer

@Anthony Wick it went towards paying off over $140k in student loans, car and student loan debt.

Michael Ealy · Answer

Agree with Anthony.

Save more money and buy more rentals.

$6K a monthx 12 = $72K/yr. As 20% downpayment, (while you still have a job) - that will buy $360,000 worth of properties. If you're in the Midwest like I am, that will buy 4 single family rentals and generate $4,000-$6,000 a month in gross rents (and probably around $1,000-$1,200 a month in cashflow). Also, that amount could buy you a good a 10-unit apartment building generating $2,000 a month cashflow.

So - yes - buy more rentals (with leverage) instead of having just 1 free and clear rental property.

Anthony Wick · Answer

@William Baptist

I’m looking over your shoulder and wondering where the rest of your huge salary went. Let your tenant pay off your rental mortgage. Leverage more rentals.

Anthony Wick · Answer

@William Baptist

Great job paying all that off! If you have that kind of discipline then any decision you make will probably lead to success.

How would you guys play this hand?

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