Hello,

I just bought a house (20% down) and I have two "tenants" renting from me. They are paying my mortgage and some. I want to get a few opinions on this scenario:

1) Live for free. Let them keep paying my mortgage. Save up to buy another property and do the same.

2) Extremely over pay on my mortgage every month and get my house paid off much quicker. Then buy more properties in 5-10 years once that is paid off.

Thanks in advance!

Zach

@Zach Shahan - This is an age old debate and you will get people arguing either said. You have to think about what your goals are? Do you want to become as wealthy as possible in as little time as possible? Or would you rather stay risk free? 

If you want to become wealthy, make the minimum payments on your mortgage (which I am guessing are at below 5% interest) and save that money for your next down payment. Remember, if you are living there you can lever much more by only putting down 3% to 5%. 

If you want to stay risk free, then pay off the loan before buying the next one. You will just be growing your wealth much much slower. If it takes you 5 years to pay off your property, at the end of 5 years, you will only have one property that is cash flowing you a whole bunch. Whereas if you own 5 properties, you'll have all 5 cash flowing you, building you equity, reducing your taxable income, paying down your loan, etc. 

Personally, I think leverage is one of the biggest advantages to real estate and I would 100% be making those minimum payments and purchasing more property. When you get to a point where you have enough. You don't care about getting wealthier and would rather just have maximum cash flow with minimum risk, then you go ahead and pay down those loans. 

@Craig Curelop that is very true. Goal is to build wealth quickly, just wasn't sure if it would make sense to have a house with no payments after 5 years (and have it roughly cash flowing 1000/mo) or have 5 properties (cash flowing roughly 200/mo/ea).  

Could you elaborate more on "reducing my taxable income" by buying/owning more properties?