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Ana Bejar
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Just want opinions how to invest my money

Ana Bejar
Posted Jan 28 2024, 20:25

I have 7 rental properties. Interest rates range from 4.12% to 6.5%. Net cash flow is currently $50k/yr but pre tax. I haven’t paid taxes since I bought them due to deductions such as depreciation and interest payments. I owe about $950k left. They are located in California and Nevada. How would some of you do this?

Scenario 1: Pay off all mortgages and my net pre tax cash flow is about $120k/yr. I have no more headaches, there is an umbrella policy for the properties, and I can buy more properties with the cash flow without anymore personal money. Example, I can buy a property that is $500k and pay it off in less than 5yrs and snowball more or leverage 5 other properties elsewhere and snowball. I can pay down faster if I included personal income but at this point I don’t need to.

Scenario 2: Pay off properties with the 6.5% mortgage and 4.25% mortgage. Why? The money needed for these properties would regularly require a greater than 8% return in other investments to receive the same cash flow if paid off. I would be getting about $90k/yr. The other rentals I have, I don’t need to pay off because other investments can currently generate the same amount of cashflow.

Scenario 3: Leave as is, put money in other investments, and buy more property when deals come along. Problem is that I have to use my personal income plus rentals and that would probably take a few years longer to acquire properties in the desired areas. I am almost 55 and still have kids waiting to go to college so saving will be a little more difficult. I am also less aggressive at acquiring properties since covid, I like to work less and hang out with the family more.

I have a plan, but I would like others to chime in on their thoughts. Maybe there will be new ideas I haven’t thought about.

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