Good Morning BP! I have a question that I've been playing over in my mind in many ways, my question is I have 1 property with a long-term tenant that in July will renew our contract for two years. I have 20% in cash saved that I would like to use for a 2nd property, but I'm wondering if I should A.) use the 20% saved to reduce the 1st properties mortgage or B.) use that money to purchase a second property?
Any help/direction is greatly appreciated!
good question. The answer depends on your personal risk tolerance. Many investors will tell you that the logical answer is to buy another property and increase your monthly cash flow, and they buy more property when you have more cash saved up.
While I personally agree with that philosophy, I can also argue the benifits of free and clear property. So the real question is what is your risk tolerance?
To your success
me, I'm always moving forward.
Great Responses and all I have considered, I'm a big Dave Ramsey follower and enjoy what he has practiced which is the snow ball affect of paying off 1 at a time. I'm going to save the 20% for a good down payment on the second property, but to continue after all monthly expenses pay down the principal on the 1st rental property.
Free eBook from BiggerPockets!
Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!
- Actionable advice for getting started,
- Discover the 10 Most Lucrative Real Estate Niches,
- Learn how to get started with or without money,
- Explore Real-Life Strategies for Building Wealth,
- And a LOT more.
Sign up below to download the eBook for FREE today!
We hate spam just as much as you
Join the Largest Real Estate Investing Community
Basic membership is free, forever.