Save positive cashflow or payoff mortgage faster?
Hey everyone,
I'm under contract with my first 2 unit building here, closing within the next month or so. After the deal is done, I should be positive cash flowing about $500/mo. My question is, and curiosity to what other buy and hold investors are doing, is the following.
Do I A) save that cashflow and let it accumulate to a point where I use that for a downpayment on another buy and hold property? or B) at the end of the year, do I take that $6,000 in annual cashflow ($500x12 months), and apply that to the principal on the mortgage to pay down the loan as fast as possible.
My overall goal is to build a rental portfolio where it 100% replaces my income and covers my families monthly expenses. I own another business and our household monthly income comes from this primarily, I don't need the cashflow on a month to month basis for personal expenses.
Any feedback would be greatly appreciated. I love the idea of getting the mortgages paid down as quick as possible, however, I don't want to put off acquiring additional rentals until each unit is paid off. In the course of say 10 years, having 3 units free and clear OR within that 10 year time frame have say, 20 units with mortgages on all, but all are cash flowing.