Leverage or Payoff investment properties?

Question

Everyone wants financial independence but the Big question is...

Is it better to leverage for cash flow? Or is it better to pay off a house before buying another one? Both get you to the same goal at the end but which is better? And why?

Joe Villeneuve · Answer

What do you hope to accomplish by paying off a mortgage on a rental property?

Kenneth Garrett · Answer

@Gerardo Hernandez

It depends on where you are at in your investing career.  If your getting close to retiring then you might want to live off the cash flow, then I understand paying them off. There is a big tax benefit by leveraging your properties and taking the cash flow and investing in more properties.  It depends on your goal.  Are you trying to quit your full time job and be a FT investor?  If so, you probably need multiple properties to live off of the cash flow. Paying off a property before you buy the next one is not the best way to scale your business.

Good Luck.

Joe Villeneuve · Answer

Continue to leverage and let the tenants pay down your mortgages.

Thomas Cummings · Answer

Continue to leverage to the max and build wealth until you are close to retirement then focus on paying down mortgages, starting with highest interest rate first.

Basit Siddiqi · Answer

@Gerardo HernandezDebt can be good or bad.Debt that allows you to purchase a cash-flowing property with a low interest rate sounds like good debt. You owe money but it is making you money in the long run.Debt that is used to live a lavish lifestyle at a high interest rate can be considered bad debt. If you are responsible with your debt and the debt is low, I would not rush to pay it off.

Clifford Paul · Answer

It depends on the  investor, your risk  tolerance and  where you are  in your  investment  journey.

Leverage or Payoff investment properties?

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