Should I save house hack cash flow or pay off house for #2?

4 Replies

I am in the process of buying my first home with my VA loan. I will be renting every bedroom to friends and making roughly $1000 a month cash flow. I have W2 income I can live on and also save extra money with.

I plan to buy another house hack in 1 year and move into that house. Probably will do this for many years to come with VA and FHA loans.

Should I save the cash flow in my savings account or use it to pay down my mortgage and then take it out later? My goal is to accumulate as many rental properties as I can.

@Scott Diller If your end goal is to use the cash for another property I wouldn't pay it into your principle. 

Savings account might not be the best, but at least a high-yield account would be better than nothing.

@David Pere

Thank you David. I asked because I thought I heard on the BP podcast you should put it into the house and take it out later for tax saving purposes. I can’t remember exactly what they said. I may only have $10-15k equity in 1 year since I am putting $0 down. Not sure if there’s a minimum for home equity loans or HELOCs. I will look into a 1 year investment account over just savings. Appreciate the advice.

Most lenders won't loan more than 70-80% LTV for HELOCs, which means you wouldn't be able to tap into it for a while.

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

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.

We hate spam just as much as you