save funds for future purchases or pay down loan faster

[Steve Kirsch]

Hello BP family,

How do you determine how much of rental income from doors should be applied to the loan and how much should go toward the next down payment of another property. If I have extra funding, should I apply that to the loan balance or again, just save for another door. I presume at some point, it is beneficial to pay down the loan. But when?

thank you

[Joe Villeneuve]

Originally posted by @Steve Kirsch:

Hello BP family,

How do you determine how much of rental income from doors should be applied to the loan and how much should go toward the next down payment of another property. If I have extra funding, should I apply that to the loan balance or again, just save for another door. I presume at some point, it is beneficial to pay down the loan. But when?

thank you

Pay down loan amount = 0%
Use for future property = 100%

Don't ever spend your cash (one time use with "zero" return)...invest it (multiple uses with infinite returns).  Paying down your loan isn't an investment, it's spending your money that you don't need to spend.  There is no benefit to it.

If you think you are saving on interest, you're wrong.  That savings occurs at the end of the loan...if you ever reach that point...and it is realized in small increments, and not in a lump sum.

All you are doing is taking your cash and "buying" equity.  That's not equity...that's just you cash no longer working for you.  All you did is transfer it from your bank, to the house.  It has the same current value.  It just looks different, and is dead.

If you keep it "liquid" in your bank, you can invest it an make it grow.

Also, paying off your mortgage isn't your job...it's your tenants job.  Don't help them.