Pay off one property or look at another?
Hello BP!
So after reading Set For Life, I am finally past the $25,000 threshold and between the $50,000 - $100,000 threshold.
One question I can't answer for myself and can't seem to find any real good substance is: Should I pay off a house prior to buying another house? Or should I fund as many investment rentals as possible?
Here's where I am at.
I am looking at a investment property selling for ~$100,000.
It's cash flow positive.
I can put down $35,000 - $40,000 to cover the initial down payment & closing costs/rehab costs/taxes/insurance.
Now, I work oversea's, so I don't have rent, food costs, bills of any kind. Debt free.
My initial plan is to get the rental property with a PM.
I can realistically pay it off in full in 4 months (April2018).
My second goal would be to look for a second $100,000 with a PM and funnel the rent from Property 1 into Property 2 to pay it down faster + with my income, have it paid off Sept 2018 time frame. Assuming I pay it off aggressively.
With 2 houses paid off I can collect 90% of the rents (between $1600 - $1700 conservative estimates) and start funneling it into a 3rd Property, possibly a MFH @ $250,000 or another $100,000 property. Post 2018, into 2019, I can probably get Property 3 paid down to 70% equity or paid off, which will set me up for 2019 to look at a Duplex / Triplex / 4-Plex (which I'd really want).
Now, thats my plan. Alternatively, I've read people recommend having 70% equity in a property prior to looking for a another property, and some just advise to 'plant as many seeds as possible', obtaining several rental/investment properties as possible. Everything with my job is uncertain, I can be fired today, tomorrow, 1 year, 2 years, 5 years. Tomorrow isn't promised to anyone. But I can say my outlook is very good as far as a longterm job with the income I make.
I don't want to stretch myself / my finances so thin that a slight bump will knock me over. I'm really curious how others build their portfolio's. Any help / insight is helpful.
Even if I fund 2 - 3 properties, without actually paying them off, the rents combined would give me between $900 - $1100 in monthly cash flow. Which I suppose isn't bad, but could be better?
I also understand that I could just put in the initial downpayments have the renters pay down the mortgage, while I continue to use my extra capital for another rental / investment property, but have all financed/loans on houses scares the bejesus out of me, even though I know it's the most touted strategy.
Appreciate any insight!