Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
15y
i'm actually a fan of leverage...if you can lock in long term fixed debt right now, i don't understand paying cash from an investment perspective--put emotions and ideas of your comfort zone away and just look at the math...by paying off a mortgage early, you're effectively earning the interest rate of that mortgage on your cash...so around 6%...if you're a half decent investor, you should be able to better than that, and stay leveraged.....and btw, that was a terrible post...your profile says you're a student..maybe it's bc i don't trust a lot of people, but what's your angle??
SFR Investor · Orange County, CA · Member since 2009 · 1k+ posts · 1k+ votes
15y
Originally posted by Sharad M.:
I am confused. If you are going to write a big check, why even get a 30 years mortgage, why not just buy cash and you have no 30 years mortgage?
I agree. Unless you've been making extra principal payments, 5 years into a 30-year mortgage hardly puts a dent in your balance. I can see paying off the last 5 years of a 30-year note with one check (after all, it's mostly just principal at that point), but with 25 years to go? I don't know many people with that kind of scratch laying around.
Wholesaler · Amarillo, TX · Member since 2008 · 1k+ posts · 659 votes
15y
I think something other than B.S. is going on here.
I think its important to remember that we have a lot of members here now, and we are all have different abilities of understanding and comprehension. We have extremes in the highs and extremes in the lows. There's not much you can do about it. You are who you are. I think its important to realize that sometimes people just come to BP to belong, and they like interacting socially, and for them understanding all the fancy nomenclature and jargon that Bryan uses around here will never be in their stars.
:wink: Just messing with you Bryan.
No, actually on second thought, I'm not.
Either way, I thought Tin Lam's riddle did a good job getting everyone to talk. 26 replies in 8 1/2 hours. Tin, that's AMAZING! That may be a new record around Bigger Pockets. I like how you think, Tin Lam. Keep it up!
Rental Property Investor · Taylor Mill, KY · Member since 2011 · 105 posts · 24 votes
15y
Originally posted by James Vermillion:
Originally posted by Chris Weiler:
What weighs more a pound of bricks or feathers?
A pound of bricks weighs one pound, but you never say the weight of the feathers....
Oh I get it, a pound of bricks or a pound of feathers. Does anyone actually know the answer to this one? :mrgreen:
The only way to know for sure is to do some field tests. Drop a one pound brick on your left foot and one pound of feathers on your right foot. Then see which one hurts the most! :lol:
Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
15y
As far as paying off a 30 year note early, I really only see 2 options ... I don't like the Outdated Idea of paying on a mortgage for thirty years and then having a free and clear house...Iwont be throwing any mortgage burning parties ....my options are :
1. Pay down your mortgage as normal for a few years and then due to forced or natural appreciation refi on your equity to buy more leveraged property and have more tax writeoffs and Larger mortgage interest write off...Stole this one from rich to be fair, but I like it if it will ever be possible again in our tight lending economy...
2. Sell after a few years only to trade up to bigger / better property...again just paying off a mortgage to pay it off doesn't make much financial sense to me personally....it appeals to my emotional side of having a f & c home, but as far as investing, it doesn't really help u grow your business
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
15y
Originally posted by Ryan Webber:
No, actually on second thought, I'm not.
Glad you don't post much anymore. Just kidding....no on 2nd thought I'm not :wink:
For the record I wasn't the one that starting piling on. I asked a simple question at the beginning of the thread and everyone else did the fun poking.
Real Estate Investor · Chicago, IL · Member since 2011 · 8 posts · 2 votes
15y
Originally posted by BryanA:
As far as paying off a 30 year note early, I really only see 2 options ... I don't like the Outdated Idea of paying on a mortgage for thirty years and then having a free and clear house...Iwont be throwing any mortgage burning parties ....my options are :
1. Pay down your mortgage as normal for a few years and then due to forced or natural appreciation refi on your equity to buy more leveraged property and have more tax writeoffs and Larger mortgage interest write off...Stole this one from rich to be fair, but I like it if it will ever be possible again in our tight lending economy...
2. Sell after a few years only to trade up to bigger / better property...again just paying off a mortgage to pay it off doesn't make much financial sense to me personally....it appeals to my emotional side of having a f & c home, but as far as investing, it doesn't really help u grow your business
Yeah, but if you're going to keep the property for long-term cash flow, then I think it makes sense to pay it off early or do a mortgage with a term of less than 30 years.
You would obviously save quite a bit, but I would imagine that many investors aren't able to pay 15-year mortgage payments on all of their properties and still continue to buy more.
Real Estate Investor · Pomona, CA · Member since 2009 · 56 posts · 25 votes
15y
I find it interesting that the two posters who are strongly advocating leverage are in their 20's (I believe). Now that I'm less than a year from 50 and 65 (retirement?) only half way through a 30 year mortgage, a early paid off 30 year mortgage doesn't seem so bad despite.what the numbers on a calculator says.
Investor · Round Rock, TX · Member since 2010 · 8k+ posts · 4k+ votes
15y
My belief is that the leverage of your portfolio should ratchet down as you get older. Fully-amortizing notes are good for this purpose. This is consistent with decreasing the volatility of your equity portfolio as you age too....which is what most portfolio designers preach.
Of course....there are those on BP that claim this is non-optimal and that these people are not "serious businessmen." I guess like everything in life it depends your goals and perspective.
As I get older (I'm still fairly young by BP standards) I find that I want to decrease my leverage a bit too.
Full-Time Investor · Charlotte, NC · Member since 2009 · 2k+ posts · 1k+ votes
15y
derek, i have a few 15 years...to be honest, it's nice to pay them down quicker, but again, i'd rather have the longer term with the flexiblity and option to pay it down with extra principal payments...and witht hat extra cashflow, instead of paying that proeprty down, i could use it to buy another property which would provide better returns than paying down a 6% mortgage...
william, that's a good point...and perhaps my views will change as i age as well..then again, debit is cheap right now, no matter how old you are! :) in a few years, we may be kicking ourselves for not locking in these low rates
Landlord · Seattle, WA · Member since 2010 · 3k+ posts · 1k+ votes
15y
I'm comfortable with leverage. I have free and clear properties and leveraged properties there are advantages to both. Cash flow is better when there is no mortgage, but you have less cash to reinvest with.
I may be in my 50s, but I like the idea of using leverage to continue to grow my investments. Generally speaking though I'm not looking to be 100% leveraged. Over leveraging can be bad thing as well.
Investor · McKinney, TX · Member since 2009 · 405 posts · 160 votes
15y
I'm in the over 50 camp and am working towards 0 debt, which would mean paying off all my 30 year mortgages early.
I like the flexibility of a 30 year mortgage, but I'd like 0 debt even more.
My plan is to build cash reserves until I have enough to pay off one or all of the mortgages I hold, then decide at that point if it makes sense.
I won't write that check (or checks) until I can do so and still have comfortable cash reserves.
My goal is to own all my properties free and clear by the time I'm 60. I may change my mind when I get there, but at the very least I want that option.
Property Manager · Farmington, MI · Member since 2011 · 61 posts · 20 votes
15y
Keep in mind the basic advantage of leverage. It frees up cash to re-invest in more projects, etc. Many investors will come to a point where they are no longer interested in stockpiling assets, they want to monetize them. With all successful businesses, big and small, you will see a transition from the Growth/Expansion phase to the Mature (hopefully as a cash cow!!) phase.