payoff mtg to buy more?

2 Replies

Hi everyone, a little background first, we have 3 rentals and 1 primary all with mortgages. The three rentals all have equity and positive cash flow with low mortgages. We are looking a purchasing either another SF or multi-family which has put us in the spot of larger down payment 25-30%+ which we have. My partner (hubby) came up with the idea of paying off one of the rentals and purchase another property he is thinking we would get a lower down payment of 10-20% because only 3 properties would have active mortgages. Then after the purchase refi the rental that was paid off to get the money back out My take on this is why increase a mortgage by 100% (400mo to 800mo) when we can just bite the bull.. and purchase with a higher down of 25-30% and keep the mortgages at there low monthly and with 25-30% the new mortgage would also be low. I like to hear your thoughts on this What say you :)

@Marlene D'Souza as many here will tell you it is a matter of risk tolerance and also analysis. Some people use and abuse leverage to a point of extreme risk. Others avoid it to the point of decreasing growth. It comes down to your own comfort level, how large your reserves are, and your goals. Find a balance point that doesn't cause you to lose sleep.

Thanks Walt, I'll keep that in mind I tend to lean on the side of caution.

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