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Leaven Phillips
  • Kansas City, MO
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First Duplex Rental Investment: What to do with cash flow?

Leaven Phillips
  • Kansas City, MO
Posted Jul 17 2017, 07:24

Soo... I did it! I’ve officially made my first real estate investment and closed on Friday; A duplex in an awesome area next to a new Cerner w/ a long term tenant in one unit and another long term tenant coming soon following my background check. I’ve run the numbers like a madman and everything seems to check out with a CF of about 650/mo.

But now what?

I’ve seen lots of articles about strategies with buy and hold in regards to duplexes. I can pocket cash flow in an effort to build capital for my next investment, life hack (I’m not doing this), or I could put every dollar the property generates and make double payments on my mortgage.

I’m teetering between pocketing the cash flow and investing the cash flow back into the property. The difference between the two “seem” to be the following;

-Pocket CF

PRO’s: regaining of down payment, self-generated on-hand cash reserve for emergency repairs

CON’s: TAXES!!!!!!!!!!#!@@!1!@321#1#$!!

- Put CF into mortgage payoff

PRO’s: Safe haven to protect from taxes (?), quicker payoff (possible 8/9 yrs.)

CON’s: ehhh... take longer to build for next investment?

I suck at explaining myself in some regard, but I feel my question is straight forward. What pros and cons of each could I be overlooking? What strategy should I follow to get the best benefit from this investment? What tax benefits should I be aware of, strategies that can help solidify the next investment, or other cool stuff that those of wisdom may provide?

Let me know if I left out pertinent details.

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