Investor · Yuma, AZ · Member since 2024 · 11 posts · 6 votes
I am 46 and planning to purchase 5 total properties over the next 4 years, After they are purchased I will be using my own money (W2 job) to pay them off and retire early. How important is cash flow and COC return now if my plan is to use my own money to pay them off, My theory is with the amount of interest i will save on the loans by paying them off early i will be saving. Am I thinking about this correctly or am I missing something?
Cheyenne, WY · Member since 2025 · 8 posts · 5 votes
1y
That’s a solid plan and it shows you’re thinking long-term about both equity growth and debt reduction. Paying off properties early does indeed save you a significant amount in interest, so your thinking is on point.
That said, cash flow and cash-on-cash return are still important—even if you plan to pay down the loans with your W-2 income. Here’s why:
* Flexibility & Safety Net: Positive cash flow provides a cushion in case of vacancies, repairs, or unexpected expenses. It prevents you from dipping into your W-2 income more than you planned.
* Scalability: Stronger cash flow makes it easier to qualify for future financing, should you decide to expand beyond the 5 properties.
* Exit Strategy: If life circumstances change and you want/need to sell or stop aggressively paying down debt, cash flow ensures the properties are still performing investments on their own.
* COC Return: Even if your focus is principal paydown, measuring cash-on-cash return helps you understand how efficiently your capital is working compared to other investment options.
So, while your strategy works, cash flow shouldn’t be ignored—it’s not just about profit, but about protecting your investment and keeping options open. A blended mindset of equity build-up and cash flow usually gives the best long-term outcome.
I am 46 and planning to purchase 5 total properties over the next 4 years, After they are purchased I will be using my own money (W2 job) to pay them off and retire early. How important is cash flow and COC return now if my plan is to use my own money to pay them off, My theory is with the amount of interest i will save on the loans by paying them off early i will be saving. Am I thinking about this correctly or am I missing something?
That's certainly one strategy.
There is no right or wrong. If it aligns with your goals go for it.
Loans are helpful because it allows people to leverage other people's money to do the same thing you're saying --- albeit on a longer timeline.
Cheyenne, WY · Member since 2025 · 8 posts · 5 votes
1y
That’s a solid plan and it shows you’re thinking long-term about both equity growth and debt reduction. Paying off properties early does indeed save you a significant amount in interest, so your thinking is on point.
That said, cash flow and cash-on-cash return are still important—even if you plan to pay down the loans with your W-2 income. Here’s why:
* Flexibility & Safety Net: Positive cash flow provides a cushion in case of vacancies, repairs, or unexpected expenses. It prevents you from dipping into your W-2 income more than you planned.
* Scalability: Stronger cash flow makes it easier to qualify for future financing, should you decide to expand beyond the 5 properties.
* Exit Strategy: If life circumstances change and you want/need to sell or stop aggressively paying down debt, cash flow ensures the properties are still performing investments on their own.
* COC Return: Even if your focus is principal paydown, measuring cash-on-cash return helps you understand how efficiently your capital is working compared to other investment options.
So, while your strategy works, cash flow shouldn’t be ignored—it’s not just about profit, but about protecting your investment and keeping options open. A blended mindset of equity build-up and cash flow usually gives the best long-term outcome.
Run the numbers as if you are not paying them off early. I'd also look for houses where they have legal suites-ie you can rent out upstairs and downstairs which will give you a higher return on your money and help reduce costs when one tenant moves out. Also get the longest term mortgage you can (eg 25 years), so you have the smallest payments.
When you go to pay them off, be strategic about it and look at mortgage calculators to determine if it is better to add a bit to each mortgage every month or to pay one down first.
Investor · Yuma, AZ · Member since 2024 · 11 posts · 6 votes
1y
@Delbert Standifer can I ask what your situation is? I've never had a goal of accumulating as many properties as possible. More interested in getting enough to fund my retirement with the rent once they are paid off. My goal is 5-6 total.
Plymouth, MI · Member since 2013 · 13k+ posts · 19k+ votes
1y
Bad strategy all the way around. CoC and cash flow is always important. That's how you pay off the rentals, not using your own cash. The cost to the investor is only the cash they put in. The more they put in, the more it costs. Negative CF just adds to the cost. Using you own cash to pay off just adds to the cost.
Why bother to invest? Your entire return depends on appreciation. You gain no benefit from added profit from CF, and you're buying equity when you pay for it. That's the tenant's job, not yours.
Lender · Irvine, CA · Member since 2025 · 27 posts · 8 votes
1y
Your plan makes sense—paying them off early will save a lot in interest and set you up for strong retirement cash flow. Just don’t ignore cash flow completely, since it gives you a cushion for vacancies or surprises. Overall, you’re on the right track, just keep reserves so you’re not stretched too thin.
Your plan makes sense—paying them off early will save a lot in interest and set you up for strong retirement cash flow. Just don’t ignore cash flow completely, since it gives you a cushion for vacancies or surprises. Overall, you’re on the right track, just keep reserves so you’re not stretched too thin.
You're not saving interest. Your tenant is paying the interest. All you're doing is paying more for the property.
@Jim Vasica good question but regardless of you paying them off early you'd still want to do full analysis otherwise you wouldn't know if you'd just be better off putting cash in a mutual fund. Essentially you're forcing cashflow by paying it off early.
Rental Property Investor · Carson, CA · Member since 2019 · 185 posts · 74 votes
1y
@Jim Vasica
Basically I have 6 properties under 60k owed to my lender. I average about $200 per month on each property ($1200 total per month cash flow). My logic is if I can help pay these off with my W2 within 6 years my cash flow should be about $500-$600 per property ($3000 per month cash flow conservatively). I plan to retire in 6 years and don’t want any more properties. I have a total of 8.
I’m not sure what to do with the extra money for my W-2 so I plan to hurry up and pay off these properties. Does that make sense or am I looking at it wrong? That’s why I am so curious about this post.
Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
1y
I think CoC return is overrated. People will sacrifice everything else in the name of CoC and that's a huge mistake, just takes a few years before they realize it. I always tell people to think about what type of properties do they wish their parents had bought 30 years ago. The answer is never: a cash flow property in the hood.
That does not mean CoC is irrelevant, I'm just a fan of a balanced approach that includes also other financial metrics and soft considerations like neighborhood desirability. Long term, you realize it's important you bought good stuff.
Rental Property Investor · Seattle, WA · Member since 2017 · 44 posts · 17 votes
1y
I would still analyze the opportunities, even if I want to pay the investment early. Think about it, if you had the cash to purchase a rental in full and you had two properties in front of you, wouldn't you compare them based on the metrics that matter most to you?
The same is happening here, you should adjust your deal analysis to your specific scenario. That said, if you're set on paying them off early, why not start buying one property at a time, and why not pay for them out right and use the snowball approach with the cashflow + W2 income?