Updated over 9 years ago on . Most recent reply
Put cash flow towards principle?
This is something that I haven't seen yet as far as an investment strategy. I've thought about taking the cash flows from the rental and putting it towards the principle on the loan in order to expedite acquisition of equity as well as mitigate perhaps thousands of dollars in interest payments over the shortened term. Is this a sound practice, or is it not talked about because there is a better strategy?
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#5 All Forums Contributor
- Plymouth, MI
The quick answer is "no". You're an investor, not a property "babysitter". What you propose defeats the purpose of buying a rental.
1) You buy rentals for cash flow. If you're going to give the money right back, why bother?
2) Equity is a trophy on a rental. What is it good for...nothin'. You can't access it unless you sell it, or refi.
3) Here's the big one. You are not making the payments on the interest...the tenant is.