All Forum Posts by: Chad Duncan

In addition, if you want to analyze and compare them; 

1. You would want to figure out the total cost of the refinance

2. Calculate the monthly additional cash flow you would have, multiply it by 12 to find the annual cash flow

3. Divide step 2 by step 1. What is the return? 

Ask yourself, is that return good enough for you? Can you get more return (both in percentage and total cash return) by buying a duplex? 

Would the duplex cost more than the condo? I'm guessing most likely. If so, then the condo would be less total debt. It's usually a good idea to have a lower fixed interest rate. As well, it would take a good amount of time for you to get another property, and having a cheaper condo with the same cash flow, and no additional work makes more sense. Keep it simple, and try not to stress about getting more property. It can make you desperate and that can mean a bad investment.

If you want to ultimately live off of rental income, why would you increase your home costs? That makes your goal less attainable as you now have to cover more costs. Your taxable account is only going to be taxed on the gains, so find out from a tax advisor what the taxes will be before making the decision. Margin trading is an absolute terrible idea as it is complex, riddled with fees, and incredibly risky. I think you should figure out the cash flow you will need to accomplish your goal, then see which decision makes the most sense with that in mind.

As a conservative estimate, double the cost you think it will be and double the timeline while doing a quick proforma. A good contractor will help you figure out more accurate costs for your detailed projections. Talk to a property manager on what level of renovations you should do, that way you aren't over renovating. Doing these can help you create a detailed cash flow projection based on estimates for your specific property.