Real Estate / Resi Rentals

[legion]

In a recent thread about how much should a young guy put down on a significant purchase there were a few comments about not paying down RE rental units although paying down on your own mtg made perfect sense.

I'm in a completely different business (and I'm not a young guy) but have never sold any of the houses I've lived in and bought a couple other properties along the way. Never gave any thought to how I should treat the properties from a business perspective either. The comments in that thread were stated like "oh yeah, sure, everybody knows its better to be 10% invested in 10 houses than 100% invested in one house". Not me. Never gave it a moment's thought.

I might be the only guy that's never given this a second thought though and just might be the only guy that's actively botching it.

was planning on keeping the mtg on my house and paying that off after all else had been paid, too.

For those of us that haven't thought much about that aspect of RE investing, got any words of wisdom on how it should be done? Mine's just something I've always done after reading Haroldson's book long ago. Haven't really paid much attn to what I was doing w/ RE since... just buy, rent, and keep.

Talk to me.

 

[steveny]

No two markets are alike, no two goals are the same and not one strategy is correct.

 

[passline]

No two markets are alike, no two goals are the same and not one strategy is correct.

+1 Just work smart & hard at it. :wink:

 

[VegasSpeed]

I have two rentals and now is a good time to buy them but finding good tenants is a pain in the ass. A friend of mine brought up paying off his rental property this year. I think it is a waste of time to pay off rental any faster than normal means. Here is the thing to consider when paying something off. If you have the means to pay something off and plenty left over in the bank etc.. than it might make sense. However, if paying off a house is going to leave you strapped for liquid funds this is a bad idea. The advantage of paying off a rental is just piece of mind. That is it. When you sell your rental house the difference between what you owe and what the buyer will pay is what you make on it. Paying the house off doesn't change that at all. That just makes your funds less liquid down the road. Selling a house to get money out isn't a good idea anymore. I would keep the money somewhere else unless you have 2x the amount to pay off a house in the bank. This way you aren't losing any money you will need down the road. I hope that made sense. I am in a hurry.

 

[steveny]

I have two rentals and now is a good time to buy them but finding good tenants is a pain in the ass. A friend of mine brought up paying off his rental property this year. I think it is a waste of time to pay off rental any faster than normal means. Here is the thing to consider when paying something off. If you have the means to pay something off and plenty left over in the bank etc.. than it might make sense. However, if paying off a house is going to leave you strapped for liquid funds this is a bad idea. The advantage of paying off a rental is just piece of mind. That is it. When you sell your rental house the difference between what you owe and what the buyer will pay is what you make on it. Paying the house off doesn't change that at all. That just makes your funds less liquid down the road. Selling a house to get money out isn't a good idea anymore. I would keep the money somewhere else unless you have 2x the amount to pay off a house in the bank. This way you aren't losing any money you will need down the road. I hope that made sense. I am in a hurry.

It all makes sense except the part ....

you sell your rental house the difference between what you owe and what the buyer will pay is what you make on it.

What you make on it is the difference between what you paid and what you get for it minus all the net rents for the time you owned it.

 

[legion]

No two markets are alike, no two goals are the same and not one strategy is correct.

I'd like to review the strategies of others and adopt one that's already known to be successful. I understand that I'd need to weigh market differences but would like to avoid inventing my own strategy. Any suggested reading material?