Should You Pay Off Debt or Buy an Investment Property?

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Episode 8 - If you have extra cash, should you use it to pay off debt or save it to buy rental properties? This is a common question, and here I give my recommendation and also share what I've done. 
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[georgerobinson]

Nobody can become financially successful overnight. They put in background work but we tend to see the finished part. Fear is a dangerous component, hindering us from taking the bold steps we need in other to reach our goals.

[hdtwalden]

Our strategy has been this: Build your investment portfolio up so that the net income from your properties can cover your monthly expenses (including your own mortgage) and THEN pay down your mortgage aggressively. But we're not getting rid of mortgage debt until we have the passive income necessary to survive without a job first.

[francisco]

Got info, playing it safe is the way to go you sleep better knowing that you rentals are paid for, thank you for insured me that I am doing the right thing for my situation

[havenpersonalcare]

The saving concept is a good approach; I do like the analogy, "it's hard to fall from the floor" thanks video.

[edwardnguyen]

"It's hard to fall off the floor" is extremely good advice. Tks Coach

[diegoave]

Isn’t rental property income taxable while debt is not? So if you refinance on a brrrr you don’t have to pay taxes on it. If you buy out right you will pay a higher percentage on taxes than interest rate. Dealing with this now! Not sure whether to refinance or not.

[bobcw]

Being interest so low. I would investment in more properties. I did a cash out refinance of my home for $400k and bought 3 properties with 20% down payments each. I still has cash flow. Best thing is use bank money to make money.

[skridiot]

Coach Carson,
Whenever I hear people say to invest instead of paying off your mortgage because the interest rate is only 3% vs 8% or 10% returns investing I wonder if that’s the whole picture. My income and debt situation is identical to the couple that asked this question. If I pay off my 130k, it frees up 12k a year. Which is nearly a 10% return. Not having to pay $1000 a month mortgage is the same as making $1000 a month, except it’s guaranteed and there’s no taxes. Am I wrong?

[frank.m]

Great info! Im still deciding. Got to years left on mortgage but I'm dying to buy a duplex. Decisions decisions.

[William]

I thought you had a perfect answer to that question

[sachamo]

What are your thoughts on buying Rental Units out of state?

[dalerobeson]

In most cases for me my rental properties when purchased i made more money in equity, than i would lose paying interest on mortgage. But i guess you just do the numbers then decide.

[ILUVGOLF]

Great advice dude! I saved for 12 years as I rented. I invested extra money into my business and schooling. In October 2020 I bought my first home and put down 110K. The mortgage was for $182k leaving me owing 72k. My mortgage payment is $523/mo and I was renting for $1200/mo. That's a huge savings per month. I am aggressively paying down the mortgage and only have 48k left after 5 months of living in the new house. I compare my risk tolerance to spicy food. I LOVE spicy food but I don't like it so much that I can not enjoy eating the meal. If it's too spicy your a$$ will pay for it later.

[MrDmacc]

What state could you get properties that cheap in houses for 150 thousand 2 +

[kasokachibanga]

Paying off your home is better, but if it’s a 30 year loan buying more properties is better.
Thoughts🤔?

[aeneaslime]

Hi. Should I take a lump at retirement to invest in a rental?

[zacharyward]

I leveraged at first for 7 years and now have what I can handle with a FT job so I’m focused on paying off 6 more single families that will replace my income. Once I have enough free and clear for my base income I may leverage other properties to grow another “bucket”. My goal is to retire from nursing before 50. Your plan should be based around your goal.

[ericcalabrese]

This is something I’m struggling with. I have an esop with an old company and they’re going to buy me out soon. If I don’t take the money it might be worth more later. On the flip side the company might not exist in 40 years which is when the contract for the esop is up. The amount is legit what I would need to pay my rental off. I figure with that I could pay off my primary faster using the free and clear rental property income. Im in my mid- late 20s and I’m certain I could pay both properties off by 33 and then start buying things cash every couple of years. Which I believe by 60 I should have a handful of paid off properties which is really all you need.

[JJ-gkri]

I've saved up $760, 000. I'm 38 years old and my goal isn't to be rich, but to be financially free - I want more free time in my life. I'm thinking about purchasing 6 rental properties for approximately $125, 000 each and living off the rental income. I'm wondering if this is a good idea? As long as I can make $3400/mo (after taxes), I'm good to go. Any advice?

[nathanc]

How many units do you have now? I'm leveraged in total $200, 000 including my home. I have 5 rental doors and building another 2 for a total of 7. Thanks