Payoff or Buy More (by Dan [TX]) Jun 20, 2019 9:39 AM|
Payoff or Buy More (by Deanna [TX]) Jun 20, 2019 9:42 AM
Payoff or Buy More (by myob [GA]) Jun 20, 2019 10:05 AM
Payoff or Buy More (by David [NC]) Jun 20, 2019 10:07 AM
Payoff or Buy More (by myob [GA]) Jun 20, 2019 10:32 AM
Payoff or Buy More (by S i d [MO]) Jun 20, 2019 11:05 AM
Payoff or Buy More (by myob [GA]) Jun 20, 2019 11:23 AM
Payoff or Buy More (by Robert J [CA]) Jun 20, 2019 12:41 PM
Payoff or Buy More (by myob [GA]) Jun 20, 2019 2:16 PM
Payoff or Buy More (by WMH [NC]) Jun 20, 2019 2:35 PM
Payoff or Buy More (by MMIT [VA]) Jun 20, 2019 3:21 PM
Payoff or Buy More (by AllyM [NJ]) Jun 20, 2019 3:54 PM
Payoff or Buy More (by myob [GA]) Jun 20, 2019 4:00 PM
Payoff or Buy More (by Richard [MI]) Jun 20, 2019 9:00 PM
Payoff or Buy More (by BRAD 20,000 [IN]) Jun 20, 2019 11:48 PM
Payoff or Buy More (by nhsailmaker [NH]) Jun 21, 2019 7:31 AM
Payoff or Buy More (by S i d [MO]) Jun 21, 2019 8:07 AM
Payoff or Buy More (by razorback_tim [AR]) Jun 21, 2019 9:33 AM
Payoff or Buy More (by Robert J [CA]) Jun 21, 2019 5:44 PM
Payoff or Buy More (by Sean [OR]) Jun 21, 2019 8:21 PM
Payoff or Buy More (by Peter [NH]) Jun 24, 2019 6:26 PM
Payoff or Buy More (by Ray-N-Pa [PA]) Jun 25, 2019 9:13 AM
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Payoff or Buy More (by Dan [TX]) Posted on: Jun 20, 2019 9:39 AM
What to do? So here's my dilemma just curious what you would do. I am considering separating from my 9-5 in the coming year. If I follow through I will be 59 at retirement with a decent pension plus rents from 15 SFHs. I currently have a comfortable amount in savings and can payoff 2 maybe 3 mortgages leaving 4 homes with debt service less then $1,000 a mth in payments. I am struggling with either paying off mortgages or buying more rentals. What would you do? --161.226.xxx.xxx
Payoff or Buy More (by Deanna [TX]) Posted on: Jun 20, 2019 9:42 AM
If you want to grow, do it before you cut loose your W2 job, because it's easier to get a mortgage when you're employed, vs when you're only pointing to your rental income. Banks like W2 income, but they don't trust our ability to run our biz, even with a track record. ;)
Payoff or Buy More (by myob [GA]) Posted on: Jun 20, 2019 10:05 AM
keep your cash until your done buying. Once you resolve that your not purchasing any more rental-- start the pay off plan. --99.103.xxx.xxx
Payoff or Buy More (by David [NC]) Posted on: Jun 20, 2019 10:07 AM
Work 3 more years till 62, buy more houses to get to 20-22. Retire. Use some of your retirement plan to pay off any notes since withdrawals are probably penalty free after 59 1/2 and you probably don't need the money with the rental income. Cruise on with 20+ debt free houses. Live the dream. --71.217.xxx.xxx
Payoff or Buy More (by myob [GA]) Posted on: Jun 20, 2019 10:32 AM
at 51 I took a 5 year leave. Still got my seniority, medical coverage and bennies. Still wrote working for on my papers.
4 years into it-- I retired. Now collecting retirement +.
So there is a way----.. --99.103.xxx.xxx
Payoff or Buy More (by S i d [MO]) Posted on: Jun 20, 2019 11:05 AM
If the goal is to retire in a year no matter what, I suggest do no buying or paying off just yet. Live on just your rental income "as is" for a year and bank your W-2 income. If you do not enough cash flow to live the lifestyle you desire, then pay off the houses to achieve higher cash flow and secure your retirement income. If you are comfy after the year, then you can buy some more to keep growing.
In general, prices are high right now. Some good deals are still out there, but harder to find. The most likely scenarios is you would use your cash to buy a marginal deal that may not increase your income much, thereby delaying your retirement.
59 is a high age to be adding debt risk. I would avoid that at all costs. What would you hope to achieve by adding 5-7 more units with debt that could not be achieved by simply removing monthly debt payments? --173.20.xxx.xxx
Payoff or Buy More (by myob [GA]) Posted on: Jun 20, 2019 11:23 AM
Dan can I ask? If you have money to payoff 3 or 4 why not just buy 3 or 4 outright? Then you'll have 19 properties. 3 or 4 of which will be paid off? No debt service.
I don't think 15 is enough unless you have a great retirement package also?
Do you have a 401 or roth? I'm getting to the age I have to start withdrawing from my plan-- so I've been using some of that draw- mixed with over abundance of cash in my business account to pay off loans. Problem is I only have 2 mort. left? Problem in good way-- not cry baby way. --99.103.xxx.xxx
Payoff or Buy More (by Robert J [CA]) Posted on: Jun 20, 2019 12:41 PM
No one should have all of their eggs in one basket, period. To have some "cash" is not a terrible thing. What would happen if your area had a natural disaster and you needed to fix your 15 homes all at once or loose your tenants? Such as a hurricane, flood, fire or earthquake? Go to the bank with 15 vacant damaged homes with no income, NO LOAN FOR YOU!
On the flip side, with cash in hand you could be the first landlord to fix up your homes and offer them for rent in a time where the inventory was zero.... --47.156.xx.xx
Payoff or Buy More (by myob [GA]) Posted on: Jun 20, 2019 2:16 PM
Robert love the "cash is not terrible thing"!!!! if your a LL you should have #1 loss of rents on your policy and #2 A POLICY on each. I don't think you could possible have coverage for every scenario. The fire in your state that torched 700 homes-- is once in a lifetime or 0ne in 500 million so I can see where your coming from thinking that way.
The 15 vacant homes should never be with the same lender but if they are-- who do you suppose will be worked with first-- the person with one loan with the bank or the one with 15? I can tell you multiple property loans get all the attention. No one wants 15 mortgages back.
Sorry this got off track somewhat. --99.103.xxx.xxx
Payoff or Buy More (by WMH [NC]) Posted on: Jun 20, 2019 2:35 PM
MYOB, check into what "Loss of Rents" really covers. We pay for it, but are not happy with the coverage. --50.82.xxx.xx
Payoff or Buy More (by MMIT [VA]) Posted on: Jun 20, 2019 3:21 PM
Congratulations! You have made it!
You have a pension, 401, rental income, and social security (once you are 62). You have done a great job!
At this point, you should take a look at your overall financial situation. Rental property is very important, but, it is only one part of your financial plan.
I retired 5 years ago at 59 with very similar circumstances. That was one of the best career decisions I have made.
Being 5 years ahead of you, I suggest:
1. Pay off the rentals as soon as possible (today is soon enough!). 15 paid for rental properties will cash flow like bandits! I have 17 paid for properties.
2. Start social security at 62 (assuming that is not a requirement of your pension and that you do not have another W-2 job). Invest the social security money into rentals that become part of your estate. When you die, the social security goes away. But, the houses you bought with the social security money will become part of your estate and will live on in the next generation. I will buy 2 houses with social security money by the time I am 66.
3. If you have a 401 or traditional IRA, lay out a plan to roll it over to a Roth. Be sure to have it all rolled over by the time you are 70. My 401 will be rolled over in 3 more years. Then we start rolling over my wife's 401.
4. The 401/IRA roll over is a taxable event. Use the rental income to pay taxes each year on the roll over. Base your roll over plan on the tax brackets.
5. Continue buying rental properties with any remaining cash.
The ROTH IRA can play a major role in your net worth and estate planning. At your age and the potential money you might have in the 401 plan, the ROTH IRA can be more important than more paid for real estate for your estate planning.
Congratulations and good luck!
Payoff or Buy More (by AllyM [NJ]) Posted on: Jun 20, 2019 3:54 PM
OK, at age 62 you don't get the same SS and it's much less. The way I make more with the same number of properties is to add comfort style and class and up the rents when someone moves out, not buy more. I'm 72 and just can't do enough of the work myself to make it pay. I can write checks for nicer blinds and appliances. I have 401 K that is flying high thanks to the Pres, cash in bank, and three properties plus my home. I also sell my antiques etc on Ebay to make extra money and you can find something you can sell on Ebay when you are not fixing your properties. Prices are high now because of the home buyers program that gives them a grant toward downpayment. Since we are in solar minimum (no sunspots) everything is cooler and rainier so you will have to deal with colder temps and higher fuel bills, plus more snow for about three more years. When this solar condition happens someone always fools with the fuel supply to up the prices, or a refinery breaks etc. So watch out for that. I would sit tight until the new solar maximum arrives and the colder weather will weed out some folks that should not be trying to have a house and there will be more homes back on the market. --173.61.xxx.xx
Payoff or Buy More (by myob [GA]) Posted on: Jun 20, 2019 4:00 PM
WMH I checked and have used it once-- mine is ACTUAL loss of rents. WMH I was looking at Robert J's example and thinking. OK so I have 15 property's out of commision and one insurer for all 15-- which is usually the case. Now I make a claim and the insurance supply's the contractors of their choice-- let's face it they don't have 15 local contractors-- so as they work through 2 or 3 at a time--- they the insurance company is what's causing the LOSS of additional rents--- that makes me whole since it's there lack of people available. Does that make sense?
MMIT your item #1 I AGREE 100%-- but that's not what this poster has--- he has mortgages. the posters number a a little weird though. 15 rentals-- has cash to pay off 2 or 3 of those but not sure if the others are free and clear? He pays off 3 and leaves 4 with debt service-- so there's 8 free and clear?
Dan can you clear up the numbers? 15 with 7 having mort? rest are? --99.103.xxx.xxx
Payoff or Buy More (by Richard [MI]) Posted on: Jun 20, 2019 9:00 PM
Lots of good advice here.To add a little:
* Don't use your cash at this time for payments on the rentals. Why? Because interest rates have been historically low for years. Likely your rates are under 6 percent. That's cheap. I remember when 10 percent was cheap. Let the tenants pay it down.
* If you need more cash, try raising the rents. With 15 places, only $75 each would make that $1000 a month.
* Prices for real estate have been climbing. I think that we are near a top. There are some good deals out there but you've got to really look.Save your money for good deals. In a couple years, after a correction, prices will again be cheap.But then and get 2 or 3 for what you pay now for 1.
*If you insist on using cash, do a flip or two.
* Think of developing a separate stream of income outside rentals. A business of some type (retail arbitrage, consulting, hard money lending, Angel investments, etc). --71.10.xx.xxx
Payoff or Buy More (by BRAD 20,000 [IN]) Posted on: Jun 20, 2019 11:48 PM
At our age my focus is on debt free.
Here's the advice from a super successful RE investor that I am following.
Generally speaking RE prices are high. A downturn/correction is expected by many analysts.
Pay off your loans now. Banks cannot repo a paid off house. If you have a health crisis the larger money will keep rolling in. I have watched too many LLs lose everything because age or health did not allow them to keep up and the banks stepped in.
Your profit will take a giant leap. Bank it to buy in the next few years in the next downturn or retire now!
Me? Anything I DO buy is in my 401K Roth - 40% greater return than anything I buy out side the Roth and tax free for life.
Set up an account now because it has to season for 5 years.
Payoff or Buy More (by nhsailmaker [NH]) Posted on: Jun 21, 2019 7:31 AM
Take some of your savings and drive to a FINANCIAL PLANNER and get professional advice - TODAY !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! --24.62.xxx.xxx
Payoff or Buy More (by S i d [MO]) Posted on: Jun 21, 2019 8:07 AM
I'm curious, have you ever found a financial planner who has a clue about real estate? I've worked with several--some of whom I liked very much--but all they knew about were the "traditional" methods of retiring:
2) Social Security
And that's it. When I wanted to talk about how real estate fit in...."Deer in the headlights".
I'm left thinking that they don't train financial planners to understand how real estate fits in, but perhaps some of them have taken classes outside their areas of formal training and/or own their own rentals. Have you found any that are knowledgeable? --173.20.xxx.xxx
Payoff or Buy More (by razorback_tim [AR]) Posted on: Jun 21, 2019 9:33 AM
In retirement you need to reduce risk. Once you are off the w-2 income you won't have the financial resiliency to handle hiccups that you have today. For that reason, in retirement I would payoff debt before purchasing more unless those purchases are with cash. --192.155.xx.xxx
Payoff or Buy More (by Robert J [CA]) Posted on: Jun 21, 2019 5:44 PM
Here's another thought on having your properties all paid off:
1) If you hold a "simple" title to your properties and a clever crook see's you have no loan, they can create phony documents and transfer ownership to someone else then do a quick re-sale. This has happened to several investors I know.
2) You must have your insurance polices with as many different carriers as possible in case of a major loss. One insurance company can easily go belly up, but having 5 or more insurers, it's likely that you will get paid on most of your losses.
3) No one ever does the math and considers the tax ramification of paying off the mortgage and eliminating your "mortgage interest" deduction.
For example if your net income from your rentals is $100,000, great you may be in the 28% bracket. But pay off your loans and you income jumps to $150,000, they you might be in the next higher bracket... More income, more taxes, less return percentage.
Payoff or Buy More (by Sean [OR]) Posted on: Jun 21, 2019 8:21 PM
All of this retirement talk has be jealous. --47.28.x.xxx
Payoff or Buy More (by Peter [NH]) Posted on: Jun 24, 2019 6:26 PM
I would pay off debt. Thats me. I paid off all my debt last year by selling some units. Sounds like you will have a financially successful retirement :)
I am curious what your ultimate real estate exit strategy is though? (management company, ? --75.67.xxx.xxx
Payoff or Buy More (by Ray-N-Pa [PA]) Posted on: Jun 25, 2019 9:13 AM
There are better times than others to seriously grow your business. Where there are a couple of transactions out there for me to stalk out and scoop up - it has been much harder work this past couple of years. I have largely been squirreling away my cash for when these deals just fall from the sky. In 2008, I was buying a place roughly every 3 weeks.
I can't speak for your area or the area that you are investing in as real estate is so localized. If you have deals lined up that TRULY make sense, then run with them. If you are waiting for easier times to invest, they will be coming in due good time.
It would not be a far fetched idea to think Stagflation again from the 70's --24.101.xxx.xx
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