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. ;)

Ditto Deanna.

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 +.

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.

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?

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!

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.

Dan,

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!

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?

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.

Dan,

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.

nhsailmaker,

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:

1) IRA

2) Social Security

3) Annuities

And that's it. When I wanted to talk about how real estate fit in...."Deer in the headlights".

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.

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 :)

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.