Should I Pay Down Debt OR Buy More Rentals?
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- เผยแพร่เมื่อ 23 ก.ค. 2024
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🎙️ Episode 338 - The age-old question of: should you keep acquiring properties or shift gears to pay down existing debt? Coach and Erion talk you through the nuances of this decision, exploring key milestones, income goals, and lifestyle considerations to help you navigate your unique path to financial freedom.
📄 Show Notes: www.coachcarson.com/paydownor...
▶️ Next Video: 4 Reasons to Pay Off Debt on Your Rental Properties • 4 Reasons to Pay Off D...
🎬 Timestamps:
00:00 - Buy a New Property or Pay Down Debt?
00:18 - Join my exclusive community
00:50 - When to Start Paying Off Debt?
03:35 - Real Estate as a Source of Income
04:53 - When to Focus on Income
05:37 - Maximizing Return vs. Income
09:19 - Investing to Achieve Financial Goals
12:19 - The Importance of Long-Term Thinking
12:43 - Setting Investment Income Goals
16:24 - How to Connect with Us
16:42 - How to Pay Off Rental Property Debt Quickly
🔗 Connect with Erion Shehaj:
• Erion's Twitter: / investarchitect
• Erion's Website: www.signaturehouston.com/
• Erion’s LinkedIn: / erionshehaj
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Footage + Photos credit to: Pexels.com | Pixabay.com
For me, wealth preservation is more important, so paying down debts will always be a priority in this complex world we live in
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Use her name to quickly conduct an internet search.
She often talks on Telegrams, using the user-
@Infurnaevely
Wow, I'm just shocked that you mentioned and recommended Coach Evelyn Infurna I thought people don't know her… She's really great!
Nice! I invest and buy cryptocurrencies but Mostly waiting for the rise to sell. This is a great opportunity to start trading my investments to start earning right away.
Thanks coach. Lots of good perspective from the guest. Especially like the part about playing the game to win or reach the goal, and your analogy about running the appropriate play for the phase of the game vs getting trapped and letting the game play you!
Our pleasure! Thanks for the feedback
Pure gold this is, thank you
Great timing
11:49
I appreciate your balanced approach regarding the fact that each person ought to consider their stage in the game.
On the other hand, when you gave the 150,000 example, you speak as though once a person pays odf s property, they no longer have an income with which they can save and then buy more properties.
This is an absolutely excellent video! Every 25 or 30 year old investor needs to hear this. I am now 60 years old, and have been at the game for over 21- years. Love the idea of working backwards from your end income goal. Good analogy of towards end it’s like moving money from stocks to bonds. I think key is to be like Robert Kiyosaki when you start and end like Dave Ramsey with no debt as you head into retirement-slowing down from one’s day job/ work. Tx for this valuable content.
Great point! Rich Dad when you start. Ramsey when you finish! Can I borrow that?!
Thanks for watching and for feedback
Both very wise. Thank you 😊
Very helpful Thank you for sharing
Very smart, thanks
Such great discussion
I’m an old real estate start school student. Coming back to these principles
Preston!! Good to hear from you old friend. You still flipping?
Hi Coach thanks for all the great content. I’m looking for a mentor. Any ideas?
Ditto. Perfect timing.
Thanks for watching!
Thanks for watching!
Perfect timing of this episode…
Glad the timing was good! What do you think you will do?
If you want to retire then it makes sense to use debt to write off and depreciate properties
This is exactly what I needed to hear this morning so I can make my life less stressful at age 70 by selling some of my problem properties. Thank you!
glad to hear it!! Thank you for watching, and best of luck with your next steps.
Hey robin where’s your problem property’s located sir
We have a young family, not sure how much to forecast for our 2yo and one on the way. We live a modest lifestyle in a HCOL city. We could live very comfortably on $10k pm but not sure how to account for 2 young kids in todays world and future inflation
Yeah, it's tough. I think we have to give ourselves a pretty big cushion with young kids. For me, it was build a base of real estate income. Build skills that I can use to earn entrepreneurial income as needed. And also build my IRA/retirement accounts for a back-up plan.
Thank you coach my husband is ready to retired in one or two years and we’re investing in real state , we think we can pay them off later if we want with our retirement savings or depending what makes more sense ,we don’t want to be on age and in debt we want our kids to have something later , hope we’re no to old to invest 😂 we enjoyed your videos you’re so cool 😎
Interesting correlation of the point of view of paying off debt to turn it into income. Strikingly similar to some long cycles of increasing national debt as a percentage of GDP and decreasing national debt as a percentage of GDP; where nations decrease their debts and also decrease the "value" of their assets as a percentage of GDP; by doing this, it adjusts the incomes of citizens in different social categories with delay.
A very pleasant video to watch; but being in debt up to my neck in the long term is not comfortable; even the Babylonian tablets do not recommend debt greater than 20-25% of net income; So they knew what the ancients also knew; ballooning debt too much over net income can decrease the quality of life and innovation in a region/economy.
Thank you very much for the video.
Hi Coach! I just finished your book and am doing the strategy you mentioned of buying more properties with all cash, rather than paying down fixed loans. I guess at some point after some principle is paid down on my loans, then the ROI will become high enough that loan paydown has a higher ROI than buying all cash. But not yet for me, especially considering the interest deduction of loans and depreciation write off of new properties. One long term concern I have is I manage our portfolio, and my wife is quite a bit younger but has less property management experience. I would love to hear if you have any investors who have "wound down" their real estate portfolio at some point, and perhaps converted entirely to something completely passive such as equities if their spouse or kids could not manage the portfolio. I cringe at the depreciation recapture that I might have to pay 15-20 years from now.
Congrats on implementing the all cash strategy for new purchsses! Makes a ton of sense in your case.
Good question on wind down strategy. With singld family houses you could strategically sell off houses each year to mimimize tax hit.
Or if you have plans with heirs you could have them help with management.
Its a great topic i hope to cover more in future
When you say, "Pay down some debt." What exactly do you mean? Sell a property or some of your properties to garner the equity in them to pay off some debts plus have liquidity?
Yes, that's one common way. If you make $300,000 after tax from selling a property you could use that to pay down a $300,000 debt.
I have also used a debt snowball method where I piled up cash from all my rentals plus any other savings I could find, and I'd attack one debt at a time and pay it off early with extra payments.
I talk a few strategies like this with examples in my Small and Mighty Real Estate Investor book: biggerpockets.com/smallandmighty
Always love hearing these duos the experts❤!! Very important topic discussed to bring back to asking first why someone should invest in real estate rentals and then working on strategy to pay off or keep what you need for long term. Doing what matters most !
Thanks for watching and for your feedback!
Hey Coach. I watch many of your videos and they are excellent. This one is ok. The interviewee here would be better if he actually gave specific examples of what HE did to build his portfolio. Perhaps the goal of the interview was more general. However, if the goal is to give advice germane to more viewers, you should try interviewing the gentleman and getting him to open up about what he personally did. Although, my instincts tell me he does not want to do that.
By the way, the reason your videos and book are excellent is because you give SPECIFIC examples of what you did.
thanks for the feedback. I like specific, too and I'll continue to strive for that. This was a little more of a general topic episode, but I've got a couple more coming soon with specific stories of people who chose to pay down debt instead of buying more rentals.
I appreciate you watching!
Hey Coach. Perhaps you should reach out to Mr. Ken Wheeler who posted on this episode (he started buying investment properties at 68). Just reading his post is FAR more interesting than listening to your guest Ariel. I enjoy your posts, am a real estate investor, and can recognize a good thing. Mr. Wheeler has a story to tell that may be captivating compared to Ariel avoiding specificity. Just my two cents after watching this episode several times now.
Leverage itself can be a form of tax free income. And net worth doesn't need to only be about one's own needs. It can be for long term security for our descendants.
Can you really make 2 - 3 property acquisitions with $150,000 in today's market?
With 20% down (SFR) $150k will allow you to buy roughly 730k worth of real estate. With 25% down (small multifamily) about 580k. So definitely 2 acquisitions in most viable markets, 3 if you’re good at finding off market deals
This guy is great. Having said that, I know you are trying to help, but sometimes you make it confusing when you add or try to clarify his comments.
I happen to like when Chad clarifies the guest statements. Sometimes, just hearing a concept repeated using different words can clarify for me. People respond to different communication styles.
I think you have to do the math and figure out maximizing CAP rate. With high mortgage interest rates, it is best to pay down debt or refi when interest rates go down. Acquiring new debt with over 7% interest rate to acquire more properties doesn't make sense at this point.
Right. Very few properties will have cap rates over 7%. So, you'd have to justify it with other profit sources like adding value, increasing rents, selling off part of a property, etc.
Not necessarily, I just purchased a remodeled sfh with tenant with a 7.25% 30-year fixed rate. Rent is $900, payment is $490. Amazing cash flow...
As my buddy likes to say: "Rich people problems."😂
Perfect timing…
I kid you not... Today l was praying for some kind of guidance concerning leverage, and this... I agree with the others, timing.
So glad to hear it! Thank you for watching and for the feedback.
The game has started playing kyosaki now days.,,, he is over leveraged and banks are telling him NO!’ Now days. 😡👎🏾💔kyosaki is a grifter!!
Didn't know that! Have you seen any news on it you can share?
I have been paying off each house I owned for the last 4 years. I’m 35. Have 3 paid off houses so far. I prefer not to invest in 401k
Congrats on your progress! That's awesome.
Well done but I would suggest you participate in your employer's 401k 'if' they offer a Roth 401k and/or a match.
@@danielsnook5029I know I struggle with nthat because I am my own employer and I can contribute as much as Uncle Sam allows but I rather pay off mortgages
I bought a Burger King
I bet it's a Whopper of a deal😮
Add to this scenario an investor (me) who did not begin this journey until he was 68. Now, at 70 and with four SFH's this question looms large after only two years investing. Moral of the story? There is no all-encompassing formula by which you can make a decision. The decision will always be dependent on personal goals and how much (statistical) time you have left on your journey.
Well said. Thanks for sharing your perspective. Principles and examples can help. But every situation is still unique.
Curious why still start at 68. For family? Did you have a lot of cash? Decided 5% guaranteed wasn’t good. High prices. High interest. Curious.
@@HappyPenguin75034 I had owned a few rentals over the years but never had the perspective about owning them like I do now. Basically I am very late to the game, but it is what it is. I believe owning rental income producing properties is a solid investment and something that will benefit my family in the future. I had a commercial building that had been in my family since 1952 and for various reasons it was time to be sold. That helped to finance my investing in SFHs out of state. Where I am investing, I am comfortable with the prices and the rents.
can I ask what it was like to buy your first property? My husband is 65 and I am 60. We are just coming into some money that we can invest. Did that property cash flow immediately, or were you shooting for more long-term equity income?
@@lisarechsteiner2618 I am very much a rookie, but prior to the houses I have now, I had owned 5 rental properties, over the years, in my hometown. I was by no means an experienced property owner, it was just "something I tried", but that's another story. I currently only have 4 houses, so far, but they all cash flowed from day one, which is my goal. For me (emphasize "me") that is more important that long-term growth. I intend to pass my properties to my children, which I know, for some, is a wrong decision, but I'm extremely comfortable doing so. Again, another debate for another time. lol