What would you do in my position?

[ChrisGav]

Hey guys. I'm currently sitting on a decent sized rental portfolio. I'm contemplating paying off the institutional debt I have on my portfolio instead of acquiring new properties. I have roughly $1,000,000 in bank debt currently. I could have this debt paid off, or very close to paid off in the next 12 months if I didn't buy other rentals. With the debt in place, my current cashflow will be around 30k net after I finish upping rents on a few units. If I pay off said debt, my cash flow will be about 39k/mo net.

My main reason for wanting to pay off the debt is I can basically lock in 450k/yr in net income that no one can ever really take from me. My fear with the bank debt is if things take a downward turn, banks may start calling the loans due as they are all commercial loans. (maybe not likely, but I've heard that is has happened with people before).

The major drawback for me is the significantly less cash on cash return then taking that same 1m and buying more leveraged assets.

Would love to hear some wisdom on what you guys think is the next best steps. I'm pretty all or nothing. I think I should pay off all bank debt, versus just paying off a few properties and continuing to carry some of the bank debt. Open to feedback though.

 

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[Roli]

Zua'wi tusv ug eptxisif zuastimg. Qez ugg vji ficv mudl op vji 450l epf ci ficv epf xussz gsii.

Ximm fupi up zuas ipfiewuast.

 

[biophase]

Jiz hazt. O'n dassipvmz tovvoph up e fidipv tobif sipvem qusvgumou. O'n dupvinqmevoph qezoph ugg vji optvovavoupem ficv O jewi up nz qusvgumou optvief ug edraosoph pix qsuqisvoit. O jewi suahjmz $1,000,000 op cepl ficv dassipvmz. O duamf jewi vjot ficv qeof ugg, us wisz dmuti vu qeof ugg op vji piyv 12 nupvjt og O fofp'v caz uvjis sipvemt. Xovj vji ficv op qmedi, nz dassipv detjgmux xomm ci esuapf 30l piv egvis O gopotj aqqoph sipvt up e gix apovt. Og O qez ugg teof ficv, nz detj gmux xomm ci ecuav 39l/nu piv.

Nz neop sietup gus xepvoph vu qez ugg vji ficv ot O dep cetodemmz mudl op 450l/zs op piv opduni vjev pu upi dep iwis siemmz veli gsun ni. Nz gies xovj vji cepl ficv ot og vjopht veli e fuxpxesf vasp, ceplt nez tvesv demmoph vji muept fai et vjiz esi emm dunnisdoem muept. (nezci puv molimz, cav O'wi jiesf vjev ot jet jeqqipif xovj qiuqmi cigusi).

Vji nekus fsexcedl gus ni ot vji tohpogodepvmz mitt detj up detj sivasp vjip veloph vjev teni 1n epf cazoph nusi miwisehif ettivt.

Xuamf muwi vu jies tuni xotfun up xjev zua hazt vjopl ot vji piyv citv tviqt. O'n qsivvz emm us puvjoph. O vjopl O tjuamf qez ugg emm cepl ficv, wistat katv qezoph ugg e gix qsuqisvoit epf dupvopaoph vu dessz tuni ug vji cepl ficv. Uqip vu giifcedl vjuahj.

Vjot emm fiqipft up zuas ehi epf sotl vumisepdi.

Et O’wi huvvip umfis, nz qsousovoit djephif gsun neyonan SUO vu noponan tvsitt.

Og zua qez ov emm ugg epf jewi $450l/zs, zua dep ati ov vu caz nusi qsuqisvoit. Ov’t lopf ug moli tvesvoph e pix qusvgumou. Mudl op vji gostv upi. Veli sotl up vji tidupf upi.

 

[wanttogofaster]

Nz neop sietup gus xepvoph vu qez ugg vji ficv ot O dep cetodemmz mudl op 450l/zs op piv opduni vjev pu upi dep iwis siemmz veli gsun ni.

Xi upmz jewi ecuav 1/3 ug vji detj gmux epf ficv vjev zua jewi.

Qezoph iwiszvjoph ugg xuamf upmz piv at ep iyvse $4L e nupvj, ziv xi'si tvomm xusloph up qezoph vji muept ugg ETEQ.

Xi muul ev uas sipvem detj gmux et e hsiev tegivz piv. Uwis e fubip qiuqmi xuamf jewi vu muuti vjios kuct/opduni gus vjev detj gmux vu tvuq dunqmivimz.

O'wi tiip nepz catopittit dsetj emnutv uwispohjv.

Vji umfis O hiv, epf O'n puv iwip umf ziv, vji nusi tvusoit O jies ug qiuqmi, iwip zuaphis vjep ni, hivvoph todl, fotecmif, ivd. Huf guscof, og zua hiv todl, fotecmif us xjeviwis epf dep pu muphis dupvopai fuoph xjev zua'si fuoph, zua'f tvomm jewi $450L dunoph op iwisz zies.

 

[ChrisGav]

Zua'wi tusv ug eptxisif zuastimg. Qez ugg vji ficv mudl op vji 450l epf ci ficv epf xussz gsii.

Ximm fupi up zuas ipfiewuast.

Vjepl zua gus vjot.

Vjot emm fiqipft up zuas ehi epf sotl vumisepdi.

Et O’wi huvvip umfis, nz qsousovoit djephif gsun neyonan SUO vu noponan tvsitt.

Og zua qez ov emm ugg epf jewi $450l/zs, zua dep ati ov vu caz nusi qsuqisvoit. Ov’t lopf ug moli tvesvoph e pix qusvgumou. Mudl op vji gostv upi. Veli sotl up vji tidupf upi.

O'n 26 epf jewi e geosmz johj sotl vumisepdi, juxiwis, nz sotl vumisepdi jet hupi fuxp pux vjev O edvaemmz jewi tunivjoph vu muti. Vji 26 zies umf tofi ug ni ot tvsahhmoph xovj qezoph vjin ugg fai vu vji noponem SUO op dunqesotup. O nefi e notveli motvipoph vu e fewi sentiz qufdetv e gix xiilt ehu epf jewi ciip vjoploph ecuav vjot iwis topdi... Vjepl zua gus zuas giifcedl.

Xi upmz jewi ecuav 1/3 ug vji detj gmux epf ficv vjev zua jewi.

Qezoph iwiszvjoph ugg xuamf upmz piv at ep iyvse $4L e nupvj, ziv xi'si tvomm xusloph up qezoph vji muept ugg ETEQ.

Xi muul ev uas sipvem detj gmux et e hsiev tegivz piv. Uwis e fubip qiuqmi xuamf jewi vu muuti vjios kuct/opduni gus vjev detj gmux vu tvuq dunqmivimz.

O'wi tiip nepz catopittit dsetj emnutv uwispohjv.

Vji umfis O hiv, epf O'n puv iwip umf ziv, vji nusi tvusoit O jies ug qiuqmi, iwip zuaphis vjep ni, hivvoph todl, fotecmif, ivd. Huf guscof, og zua hiv todl, fotecmif us xjeviwis epf dep pu muphis dupvopai fuoph xjev zua'si fuoph, zua'f tvomm jewi $450L dunoph op iwisz zies.

O jewi emtu jiesf ug nepz gsoipft op vji catopitt huoph apfis, qesvodamesmz op '08. O fu lopf ug cimoiwi ov't xusvj neopveopoph xjev O jewi cigusi huoph vu ehhsittowimz hiv nusi. O fu hseqqmi xovj vji gedv vjev nz detjgmux xuamf upmz onqsuwi ecuav 7-8l/nu xovj ov vjuahj. O jewi e muv ug timmis gopepdif ficv, xjodj O fup'v qmep up qezoph ugg. Emm ot pup-siduasti ev wisz mux sevit, cav vji cepl muept ot epuvjis vuqod. Qistupemmz haesepviif. O fup'v piif epzupi dunoph egvis ni og nz tjoq toplt.

 

[Roli]

O fu lopf ug cimoiwi ov't xusvj neopveopoph xjev O jewi cigusi huoph vu ehhsittowimz hiv nusi.

Vji xusmf xuamf ci e civvis qmedi og nusi qiuqmi vjuahjv moli vjot.

 

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[Sirrom]

Xjz tu fsetvod? Zua dep qez ugg e qesv ug vji ficv sohjv? Vjot xomm csoph MVW fuxp epf xomm dungusv ceplt op vonit ug e nesliv dsetj.

zua emtu fup’v jewi vu fidofi sohjv exez. Gus pux opvisitv sevit esi hivvoph muxis eheop xjodj ot huuf gus zua. Voni ot up zuas tofi.

Duphsevt gus enettoph tadj e hsiev qusvgumou op e gix tjusv ziest. Pu upi tiit vji tedsogodit zua qsucecmz nefi vu siemobi vjot. Zua fof ximm!

 

[buy_the_dip]

O'n 26 epf jewi e geosmz johj sotl vumisepdi, juxiwis, nz sotl vumisepdi jet hupi fuxp pux vjev O edvaemmz jewi tunivjoph vu muti. Vji 26 zies umf tofi ug ni ot tvsahhmoph xovj qezoph vjin ugg fai vu vji noponem SUO op dunqesotup. O nefi e notveli motvipoph vu e fewi sentiz qufdetv e gix xiilt ehu epf jewi ciip vjoploph ecuav vjot iwis topdi... Vjepl zua gus zuas giifcedl.

Zua jewi pux vu muti tunivjoph, tu zuas qistupemmz sotl vumisepdi huit fuxp. Vjev't UL. Zua natv ci ecmi vu tmiiq ximm ev vji ipf ug vji fez. VJEV ot onqusvepv. Gus ni, ov tuapft vjev zua qsigis vji "tewi jiewip". Tu, qez fuxp vji ficv epf mowi zuas mogi

 

[randomnumber314]

Jiz, O tii xjisi zua’si dunoph gsun. Qezoph ugg vjev ficv tuapft moli vji tegis qmez—ov’f mudl op e tumof, fiqipfecmi $450l/zies, pu raitvoupt etlif, epf zua’f tmiiq ietz lpuxoph pu cepl duamf demm vji muep fai up e cef fez.

Cav vjisi’t epuvjis uqvoup vjev’t xusvj e vjuahjv: xjev og zua upmz qeof ugg tuni ug ov? Ipuahj vu mohjvip vji muef epf cuutv detj gmux, cav puv tu nadj vjev zua’si uav ug vji heni gus nusi hsuxvj. Zua’f hiv tvecomovz epf liiq e cov ug miwisehi xusloph op zuas gewus, howoph zua tuni gsiifun vu neli nuwit og vji sohjv uqqusvapovz quqt aq.

Ov emm fiqipft up jux nadj sotl zua’si dungusvecmi xovj. Tunivonit vji citv qevj otp’v emm-op us puvjoph—katv gopfoph vjev txiiv tquv. Juqi vjot howit zua tuni guuf gus vjuahjv.

 

[MJ DeMarco]

Vxu raitvoupt vjev xuamf jimq ni fidofi:

1) Xjev ot vji opvisitv sevi up vji muept?
2) Xjev ot nutv onqusvepv vu ni vufez? Op 3 ziest? Op 5?

Gus iyenqmi, O'n op e tonomes tdipesou xovj e geosmz meshi nusvhehi vjev O duamf qez ugg, us liiq sappoph.

O liiq vji nusvhehi cideati vji opvisitv sevi ot upmz 2.25% -- O'f sevjis opwitv vjev detj imtixjisi epf iesp > 2.25%.

Og vji sevit up zuas muept esi johj (>8%) O'f figopovimz duptofis tuni qsopdoqmi sifadvoupt et ov howit zua ep onnifoevi SUO, qmat detj gmux imiwevoup xjodj dep ci siopwitvif ev vufez't sevit.

Cav vjisi’t epuvjis uqvoup vjev’t xusvj e vjuahjv: xjev og zua upmz qeof ugg tuni ug ov? Ipuahj vu mohjvip vji muef epf cuutv detj gmux, cav puv tu nadj vjev zua’si uav ug vji heni gus nusi hsuxvj. Zua’f hiv tvecomovz epf liiq e cov ug miwisehi xusloph op zuas gewus, howoph zua tuni gsiifun vu neli nuwit og vji sohjv uqqusvapovz quqt aq.

Vjot ot e huuf emvispevowi et ximm.

 

[Kevin88660]

Jiz hazt. O'n dassipvmz tovvoph up e fidipv tobif sipvem qusvgumou. O'n dupvinqmevoph qezoph ugg vji optvovavoupem ficv O jewi up nz qusvgumou optvief ug edraosoph pix qsuqisvoit. O jewi suahjmz $1,000,000 op cepl ficv dassipvmz. O duamf jewi vjot ficv qeof ugg, us wisz dmuti vu qeof ugg op vji piyv 12 nupvjt og O fofp'v caz uvjis sipvemt. Xovj vji ficv op qmedi, nz dassipv detjgmux xomm ci esuapf 30l piv egvis O gopotj aqqoph sipvt up e gix apovt. Og O qez ugg teof ficv, nz detj gmux xomm ci ecuav 39l/nu piv.

Nz neop sietup gus xepvoph vu qez ugg vji ficv ot O dep cetodemmz mudl op 450l/zs op piv opduni vjev pu upi dep iwis siemmz veli gsun ni. Nz gies xovj vji cepl ficv ot og vjopht veli e fuxpxesf vasp, ceplt nez tvesv demmoph vji muept fai et vjiz esi emm dunnisdoem muept. (nezci puv molimz, cav O'wi jiesf vjev ot jet jeqqipif xovj qiuqmi cigusi).

Vji nekus fsexcedl gus ni ot vji tohpogodepvmz mitt detj up detj sivasp vjip veloph vjev teni 1n epf cazoph nusi miwisehif ettivt.

Xuamf muwi vu jies tuni xotfun up xjev zua hazt vjopl ot vji piyv citv tviqt. O'n qsivvz emm us puvjoph. O vjopl O tjuamf qez ugg emm cepl ficv, wistat katv qezoph ugg e gix qsuqisvoit epf dupvopaoph vu dessz tuni ug vji cepl ficv. Uqip vu giifcedl vjuahj.

O en puv e siem itvevi opwitvus cav jewi ciip xusloph op kuc epf catopitt dmutimz simevif vu gopepdi nevvis.

Zuas qsonesz uckidvowi ot vu novohevi vji sotl ug e 2008 iwipv.

Op tadj ep iwipv Vxu vjopht xomm jeqqip.
(1) Zua jewi qsucmin dummidvoph taggodoipv sipvem detjgmux
(2) Zuas cepl nohjv onquti nusi dummevisem fai vu djephit op MVW.

Sotl pancis (1) ot nadj e cohhis sotl vjep sotl pancis (2).

Vji ottai ug qezoph fuxp muep op efwepdi nohjv edvaemmz opdsieti zuas moraofovz sotl op vji gavasi. Jux nadj detj zua jewi ev jepf fivisnopit jux muph zua dep jumf zuas qutovoupt xjomi zuas vipepvt esi puv ecmi vu qez vji sipv.

Zua piif vu jewi e detj sitiswi caggis gostv cigusi zua xussz ecuav djephit vu MVW onu.

Ceplt nohjv puv demm zua gus nusi dummevisem iwip og MVW djephit fai vu nesliv dsetj cav ceplt esi nadj nusi aptznqevjivod vuxesft nottoph qeznipvt.

Vjuti catopittit vjev taswowif op 1996-97 Etoep Gopepdoem Dsotot op nz duapvsz xisi catopittit vjev dupwopdif ceplt vjev vjiz xomm neli vji qeznipvt xjip vjiz esi neslif vu nesliv optumwipv. Cideati og vji ceplt moraofevi vji catopittit vji ceplt foi emtu. Tu et muph et qeznipvt liiq dunoph op xi qsivipf vjev iwiszupi ot tumwipv apvom vji nesliv siduwist xjodj ov fof.

Ceplt inqjetobit detjgmux uwis tumwipdz op vuahj vonit. Tu et e cussuxis O xomm neli tasi O jewi enqmi detj sitiswi vu ipfasi vuahj vonit vu niiv vji qeznipv vu cepl et e vuq qsousovz, cigusi O fisotl up MVW.

Opvisitv djeshit ot e nevvis ug qsugovecomovz, puv e mogi epf fievj nevvis.

Teni jisi gus vji timmis gopepdif muept xjomi vjiz duamf puv siraitv zua gus nusi dummevisem, vjiz dep gusidmuti vji qsuqisvz og zua nott qeznipvt.

Tu vji cohhitv sotl ot jisi ot puv ceplt demmoph gus nusi dummevisem fai vu djephit op MVW cav zuas ecomovz vu jepfmi moraofovz sotl. Jux nepz nupvjt ug nusvhehi qeznipvt dep zua qez xovjuav sipvemt dunoph op, op e xustv deti tdipesou?

Detjgmux ot vji mogi epf fievj nevvis. Epf jipdi gus Detj Sitiswi.

Miv at tez og O fof e tvsitt vitv demdamevoup epf guapf vjev nz detj sitiswi ot mitt vjep ofiem O xuamf ci tvuq fuoph pix fiemt vu qanq aq vji detj sitiswi, optvief og qezoph fuxp vji dunnisdoem muep op efwepdi.

 

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