Bad Rental Property Strategy
Andy and his wife own a rental property in Kentucky. He'd like to refinance their primary residence, buy a duplex, and pay it off. Hear why Dave says no way.
QUESTION: Andy in Green Bay is in the military and is stationed away from his wife and kids. He’s renting, and he and his wife own a rental property in Kentucky as well as a primary residence. He’d like to refinance the primary residence, buy a duplex, and pay it off aggressively. Hear why Dave says no way.
ANSWER: I would not put my paid-for personal residence at risk to do investing. That scares me. I think you’ve done a really good job at becoming debt-free. You became debt-free because of the sense of freedom that it gives. Let’s not lose that to get in a hurry with your investing.
You’ve got good solid ground that you’re standing on. Enjoy that and take all the rental income you are making now as well as the cash you don’t have to put into a house payment, then roll up your sleeves and say you’re going to pay cash for your next rental as fast as you can.
By the way, after you get about five rentals, which will take you a little while, then the income off of those five will buy another one very quickly. Then the income from those six will buy another one even quicker. It snowballs in your favor going that direction. That was my personal experience.