Quote:
Originally Posted by Rybar
2 Ways to re-invest that rent money:
#1 use it to pay down your principal faster, in turn saving you interest. The sooner that house is paid off the sooner you can collect 100% of the rent as income.
#2 use to renovate the house (if needed) this increases the value of the home and/or makes it easier to sell.
Personally that's what I'd do with the rent money, and the use the greater rent profit later on for cars etc like Greg mentioned.
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I'm in a good spot where I don't need the money now to pay for my car stuff, but I do intend to pay down the house faster even though on paper it's a terrible investment move. I am risk adverse so less debt feels better for me and I think everyone has their own risk/reward point that affects what they feel comfortable doing.
If I was trying to maximize my return, what I would do is leverage the house I just bought, cashing out my down payment and the equity, netting probably 65k, and buying two more similar houses. The current house would be completely break even with the higher payment, but I would double my cash flow and returns from the other two.