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<blockquote data-quote="TacomaJD" data-source="post: 586410" data-attributes="member: 1780"><p>Bump. </p><p></p><p>Upon research I am trying to learn the advantages and disadvantages of renting properties that are owed for and paid for. At first glance, one would think that renting out paid off properties would be ideal based on the principle of all revenue being generated as profit less expenses like insurance and maintenance costs. But I have done some reading and it seems a lot of folks in this business are not worried about paying off their rental properties as early as possible, but moreso letting the debt remain as long as they are generating a profit or at least breaking even on said properties and then acquiring MORE properties. One of their reasons being the use of their property debt as leverage for lower taxes. If I am understanding this correctly, homesteaded properties receive tax breaks that income properties do not, thus making land taxes on income properties as much as 300% more than what it would be if homesteaded, AND if the income properties become paid for, they are then susceptible to higher taxes (can't remember if it was income or just land taxes, or both?). THEN, there is the tax deduction for the collective mortgage interest paid annually on all properties owned.</p><p></p><p></p><p>The reason I am debating this is because I may try and get into this sooner than I thought. Originally I planned to pay my current small 10 year old house off in 5-7 years, somewhere in that timeframe possibly put a ring on it, once married with dual income, build or buy a bigger house while conveniently living in my current house until able to move into new house, then rent my small house out after being paid off and letting that revenue pay for a 2nd rental home, and so on. BUT now I'm thinking I may not need to be in such a hurry to sacrifice all the spare money I can to pay off my current house and just let the mortgage ride, but instead build a side fund to cover start-out rental expenses, then move on into a new house in a few years and rent my old house out while renters cover the mortgage payment and leave just enough profits to set aside for property expenses, essentially just letting them pay the house off for me. And then progressively acquiring more properties as mentioned before. </p><p></p><p>Does anyone have anything to add to this to clarify if I understand this correctly? Judging by all that, it seems, paid off rental properties may not be as golden as one would think? Just thinking out loud to try and better understand this.</p></blockquote><p></p>
[QUOTE="TacomaJD, post: 586410, member: 1780"] Bump. Upon research I am trying to learn the advantages and disadvantages of renting properties that are owed for and paid for. At first glance, one would think that renting out paid off properties would be ideal based on the principle of all revenue being generated as profit less expenses like insurance and maintenance costs. But I have done some reading and it seems a lot of folks in this business are not worried about paying off their rental properties as early as possible, but moreso letting the debt remain as long as they are generating a profit or at least breaking even on said properties and then acquiring MORE properties. One of their reasons being the use of their property debt as leverage for lower taxes. If I am understanding this correctly, homesteaded properties receive tax breaks that income properties do not, thus making land taxes on income properties as much as 300% more than what it would be if homesteaded, AND if the income properties become paid for, they are then susceptible to higher taxes (can’t remember if it was income or just land taxes, or both?). THEN, there is the tax deduction for the collective mortgage interest paid annually on all properties owned. The reason I am debating this is because I may try and get into this sooner than I thought. Originally I planned to pay my current small 10 year old house off in 5-7 years, somewhere in that timeframe possibly put a ring on it, once married with dual income, build or buy a bigger house while conveniently living in my current house until able to move into new house, then rent my small house out after being paid off and letting that revenue pay for a 2nd rental home, and so on. BUT now I’m thinking I may not need to be in such a hurry to sacrifice all the spare money I can to pay off my current house and just let the mortgage ride, but instead build a side fund to cover start-out rental expenses, then move on into a new house in a few years and rent my old house out while renters cover the mortgage payment and leave just enough profits to set aside for property expenses, essentially just letting them pay the house off for me. And then progressively acquiring more properties as mentioned before. Does anyone have anything to add to this to clarify if I understand this correctly? Judging by all that, it seems, paid off rental properties may not be as golden as one would think? Just thinking out loud to try and better understand this. [/QUOTE]
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