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Author: aj485 Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308881  
Subject: Re: Ideas on getting out of debt Date: 7/4/2007 10:23 PM
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Are you saying that I can write off my interest on the credit card for tax purposes as long as I can trace it back to the mortgage?

That is my understanding......You might want to ask over on the Tax Strategies board to confirm, but if you can trace the debt back to your business of renting houses, it is a business expense.

My goal would be to start to take some off of Rental 2 since it is an interest only and will then become a principle and interest loan after 10 years. I would work on getting the mortgage payment to less then the rental payment and add on the additional income to pay down the loan faster, thus hitting it from both sides. After that, I'd work on Rental 3, (if I still own it, it's getting close to my "magic number" in which I would sell it), and work on paying that one off.

Wow, you are nearly $500 cash flow negative on your rentals, without even counting maintenance and repair expenses. I am glad that your mortgage payments all include escrow for taxes and insurance, otherwise you would be even further in the hole each month. I hope you have a good rental property contingency fund that is separate from your e-fund, because if a couple of the properties happen to be vacant the same month, or need a new roof, or whatever, you could be in a world of hurt.

Rental number 2 would definitely be a good place to start this strategy, because if the principal remains at $197k, even if your taxes and insurance do not increase, your payments will increase to more than $1800 when your loan resets. Plus it's the highest interest rate.

I wonder if you are spreading yourself too thin, and may be too heavily invested in real estate. You are mitigating the risk to some degree by getting some rental income on your primary residence, but it's still a huge concentration in (I am assuming) one market.

AJ
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