#### moneymakeover

##### Frequent Poster

- Messages
- 630

Imaginary scenario. Below I'm trying to describe situation where a landlord might be 10 to 15 years from retirement and looking to pay off debt.

It would be good if one property had zero debt and then the rent from property 1 could be used to pay down property two.

Then few years later the combined rent from 1 and 2 could be used towards property 3.

Is this a common strategy? Haven't seen it described before. But it makes sense particularly if trying to get to zero debt. Or property investors happy to keep some debt?

Personally speaking so long as there is anything remaining on the mortgage the rent tends to equal the mortgage therefore difficult to make ends meet. When debt goes to zero what was previously the capital repayment becomes like a big pay rise.

The other big issue is tax. Once mortgage interest no longer due the profit must become significant and therefore the tax?

Property 1

Value 250k

Mortgage 0

Rental income 1200/month

Property 2

Value 250k

Mortgage 60k 5 years remaining

Monthly repayment 1000 capital + 200 interest

Rental income 1200/month

Property 3

Value 250k

Mortgage 120k 10 years remaining

Monthly repayment 1000 capital + 200 interest

Rental income 1200/month

It would be good if one property had zero debt and then the rent from property 1 could be used to pay down property two.

Then few years later the combined rent from 1 and 2 could be used towards property 3.

Is this a common strategy? Haven't seen it described before. But it makes sense particularly if trying to get to zero debt. Or property investors happy to keep some debt?

Personally speaking so long as there is anything remaining on the mortgage the rent tends to equal the mortgage therefore difficult to make ends meet. When debt goes to zero what was previously the capital repayment becomes like a big pay rise.

The other big issue is tax. Once mortgage interest no longer due the profit must become significant and therefore the tax?

Property 1

Value 250k

Mortgage 0

Rental income 1200/month

Property 2

Value 250k

Mortgage 60k 5 years remaining

Monthly repayment 1000 capital + 200 interest

Rental income 1200/month

Property 3

Value 250k

Mortgage 120k 10 years remaining

Monthly repayment 1000 capital + 200 interest

Rental income 1200/month

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