[quote user=Lucy] I would think, "the greatest cash flow" comes from paying off your mortgage on your investments rather than managing multiple properties in hopes that this 15 consecutive year run up in prices will continue forever. What I should have added in my earlier post is that it depends on how old you are. If you are 20 to 40 years old for example, you may want to leverage yourself to the maximum I hopes that there will be continued appreciation in prices for the next 20 years. If you are pushing 50 or 60, I hope you are smart enough to realize you are not going to live forever and having a passive income of $200,000 or more by owning one or two quality income properties paid for is a nice place to be at that age.
I would be very happy indeed to have passive income of 200,000 or more by owning one or two quality properties. They would have to be multifamily as well as of good quality to generate that sort of income, I would think. 200,000/12 =16,666 per month. If you figure only 40% for expenses (as they'd be paid off in your example), that would require $27,777 per month of gross rent, or approximately 23 doors at $1200 per month.
So I think (as with so many things) that the right answer for a person depends on their situation (as you mentioned) as well as their current portfolio and their goals. If 200,000 per year was required for someone's Belize, and their current portfolio was 5 doors, then additional buying will be acquired, and Brett's suggestion of maximizing cash flow makes the most sense. If on the other hand, enough properties to meet your goals have already been required, then paying them off as expeditiously as possible makes lots of sense.
Of course, Brett's point that you can always choose to pay down your mortgages with cash-in-hand is still a great one. Cash gives you the most options, and if you have it in hand there's nothing stopping you from paying down your mortgages. (assuming 15% per year pre-payments or whatever you have doesn't limit you)
Regards,
Michael