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On The Market cover image

219: Should You Pay Off Your Rental Property, Reinvest, or Buy More in 2024?

On The Market

NOTE

Evaluating Portfolio for Reinvestment Opportunities

When evaluating a portfolio for reinvestment opportunities, it's crucial to consider metrics like return on equity, current cash flow, and potential value-add opportunities. By treating equity as a bank account and analyzing cash flow, one can determine if it's beneficial to reinvest in the existing portfolio or explore new investment options. Factors such as cost of money, debt service, average income, and potential returns play a key role in decision-making. Additionally, it's important to assess the feasibility and profitability of any value-adding investments, such as property renovation or expansion, by running the numbers and not just relying on potential rent increase. Benchmarking against current market returns is also recommended to ensure informed investment decisions even when not actively acquiring new deals.

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