Mortgage Elimination Investment Strategy

I read about a couple (both realtors) from California that undertook this strategy:

  1. Purchase a Property Below Market Value w/ a mortgage with flexible terms for prepayment

  2. Repair/Update

  3. Rent @ Market Value

Funnel all excess income (from properties) and savings (from the day job) into the property until there is no mortgage.

Repeat, except this time you also have the income from the first property funneling into the 2nd.

Using this strategy they were able to acquire many properties and develop a portfolio of 100 SFH’s and 2 Apartment buildings

I think about implementing something similar but adding a 2nd night-time job for a year or 2 to really get the strategy moving.

Currently 50% of my income goes directly into real estate. By moonlighting I may be able to increase that to 70-75%.

Any thoughts about this low leverage equity building strategy.


I think it's fantastic that people have built a huge portfolio of rental properties, the couple you read about did a great job building toward there retirement.

I am guessing that since you read this, that this couple did not do this over night, so I am guessing these people are now getting on towards retirement age!

When I started into real estate you could buy a home in Newport Beach, CA for $130k, today you could not touch that home for less than $1m. So when this couple started investing, let’s say for example in 1970, the price of a brand new tract home 5 bdrm, 3 bth was probable around $30k.

So these folks have a huge advantage over you as your first investment probable cost’s 10 times that amount to buy in California, thus 10 times as long to pay off.

I think your overall strategy is fine, I have friends who own properties who never intended to build a portfolio and just stumbled into owning properties as a diversification of there plan for retirement.

Make sure you take care of retirement and a prudent reserve along with any insurance you might require before investing the balance in real estate. I think in todays day and age I would encourage you to diversify somewhat even if the lions share goes to real estate!


That’s pretty much what we’ve done to build our business. All excess cash flow from properties went to buying/fixing the next property. Therefore, we’ve just been making the regular monthly payments along the way. Strategy is to get thru “property tax season” and then take all excess cash flow and lump on to the smallest mortgage to pay it off first. Then we’ll move to the next smallest and keep paying them off. I don’t think we’re done accumulating properties for good, but probably for awhile so we’re looking to get these paid off asap.


I am currently in my twenties and I believe investing everything I have into real estate is a good idea at this point in my investing career.

In Canada we have RRSP’s which are a tax-free method of saving for retirement that restricts your funds to a tax penalty if withdrawn before 65.

I do not think I am going to start investing in RRSP’s until I can reach a 10 unit minimum all mortgage free. I believe this goal can be reached within the next 10 years.

There is something called a Self-Directed RRSP mortgage which lets you leverage your retirement savings into real estate without a tax penalty (defered) however it takes too long (maximum deposits every year) to get enough RRSP savings to make a move like this worthwhile in the beginning of a real estate career.

The best benefit of the RRSP occurs if you are in the highest tax bracket and have the largest incentive to defer your taxes.

Once I have the 10 properties and a very strong cashflow I will fill the RRSP as much as I can and begin investing through the RRSP so my profits get a tax shelter that can be used on future properties.

I can increase the leverage of the RRSP dramatically by securing future investments with current properties (as collateral) that are completely paid off while maintaining a tax shelter on the property through the RRSP.

Canada may still have high prices, but there is still plenty of opportunity with the right strategy.

I think the thought of owning property free and clear is tempting but not always the wisest choice. If you could do 10 units in 10 years then you’re on a great path. Just keep in mind that alot of people (including lawyers) have the ability to find out how much you owe on a property. Landlords run a high risk of being sued. So please do something to protect these properties that you’re paying down. Being heavily leveraged actually decreases the risk of anybody going after you’re properties. But it would be a great feeling to not have the mortgages. Good luck.