Chris, you are 100% right. No, actually, 1,000% right 😊

Here’s a case I looked at for clients of mine

—Patrice and Roberte.

They own a duplex at 15 rue de Charlotte. Their mortgage had a 30-year amortization. In 5-years, they would only pay off $25,288 of principal. #Horrible

They had decent cashflow, so they reduced their amortization period to just 15-years. Guess how much principal they paid off in their first 5-years? $74,227. #Sweet

And just as nice, their property increased in value at the same time as their mortgage balance owing was dropping like a stone so, at the end of 5-years, they were able to get a new 80% LTV (loan-to-value) mortgage and pull out an incredible $181,179 tax-free.

Short amortization periods are key to the Warren Buffett methodology applied to real estate investing… you pay off your mortgages as fast as you can on a monthly basis, animate/drive up income and value of your properties as best you can then you refinance after a period of time because you have opened up enough room for a meaningful refinancing, comprehendo? It’s a sure-fire rinse and repeat method—it’s the only perpetual motion machine in the known universe.

I know my advice seems contradictory—load up on debt, pay if off as fast as you, then load up on maximum debt again—except it’s not. Why? Because, when you get to a portfolio size you are happy with (which you will do much faster if you follow the above formula), you STOP buying more property and refocus on paying off your debt as quickly as possible. Then you sit back and enjoy your NOI (net operating income) for the rest of your life and pass it on to your kids and grandchildren!

Prof Bruce

Ps if you are doing a STB (seller take back) 2nd mortgage, make sure you not only postpone it to a first, but if you are doing any renos, and you have a first mortgage that is mortgage + 10% (many lenders will allow you to balloon your 1st by 10% to help pay for your renos), postpone your 2nd to the first + 10% not the first without that 10%; otherwise, u won’t get that 10%.

Pps here’re those numbers for Patrice and Roberte:


Bruce M Firestone, B Eng (civil), M Eng-Sci, PhD
Real Estate Investment and Business coach
ROYAL LePAGE Performance Realty broker
Ottawa Senators founder




note: source of image–