[USER]

I have a rental property that generates 6k a month in income and I could pay it off in 4 years if I put everything on it. Would it be better to get to that debt free mark by making extra payments or instead make the minimum and invest elsewhere?

My interest rate is 6%. I also like the idea of being truly debt free so I don’t feel like I HAVE to work. I also have another rental property that generates 3K a month and is paid off. I really like the idea of retiring in 4 years, or at least cutting way back on my work!

TIA!

[Colin]

Depends on your interest rate, but it’s most likely better to pay the minimum on it because mortgages are typically low interest compared to investing in stocks or other properties.

[Jonathan]

If you have a super low rate then having a loan is protecting you from inflation to an extent.
If you want to pay it off put it in a high yield account until you have enough to fully pay it off. Not a fan of extra payments because you don’t have access to the capital anymore and no increase in cashflow until its all the way paid off.

You can check also: LLCs for rental properties… worth it?

[Jeff]

4 yrs is nothing… wait it out. It’s profitable already.
You’re expensing the interest.

[Dave]

Big tax disadvantage of paying off the loan. If it’s a low (or low ish) best to keep it

[Justin]

Any time I evaluate debt, I look at the interest rate vs what that money can earn elsewhere. Generally my investment portfolio. I also look at how much money would be required to generate the income to cover the payment. Choose the one that makes the most math sene.

Useful: I did have a CPA file the taxes but are there CPAs that specialize in rentals?

[Damon]

People pay off rentals then say “I have $6k cash flow”). That number means very little because its different if you have $100,000 tied up in it or $1,000,000. The metric to monitor is your ROI.

So calculate the ROI under both scenarios (you didn’t give the pertinent info to have that discussion).

[Don]

For me, being debt free is my #1 goal.

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