With any excess, make a judgement about the best new investment you can make. Paying down your existing mortgage gives you a pretty certain return as you know what that money is costing you, but you may be able to do better elsewhere (like stocks). Paying down the mortgage makes that equity illiquid, you'd need to refinance or sell the property to access it.
With my rental properties, excess funds I generate currently stay in the business. As they accumulate, I move them to a brokerage account and buy stable stocks (an index or brkb). When I am ready to acquire another property, I sell those securities off to help fund the new property.
If you don't have a "repair fund" (or a "repair funding plan"), you are missing an important part of being a landlord. It doesn't have to be cash earning nothing, but you do need some liquid cash you can draw on if your sewer ruptures or the roof needs repair. I keep enough around in cash in my operating fund to handle routine repairs as they come up, but if I have a major repair I either sell off some of the reserves I keep in securities or draw on a low cost line of credit I have for the business.
My processes work for me, think through and determine what best serves your needs.
