Hi everyone. Just looking for some general feedback on whether we have too much leverage/debt.
We live in a very high COL area outside of New York City. Luckily our income justifies living here - stable jobs with high salaries (although not a lot of upside potential). We own our home and 2 other rental properties in the area that we have accumulated over the last 8 years. We are in our early to mid 30s with 3 kids. Here are some general figures:
Total Combined Property Value: $2.0mm
Total Outstanding Mortgages: $1.5mm
Combined After-Tax Annual Income: $270k (including rental income net of expenses).
Annual Expenses: $135k (including rental properties – does not include principal payments for any of the properties).
Highest outstanding Mortgage Rate is 4.125%. All mortgages are fixed and were initially 30yr terms.
No other debt.
$255k in investments and retirement accounts.
Given our life situation, current combined income and annual expenses, do we have too much leverage, just right, or not enough? After maxing-out 401k’s, would you prioritize paying down mortgage debt with the balance of annual savings or should we look to invest (either in stocks or additional rental properties)?
Our thinking has been that the fixed rates seem very attractive as long-term debt and, while paying them down is a guaranteed return and would decrease leverage, if rates keep going up we may someday regret having aggressively paid down principal.
Thanks in advance!