Author Topic: Pay off rental duplex at 3.75% interest rate?  (Read 1980 times)

BryanR

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Pay off rental duplex at 3.75% interest rate?
« on: June 23, 2017, 10:03:12 PM »
I owe $100k on my rental duplex; it is worth about $275k. I'm really itching to pay it off, but is that dumb at 3.75%? It would offer simplicity and consistency, but wouldn't I be better served putting the dollars in the stock market?

v8rx7guy

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Re: Pay off rental duplex at 3.75% interest rate?
« Reply #1 on: June 23, 2017, 10:21:52 PM »
How quickly could you pay it off?

BryanR

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Re: Pay off rental duplex at 3.75% interest rate?
« Reply #2 on: June 23, 2017, 10:42:39 PM »
I could pay it off now but of course that would come with the opportunity cost of having less cash money to buy stocks or real estate especially if there's a sale....

Mr Mark

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Re: Pay off rental duplex at 3.75% interest rate?
« Reply #3 on: June 24, 2017, 08:57:29 AM »
And that's pretax so effectively you're paying even less.

I'm sure you can earn more than 2.8% by instead buying more real estate and diversifying your asset base. Or investing elsewhere according to your asset allocation.

Radagast

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Re: Pay off rental duplex at 3.75% interest rate?
« Reply #4 on: June 24, 2017, 09:49:49 AM »
I would not pay off a 3.75% house loan now. I'd use the cash flow to look for my next investment.

YttriumNitrate

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Re: Pay off rental duplex at 3.75% interest rate?
« Reply #5 on: June 24, 2017, 11:01:25 AM »
I also have about $100k mortgage on a rental at a similar rate (3.5%). My mortgage is a 30-year fixed rate, and will not be paying it off early even through I could. With interest rates rising, I expect in the next few years I'll be able to achieve a near-zero risk 3.5% return (more with more risk) in other investments.

chasesfish

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Re: Pay off rental duplex at 3.75% interest rate?
« Reply #6 on: June 24, 2017, 02:14:44 PM »
How much liquidity would that leave you with?  Sounds fine to me as long as you have a cash cushion,  you never know when the next buying opportunity is

Dicey

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Re: Pay off rental duplex at 3.75% interest rate?
« Reply #7 on: July 02, 2017, 10:50:18 AM »
And that's pretax so effectively you're paying even less.

I'm sure you can earn more than 2.8% by instead buying more real estate and diversifying your asset base. Or investing elsewhere according to your asset allocation.
Thanks, Mr Mark for writing my answer for me. Except that I could do it more bluntly in two words: Hell, no!