Author Topic: Aggressively pay off rental prop mortgage or invest for retirement?  (Read 1690 times)

windinthewillows

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I owe about $150k on a good rental property.  Currently it is slightly cash-flow positive.  I have a plan to pay off this mortgage in 6-8 years.  Once the mortgage is paid off, the goal would be to take 100% of the rental profits ($12k/yr) to counteract my wife stopping working full-time.

OR, would it be better to put this same amount of money towards my Betterment acct for retirement, while paying my normal, low-interest rate mortgage on the above rental property?

waltworks

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Re: Aggressively pay off rental prop mortgage or invest for retirement?
« Reply #1 on: December 28, 2014, 06:05:28 PM »
Depends on the specific numbers on the property and what kind of investment return you assume. Read the sell vs rent sticky and edit your post with details. In general if you have a low rate mortgage paying it off early is not in you best interest but it really does depend on the numbers and your situation.

W

escolegrove

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Re: Aggressively pay off rental prop mortgage or invest for retirement?
« Reply #2 on: December 30, 2014, 01:14:53 AM »
Honestly it REALLY depends on your goals. Long term cash flow allow for early retirement. Strong acquisition though makes even more cash flow long term. So you need to balance where you are acquisition or maintenance/pay off. Only you know that!

monarda

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Re: Aggressively pay off rental prop mortgage or invest for retirement?
« Reply #3 on: December 31, 2014, 09:26:28 AM »
Are you keeping a decent amount liquid for house repairs? Could compromise and do both-  you can put enough in a Roth IRA to cover expenses that might come up (like a new roof?) since you can withdraw contributions (or change your mind about your decision). Are your IRAs maxed?   Please do post numbers as walt says. Without knowing specifics, I guess I'd say keep the mortgage if it's under 4 or 4.5%. If it's higher than that, pay it down more aggressively. There are all kinds of calculators  out there (like this one)/  Then you can compare the mortgage interest that you save versus your anticipated return on your retirement investments. That will help you to decide.