Imagine you purchased a property with seller financing with a 5-year balloon payment (30 yr amortization). During the first five years, would you take the cashflow and use it to purchase another property, or reduce the principle so when you get a loan to cover the balloon the payment will be lower?
We happen to be in the exact situation you're describing at the moment...it's a value add deal so we will rehab the property and rent it out...once it's performing, we'll refi (very likely cash-out) and pay off the seller early. If it were my first deal, I'd likely pay it down, but it depends on your aversion to debt and ability to make things happen. Best of luck!