I just paid off my mortgage and I'm not sorry I did it

8 Replies

I will start by saying that I know that this is an unpopular position to take. I had been holding on to this money for a couple of years hoping to get a multifamily , but the prices in NYC are just crazy right now, I feel that we're in a bit of a bubble, and it came down to a choice between keeping it in a 1 year CD and generating 4K,or paying off my mortgage and saving 8K/year. I chose the latter. So as of today I am the proud owner of two properties that I own outright. By my calculations I'll make that cash back in a couple of years , and if as I suspect things go south in the interim I intend to take out a HELOC , it will cost me 50 -75 bucks a year plus closing costs, in return I will have the same $200K that I spent at my fingertips . Folks can talk about leveraging and deals and that might be great for some, for me I have a great deal of peace of mind knowing I am not sweating over my mortgages. As for the issue of tax benefits of the mortgage interest, well thats a moot point with the new tax plan, and I am happy to forgo that considering the fact that I saved almost $200K over the life of the loan. So yeah, I paid off my mortgage and I'm not sorry one bit. I just wonder if there are any other 'contrarian' real estate investors out there

I believe that it is natural to put some leverage on real estate.   Especially if you grow your portfolio.  Most people do not have the cash to buy multiple properties.  I prefer to keep moderate leverage on my properties, so there is positive cash flow remaining.

@Brian, and that is a perfectly reasonable position to take, in my situation I'm in NYC, a very tenant friendly state, it's not unknown to be tied up in court for a year trying to evict a bad tenant, it happened to me, took eight months to get him out , situations like that can quickly mess up a positive cash flow, if I had a mortgage on that property I would have been in bad shape. For my next property I intend to be less risk averse

congrats  nothing wrong with paid for real estate. although as you say it will not be a popular position to take on BP.

I sold all my rentals and paid off all my loans..  this allows me to have an opportunity fund for the quick hits and not have to deal with landlord drama that I cant stand personally there are many other ways in real estate to make a buck and landlording is easiest to understand and get into.. but can be pretty annoying if you get some cruddy tenants or buy in areas were your renting to the bottom of the income pool or those on government assistance..  but I get it for most this is what they can do and afford.. so better than doing nothing.

@Jay Hinrich, "Landlord drama', tell me about it , it's another reason why I also go back and forth over buying a multifamily versus investing in REITs. I'm a rather conservative investor, and at this point I'm open to passive income flow, rather than the hands on, "I've locked myself out'  1 am calls

I've never been part of the popular crowd . . .      :-)

My real estate is all debt-free. I've never been sorry. If we need a loan at some point, we'll get one, but right now, peace of mind is priceless.