few options to invest 350k please help!

[Greg Magiera]

I’m trying to decide between a few options and would appreciate input from experienced investors.

I have about $350k available.

Current situation:

• I own 3.5 rental units (1.5 already paid off)
• If I pay down ~$120k more, I can eliminate remaining debt on part of the portfolio and increase my cash flow by about $1,700/month (~$20k/year)

Other options I’m considering:

1. Buy a property cash (~$180k + $50k rehab) → estimated ~$15k/year cash flow
2. Buy a 3-unit (~$650k, 25% down) → estimated ~$8k–10k/year cash flow

All numbers are conservative and based on current rents and expenses.

My main question:
From a long-term investor perspective, would you prioritize guaranteed cash flow (debt paydown) over acquiring new properties with lower returns but potential appreciation?

Curious how you would think about this in today’s market.

omg!! What to do?

[Greg Scott]

I'm firmly in one camp.  I think it is foolish to pay off a rental property.  Why?  Here are my reasons:

- Paying down a mortgage at X interest rate is the same as investing cash at X interest rate.  Most mortgages have a fairly low interest rate and I can make much more than that with smart investments.

 - A paid-in-full property is a target for ambulance chasing attorneys

 - A paid-in-full property is a target for title fraud (Listen to David Greene's podcasts on the problems he had in FL)

 - You expose much more income to be fully taxed because depreciation cannot offset enough of the income.  If you do the math, you are typically better off owning two properties at 50% leverage than one property paid-in-full.

 - Cash poor and equity rich gives you very little flexibility in uncertain times.  I always want a nice chunk of cash for unforeseen opportunities

I know that many people disagree with my philosophy. That's OK. Go for it.