Pay off Primary residence, pay off rentals, or buy more?

Question

Been very torn with is topic. I currently have 3 properties: 1 primary, 1 short term rental, and 1 long term. I want to grow the rental portfolio, but also don't want to be too risky and leveraged. So i was thinking why not pay one off first before buying the next rental.

Primary residence: 6% APR, zero down VA Loan, hardly any equity, highest debt and mortgage.

STR: 5% APR, zero down VA Loan so still not much equity, cash flowing as an Airbnb, second highest loan and mortgage.

LTR: 2.9 % APR as a conventional loan, cash flowing, $120,000 of equity locked up, by far lowest balance loan.

I'm nervous on how leveraged I am, even though properties are cash flowing. I do  have a good paying job that helps me pay my primary residence, but I like to plan for rainy days.

My ultimate goal is have enough rental income to live off of, so I know conventional wisdom says I need to buy more rentals. However, I'm also very tempted to pay off my LTR and own it outright for the peace of mind, and that would in turn make most of the rent income net profits.

On the other hand i read you're better off paying off your primary residence. In my case it's by far my highest loan and highest interest.

Or should I do neither and just buy more? and risk being that much more leveraged? What's everyone doing in today's market?

I know there isn't a one size fits all answer for this, just want to see what others in similar situations have done.

G. Brian Davis · Answer

I agree with @William Whitley, taking on more debt is ok, leverage isn’t necessarily bad as long as the properties cash flow.

James Hamling · Answer

I get a sense that your in such a state of confusion, that your not even constructing the accurate questions for the places your suffering uncertainty.

You already answered the growth question; you want to grow a bigger portfolio. Ok, done, you want to buy.

My spiddy-sense say's your real issue is what to buy, when to buy, how to buy, that will work and not burn everything you've built up thus far.

Which would make total sense. You got something to loose now. You want to get more, but not at risk of loosing what you got.

And I am guessing you feel like getting more requires risking more. Because all you've done thus far is big leverage, so make sense that ya-think all buys are big leverage. Sound about right?

If so, here's the "prescription":

Focus your time to drafting a viable business plan. And with that business plan, it has a strategic analysis of what a "good buy" looks like.

Whatever you got or don't have, start drafting this plan. At each step you find your lacking some info to complete it, GREAT, that's your primary action item #1, finding and obtaining that information. And then move forward to the next blockade, get informed, and so on and so fourth until you have a completed plan.

The "cure" for confusion is being informed. A Business Plan is a fundamental NEED item.

Now, plan in hand, strategic analysis in hand, it becomes simple action of how do you find those.

You won't fear buys because your ONLY going to be buying "right". So each one that lands, it will be excitement, not fear.

Fear comes from making random buys, hoping they work out, praying they don't loose money.

You don't need to use random acts of hoping. Get STRATEGIC, utilize planning.

Failure to plan, is planning to fail.

Proper Preparation Prevents Pizz Poor Performance.

Be Strategic, take Informed Actions, and success becomes more inevitable than random as an outcome.

William Whitley · Answer

Good afternoon, Carlos,

I personally wouldn’t pay off the long-term rental. At 2.9%, that’s almost free money, and you’ll likely earn more elsewhere by keeping it financed.

If you can refinance your primary residence into a lower rate, that would make more sense, but given where rates are right now, that might not be possible.

I get the concern about being heavily leveraged, but since your rentals are cash flowing, your tenants are effectively covering those mortgages (aside from your primary, of course).

If you have any credit card or other unsecured debt, I’d prioritize paying that down first, as those carry much higher rates and compound interest.

If the numbers make sense, adding another property could still be a solid move even if it means taking on more debt. Leverage isn’t necessarily bad as long as cash flow and reserves are strong.

In the meantime, you might park your rental profits in short-term, liquid investments until the next deal comes along. That keeps your money working without locking it up too early.

Charlene Livers · Answer

With a 2.9% loan, I wouldn’t rush to pay off that rental. I’d build strong reserves first, for peace of mind, and then look at the next rental once the safety cushion feels solid. Slow but steady.

Steve Wilson · Answer

I'm in a very similar situation and weighing paying off our STR vs mortgaging another STR property. If the cashflow of the current STR just breaks even yearly, meaning no actual profit but the mortgage and expenses are covered, does that change the advice here?

Zack Karp · Answer

@Carlos Lopes the short answer...buy more.

You are very well-leveraged with GOOD debt, not bad debt. All of your debt is 6% or less, and tax-deductible. The rentals cash flow. It's a no brainer IMO, don't pay them off, don't even pay extra principal. Let the tenants pay them off.

Use your capital to buy more properties. And make sure your cash flow numbers are solid on the new ones too. That's how you will build your empire.

TYFYS and best of luck!

Elealeh Fulmaran · Answer

You’re thinking about it the right way: stabilize first, then scale. Given your mix, I’d keep the 2.9% LTR leveraged and redirect extra cash to build 6–12 months of reserves across all properties, then attack the highest-rate, highest-payment risk next, which is usually the primary; the STR stays if it’s reliably cash flowing after reserves and stress tests. If new deals in your buy box still cash flow conservatively with today’s rates and taxes, add one, but if not, focus on debt paydown and efficiency until they do. Quick next step: write your buy box, run a worst‑case cash flow on each property, and decide one target to fund monthly until fully reserved.

Pay off Primary residence, pay off rentals, or buy more?

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