Reinvest or Payoff Debt?

[Ryan Cameron]

I felt like this would be a great topic for BP's Pros and Newbies to discuss.

With $20,000 in cash and $20,000 in debt (Existing loan on a rental property @4.75%)

Would you use the $20,000 to purchase another property or payoff the existing debt?

I'd love to hear your thoughts, thanks

[Thomas S.]

Never pay off a rental, keep pulling money out of it to reinvest for a higher return. Having cash dead and buried in a rental reduces the return on the property by shifting it to a return on the equity.