Putting money towards loan

[Connor Castillo]

Hi all,
The highest interest rate we have on money we are borrowing is one of our investment homes. We have a 7.125% rate on a 250K loan. Does it make sense to pay it off instead of investing in another property because it’s already proven to be successful?

Rent: $4,250/ mo

Monthly expenses (including management): -$600

Monthly Mortgage/ taxes/ insurance etc: -$2,550

thanks

[Tyler Warrick]

Depends what your goals are, @Connor Castillo.

If you are simply after cash flow: pay off the debt

If you are confident in your strategy, use leverage to obtain more properties. This will also have the added benefit of appreciation on two (or more) assets instead of one. 

If you are looking at Cash on Cash Return, real estate tends to be a slower growth model (unless you dip your toes into flips instead of buy and hold).