Pay off high interest loan or buy another rental?

Brooklyn Park, MN · Member since 2017 · 57 posts · 24 votes

Curious on others’ thoughts here:

I sold off a bunch of my stock trading portfolio in the last month and now I have $50,000 that I’d like to reinvest in some manner. I have a short term rental that has a mortgage on it for $50,000 at 8.75% interest. I could pay that off and wipe out the $600 a month payment on it and own it free and clear. Or I could buy another property. Or I could wait for the stock market to drop and buy back in there.

Hoping somebody on bigger pockets can help me out with my first world conundrum. Thanks in advance for any insights!

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Doug Smith

Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes

10mo

Well, DSCR loans are in the upper 6%s now, so do both. Refi the current rental to reduce the rate and buy another...just don't overextend. We have a couple of clients that have done that lately and gotten themselves in hot water.

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Josh St LaurentBusiness Member
Financial Advisor · Stateline, NV · Member since 2023 · 131 posts · 122 votes
10mo
Buy another property. And refi that original mortgage!
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Doug Smith
Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes
10mo
Well, DSCR loans are in the upper 6%s now, so do both. Refi the current rental to reduce the rate and buy another...just don't overextend. We have a couple of clients that have done that lately and gotten themselves in hot water.
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Jonathan LeeBusiness Member
Lender · FL · Member since 2025 · 86 posts · 30 votes
10mo
Hey John, I definitely agree with refinancing and buying another property. Feel free to message me with any questions!
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Allison Park
Member since 2024 · 158 posts · 88 votes
10mo
You can use the payoff or invest calculator :) https://biggerpocketsmoney.com/mortgage-payoff-calculator/

it is for payoff or invest in stock market, but I think you could use it to invest in another property.
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Mike Dymski
Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
10mo
Option 1 - pay off debt and earn 8.75% return
Option 2 - buy another property and earn X.X%
Option 3 - invest in stock market and earn 8-10% (non-starter...more risk and same return as Option 1)
Return for option 2 vs 8.75% is your reward for executing option 2. The math has your answer. I personally would do option 1 and have a risk-free, hassle-free 8.75% return.
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Jason MalabuteBusiness Member
Accountant · Los Angeles, CA · Member since 2016 · 2k+ posts · 901 votes
9mo

It really depends on what stage of life you’re in and what your goals are. From your photo, you look pretty young, so if you’re still in the scaling phase, paying off that mortgage might not be the most strategic move.

Here’s why: if you use that $50K to buy another property, you could potentially generate more income and appreciation. Also, once you pay off that mortgage, the interest goes away—and so does the tax deduction that comes with it. More importantly, if you’re earning a return on your investment that’s higher than the 8.75% interest you’re currently paying, then you’re actually ahead by keeping the loan and using your capital elsewhere.

That said, if peace of mind and reducing risk is more important to you right now, paying it off could absolutely be the right move. So it really comes down to whether you’re optimizing for growth or for stability.
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Arman AhmedPro Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2024 · 2k+ posts · 924 votes
9mo
@John Woodington
John, if your goal is cashflow and long-term wealth building, buying another property in a strong Midwest market could make more sense than paying off the high-interest mortgage—especially if you can acquire a property that generates positive cashflow above your current $600/month payment. Midwest markets offer lower entry costs, predictable rents, and opportunities to scale with less capital than coastal areas. That said, balancing risk and interest rates is key, so make sure the numbers work for you.

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Mary McGintyPro Member
Rental Property Investor · San Francisco, CA · Member since 2021 · 70 posts · 15 votes
9mo
Have you ever considered investing in large apartment communities? These opportunities typically start with a minimum investment of $50,000 and allow you to participate as a passive investor in multifamily real estate.

The benefits include access to a strong community of like-minded investors, the potential for consistent monthly or quarterly income distributions, and receiving a K-1 for tax reporting purposes. Additionally, when the property is refinanced or sold, investors receive their original capital back, along with their share of profits based on the agreed-upon return structure.

It’s a way to invest in larger assets without the day-to-day responsibilities of property management while still participating in the upside of real estate ownership.

reach out to me if this is something you're interested in
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