Should I Borrow Against or Payoff Rentals?

Question

I have a few rentals and I'm not sure what the best course of action is?  Should I borrow against them or focus on paying them off? I was just reading that it's best to fully borrow because leaving equity is an opening for a potential lawsuit? Is this true?

Account Closed · Answer

Borrow, borrow, borrow. Then use that money to buy more rentals.

Yes, you are far less likely to be sued if there is little equity. And, interest rates are only going up from here. Inflation will make your mortgage payment look like free money.

Michael Cross · Answer

@Joe Caivano I echo what @Nathan G. says about it depends on your future plans. Are you looking to grow your portfolio? or are you heading into a stage of life you just want increased cash flow and reduced risk? In the growth stage there is a lot to be said for borrowing more while many who have stabilized a portfolio then want to reduce risk and headache and work to pay off the properties and increase cash flow.

You need to determine what your goals are for the next 5-10 years and then that will inform what your next steps are with your rental portfolio.

Should I Borrow Against or Payoff Rentals?

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