Paying down debt

1 Reply

Hello,

I currently own a duplex with a loan of roughly 250,000. I live in one side and pay about 400 per month to live there. Rent draws 1,400/month and I plan to rent both sides of the property out when I move. My question is, when I move, should I take the profit  and throw it all back into the loan? I can afford to pay 1000 more dollars each month on the house. (we were paying about 1400 to rent before so we already have that money for it). Should I try to pay off the house in 10 or 15 years vs. 30? This way, in 10 or 15 years, I would make roughly 2,000 per month on just one property rather than trying to make money on 20 or 30 properties. Anyway, I'm just curious to hear what everyone's opinion is on paying off houses. I don't really like the idea of having a bunch of houses and fixing all those problems when they arise (i.e. new roof, broken appliances, etc.)

Thanks!

Ryan

Hi Ryan,

IMO, this will probably depend on your goals, which stage you are in life and your personal preference. Leveraging is probably one of the benefit of RE. If you pay down your mortgage, then you build more equity in the home but it is locked in the property. But if you payoff the mortgage with this strategy, then you will have more cash flow. 

Instead, if you take the extra cash and buy another property, it might be a better use of your money as least mathematically with all things being equal. 

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