Is the Security of a Free & Clear Property Real?
All:
I've been investing for 16 years and am trying to thoughtfully consider the best strategies moving forward in somewhat uncertain times. Most of my career I have been in the "re-fi till you die" camp but have been moving towards the Dave Ramsey team in the last year or so.
However, I have gone through the expenses of one of my average duplexes and it *seems* that a free and clear property may not be as great as it sounds.
Current property expenses are:
$553/month interest
$496/month property taxes
$123/month insurance
$90/month lawn
$50/month water if vacant or $125/month if occupied
$225/month CapEx (est.)
= $1,537
All of the above expenses will still be there after I own the property free and clear with the exception of interest. A total of $984/month at minimum in perpetuity. Perhaps this is (somewhat) specific to my market as South Carolina property taxes are very high but I'm only eliminating 36% of the expenses when I pay it off. I could certainly be missing something. It kind of seems to be that most of the expenses of a property will always be there so what's the hurry to pay off the interest?
So is the security of a free and clear property actually real? It seems there will always be payments due on these other items forever.
Curious to hear some opinions on this topic. What do you think?