Is paying off my rental with 3.5% interest rate a good idea?

[Frazz Wick]

I have been renting my first home out for 3 years. The rent I collect 1950/month which is two times the mortgage payment. I only owe $45,000 and I'm considering paying off the house within the next 2 years. 

What are your thoughts here. Is this a good idea? My thought is from a piece of mind perspective. Paying off the house would mean I own it free and clear. I'm conflicted however, because I want to buy another rental soon. 

[Alecia Loveless]

@Frazz Wick I’d keep the low interest rate and use the money to buy another deal. You’re making twice the amount you need which means if the housing market slows you can always lower your rent some to attract tenants and still be fine.

Also if you want further peace of mind build up some additional reserves in your bank account for this property prior to buying the next building. If you have $5000 in reserves that’s likely 5 mortgage payments or more you can make if something happens and you get stuck paying the rent for a little bit.