To Pay Down My Loan or Buy Another Property

[Katy Knight]

Hey guys, so I’m super new to real estate and am looking for some advice. I just bought my first home this year, which I’ll be living in full time. My long term goal is have a few short term rental properties and I’m trying to decide what’s the best next thing to do with my money. The loan on my current home has a 6% interest rate. I’m not planning on staying in this home for more than 4 years and when I’m ready to move I’m either going to sell it or use it as a long term rental. So I’m trying to decide if it would be better for me to use my money to pay down my current loan, knowing I’ll definitely not be able to fully pay it off by the time I move, or to put my money towards buying my first invest property. What would you do if you were me? What are some things I should be considering? 

[Matthew Crivelli]

Quote from @Katy Knight:

Hey guys, so I’m super new to real estate and am looking for some advice. I just bought my first home this year, which I’ll be living in full time. My long term goal is have a few short term rental properties and I’m trying to decide what’s the best next thing to do with my money. The loan on my current home has a 6% interest rate. I’m not planning on staying in this home for more than 4 years and when I’m ready to move I’m either going to sell it or use it as a long term rental. So I’m trying to decide if it would be better for me to use my money to pay down my current loan, knowing I’ll definitely not be able to fully pay it off by the time I move, or to put my money towards buying my first invest property. What would you do if you were me? What are some things I should be considering? 

If you're moving in a short time frame and you can't pay the property off in full you might as well use the money to buy another asset. Paying down the current mortgage wouldn't change your monthly payment, it would only reduce the amount of payments due. The question is, do you have enough equity in your current home / the financial ability to cover the cost of moving in 4 years if you use your cash on hand to buy another rental?