Invest in RE or debt payoff

[Brad Kirkwood]

My wife and I most recently bought our first personal house and I've been educating myself on real estate investing ever since.  When making a few repairs, we had taken out a personal loan for about 5k @ 9.9%.  We clear a bit more than 1k every month after bills and other living expenses from our jobs and by November we should have enough to payoff the balance of the 5k loan completely.

My question is, should we pay this off as it is the highest interest debt we have or use this money to finance the downpayment of an investment property sometime later on?  Closing costs are a bit high since we live in Pennsylvania and I've yet to go beyond just educating myself in the world of real estate (as I've just started a few months back).  Thoughts are appreciated.

FWIW - we would like to have another child sometime next year and daycare is not exactly cheap.

[Brandon Sturgill]

Do you have equity in the property? Have you explored a HELOC? And just as a strategy, I keep a revolving loan active with a bank for retaining high credit. I take a low interest personal loan for $5k and deposit in a checking account and set up EFT payments. The loan pays itself and reflects positive on your credit score...the only minor cost is interest.

But I think I would pay the loan off. Once you pay it, you demonstrate to the bank your ability to settle debt...you are building a relationship with a bank and can take out larger and larger loans with better interest rates to invest.