Pay off my house before I buy a rental?

[Mike Mike]

Hello everyone. I bought my first home about 10 months ago and I am 33. The loan was for 125k which I owe about 118k. I have no debt other than this house. My girlfriend pays the utilities and I pay the mortgage that is just over 1k per month. I have paid extra every month on the mortgage but after fixing up a bunch of things and getting settled in I can afford to pay 2k a month towards the mortgage, I could pay more than the 2k but that is a number that is easily obtainable. I make about 75k per year and I will have about 20k saved up in the couple months. So here is  the question that I just can't decide on. Should I stop paying extra on my mortgage and save the money to buy a rental house or should I focus on paying off the mortgage on my house? 

[Jeff S.]

Mike,

Congrats on the house and no debt other than the mortgage. You are winning in today's climate. Many here love to leverage debt to bring in income and have their renters make their mortgage payment for them. Personally, I agree with doing that, but only if you have your 1st house in order. By "in order", have 3-6 months of savings should the unexpected happen. Next figure out how much you feel comfortable spending on an investment property. Have at least 20% to put down and look for something that you and your girlfriend can paint, fix up and tidy (sweat equity) before renting. The 1st is investment property is sometimes the hardest as you learn what your doing, but will prepare you for your next. 4-5 paid for houses can make you a millionaire if you save wisely with your regular job income. Best of luck to you.