What’s Better? Pay down rental properties or personal home?

[Todd Mason]

I’d like to get some advice as to what would be a better strategy....

I am in the process of building a new home to be my personal residence.

I will turn the current home I'm living into a STR

I also have one other LTR which cash flows nicely at current numbers and the STR will cash flow at figured numbers as well.

My wife and my goal is to simply reduce debt between the three properties as we don’t plan on buying anymore. We do have the ability to start putting big chunks of money down toward principle.

My initial thought was to “re-cast” the loans on the rental properties so they would be cash flowing more as the payment would be reduced. Then use that money to pay on my personal home mortgage.

Is there any reason to do the opposite? Pay down personal home loan and keep the rentals where they are?

Any advice would be greatly appreciated!!

[Joe Villeneuve]

Paydown personal residence using the cash flow from the two rentals.  Let the tenants paydown the rentals for you (positive CF).  This way, the tenants would be buying all three properties for you.

When you use your own money to paydown debt on rentals, it costs you money.  When you you let the tenants rent payments do it for you, it's income...and free money.

Also, don;t think about helping the tenants buy adding to making added payments on the rentals thinking it will increase your cash flow.  It won't.  All you would be doing is paying for that imaginary added cash flow upfront, and getting it back in small pieces.

Don't even think about getting a 15 year on the rentals thinking it will save you money...it doesn't.  All it does is substitute your money for the tenants money.  Why?  The tenant is doing a great job of buying the rentals for you.  Let them buy your own home too.  Don't help them.  They have one job, and one job only, and they don't complain about it.