Mortgage Paid- Off Rental Properties-- Good strategy?

[Michael Davis]

We have 2 single family rental homes in California which have no mortgages.  Cash flow is relatively high since only property taxes and insurance are outgoing payments (and necessary maintenance/repairs).

The properties have been owned for about 5 years and have appreciated significantly (about 35%).  

The question is, should we mortgage these properties and use the cash to purchase additional investments?  A mortgage would lower our cashflow, but potentially allow for additional rental properties.  We are both retired and mainly use the cash flow for international travel.  Additional properties would mean even more time invested (or a management company).

What is the general thought on mortgaging a paid-off rental property?  Good investment idea?

[Chris Mason]

If you guys are retired, and the cash flow is already enough for you and your wife to travel the world, why do anything that involves risking the sweet setup you already have?

I'm a mortgage guy, and my license is good in all of CA, so I'm supposed to look at every problem as something a mortgage can solve... but I don't actually see a problem here or any need for any mortgages (don't tell my management I said that :P ).

If you were younger and not already set for life, I might have a different opinion. But it sounds like you guys are 100% all set to enjoy your golden years stress free. You're exactly where a lot folks around here WANT to be in a decade or two, completely financially independent, etc, and I don't see why you'd want to risk that (& any investment property is a risk). Unless you just WANT more properties to manage or something, which it sounds like you don't.

But, yeah, I'm going to suggest that you actually DON'T need any more mortgages or complications in your lives. 

Go enjoy your golden years with your wife, never talk to anyone in my profession again, and I tip my hat to you sir for your success!