Have some cash - payoff rental or invest it?

[Paul Doherty]

I have enough cash to pay off one of my rentals, which would increase my cashflow by about $600 a month (house rents for $1375 and currently cashflows about $400).

Question is, would I be better off simply leaving that house not paid off, with its lower cashflow, and simply invest that same cash into a taxable investment account like Betterment or Wealthfront?  Do any tax advantages on the rental while money is still owed on it outweigh this as an option?

[Glenn McCrorey]

There's no right or wrong answer, it just depends on your goals and tolerance for risk. I would refinance it and use the cash to buy more properties. Depreciation only covers a portion of your cash flow profits. If you pay it off, that extra $600 will be taxable, but if you spread that equity over several properties depreciation might cover all the increased cash flow. If you do pay it off, I would get a HELOC on it just in case you need access to cash in a hurry. I'm not a tax guy so take my opinion for what it's worth.