Pay off mortgage quicker or use use that money for another house?

[Joe B.]

Hey all

I finally bit the bullet and purchased my first place. It is a 3bd/2bath SFH that was ~190k. My monthly payments are $1200 (PITI, Interest is 4.75%) and I will be having 1 roommate pay $500 and the other pay $425, while I live in the other room for now. All in all for $275 a month I own my very first property.

My question is, would you recommend paying down the principal quicker, or saving the excess money Id use and use it for a down payment on another property?

What do you guys think?

[Thomas S.]

What do you hope to achieve by paying down the mortgage.

Your money will do you very little hoarding it away in a property. If it is your first and last property it does not really matter what you do with your cash but if you want to continue to grow your investments you can not do that by accumulating useless dead equity. A mortgage on a income investment property is where cash goes to die.

This is one side of the argument, you will no doubt hear from those that are supporters of hoarding cash, some will justify it with a caveat as to how much you should hoard. Others simply claim there is nothing safer than using real estate as a piggy bank. It comes down to your personal business plan which you are now asking advice about.