advice wanted on use of excess cash flow

[David Ackerman]

Hi all. Here is my current situation

Property 1: A recently purchased SFH in Raleigh. I put 20% down and have a 4.62% mortgage on the other 80%. The property cash flows $200/month. I have $4,000 in reserves for vacancies/repairs/assessments.

Property 2: I am planning on using my HELOC from my home to purchase a 2nd property. The current rate is 2.75%. My goal is to use the HELOC for 2 years and then do a cash-out-refinance.

If I go this route, then my 2nd property will cash-flow $550/month ($6,600/year) if the prime rate stays the same.

So, here is my question: What should I do with this excess cash-flow? My initial plan was to use the extra $6,600/year to pay down the 4.62% mortgage on my 1st property. But, now I am questioning if that is a smart move. Why should I pay off a mortgage that is at historical lows? At 4.62% that is extremely cheap money for an investment property. Would I be better off using that excess money for a down payment on a 3rd property?

THNX,

Dave