Pay off houses, diversify, hold or buy more rentals? WWYD

[Jack B.]

Pay off:

This year I will have enough to pay off my four SFH's. I've sold a couple off in the last couple years and I'm at a point where I Can CF 80K a year and be FI at 38. This would mitigate some risks (loans getting called, etc.) but would introduce new ones (houses leveraged to 60-80% aren't the best targets for lawsuits, the bank/creditor will get paid first before some frivolous lawsuit judgement from what I understand, so paid off houses are a rich target). CF at current rates after all actual and budgeted expenses would be 80K a year for four rentals. A downside of paying off the loans removes my inflation hedge. Real estate debt is a great hedge against inflation.

What am I missing as pro's and cons here?

Diversify:

Stocks anyone? VTI index fund has low fees and is basically the Vanguard version of the S&P 500 index fund. It is an ETF rather than a mutual fund. Your transaction fee on trading 2 million dollars in stocks is...$8...no escrow. No paperwork. Click a few buttons. No tenants, no property managers, totally passive investing.

What am I missing as pro's and cons here?


Hold:

Don't pay off yet and don't buy anything yet. Sit on cash during historically low interest rates? I don't think there will be a huge crash like the one we last saw, at least not for a long time, that was a rare event, they don't usually drop that much when they do drop. But....they could, it's been the longest bull market in recent history.

What am I missing as pro's and cons here?

Buy more rentals:

Again, historically low interest rates. Even if prices go down, I like what years of owning rentals has done for principal pay down and cash flow. I will really love it after 23-27 years when paid off, especially at future rents...I would love it even more with 6 more rentals after 10-30 years. But alas I would be heavily invested in real estate with little diversification. And dealing with property managers, contractors and tenants can be a pain...like a lot of bloggers have mentioned, they want out of being a landlord, more peace, less hassle.


What am I missing as pro's and cons here?

So what am I missing for my pro and con lists? I just highlighted a few key ones for each, though I have many in mind. Curious to see how other people view these options and think differently as far as pros and cons. Which would you do/are you doing and WHY?