Pay off mortgage or invest extra money?

[Jacob Compton]

Hello BP! I am interested in thoughts from the REI community on my situations...

I bought my first home in March 2019.
Home Value - 178k
Original Mortgage - 170k
Current Mortgage - 155k
Loan Type - 5% conventional
Loan info - 4.25% 30/yr fixed
Monthly payments - $1477, includes Mortgage, Taxes, insurance, PMI
My brother and fiancee pay the majority of monthly home payments - $1350 total
My monthly payments on home is - $127

I now have all my other debt taken care of and I can begin paying $4000-5000/mo on my mortgage... or I could save that extra income and invest it into a new property. Or I could pay off my mortgage enough to allow me to file for a cancellation of PMI before investing the rest.

My thoughts were that it would be safest/easiest to go ahead and pay off my current mortgage in the next 2-3 years and then I would buy a duplex/triplex and house hack, paying off the mortgage of the new property ASAP while renting my SFH. Rinse and repeat.. in 10 years I can retire living off the income of my rental properties.

Any thoughts on this strategy? It would eliminate the need to find those diamond deals.. I wont need to renovate anything, etc.. I am 32 now so I can still retire in my 40s. I know this strategy is not as quick as leveraging mortgages to purchase new real estate.. I am not gonna have 100s of properties.. but that could be a good thing as well, I dont have to manage a bunch of properties, only 5-10.

Please poke holes in these ideas :)

[Sean McDonnell]

What does the rest of your investing portfolio look like? Are you diversifying with retirement accounts and index funds? 

I think your plan makes sense and is a safe way to build long term wealth. Dave Ramsey would be proud! There are those pro-leverage folks who will think this is a silly idea, but since your goal is to own 10 paid off properties, I think your plan makes sense as long as you are okay with moving every few years. It might sound like something you are willing to do now but I would encourage you to think if moving every few years is something you will still want to do when you are in your 40s.  

Where are you planning to live and invest?