Is paying down a mortgage the best choice?

[Edith TenBroek]

So DH and I are looking at some long term investments. We hope to start buying property in five years or so. We will be 50. First we need to pay off some debts and save some money. DH has a full time job he loves, and I'm a homeschooling work from home mom. In five years I will only have one homeschooler and my time will be freer for property management tasks.

We would ideally like to have rentals to help us with income during retirement. Would the best plan be to take all of the rental payment and put it towards mortgage (after saving a set amount for repair emergencies and or vacancies of course) so we can pay them off more quickly and have retirement monies at 65? DH's income is plenty for now, and he has a pension, but I want to work on ways to increase our retirement income and this seems smart!

Anything I'm not thinking of here?

[Jean Bolger]

Hi Edith! Your question, on the surface, is a simple one -- but it is one that will get all kinds of answers from different investors. And there's really no one 'right' answer. You can look at it the complicated way (optimizing your leverage, calculating the time value of money, tax ramifications, how can I grow my business most efficiently, etc) or you can look at it the simple way (I just want to own some houses outright when I retire and not have to think too much about it). It's really a matter of personality and preference

Hopefully you will find properties that have enough cash flow that you could get the properties paid off fairly quickly. You could get 15 year mortgages which usually offer a better rate than 30 yr mtgs and have them paid by around your retirement date. Illinois is a good market for cash flow, so you should be fine!

Make sure you read the "Free Beginner's Guide" (under the "learn" tab at the top of the page)