Pay Down Primary to Rid of PMI? Or Save to Buy More Properties

[Christian M.]

Hello everyone. This is my first post and I appreciate any replies. My wife and I just moved into a new house in July and converted our previous home into a rental property. We have 25% equity in the rental house with a monthly payment of $988/month (no PMI) at 4.5% over 30 years. Our new house has a $2200/month payment (4.125% over 30 years) and we put down only 5%. The rental house is renting for $1595/month. I want to get your guys' opinions on where I should concentrate my extra cash. I have a nice $5000 savings for the rental property so I am not worried about that. I want to know if I should work on paying down my primary residence at least to the point of ridding of the $150/month PMI (would cost ~$50,000 to get to the point of 20% equity), work on paying off my first rental (I still owe $146,000 on the rental), or concentrate on saving for another rental property.

I feel like I should be working on saving for another property but I know how people can get that warm/fuzzy feeling by having a property paid off. What do you guys recommend? Additional properties, pay off rental, pay down to rid of PMI or a combination. Thank you so much again and I look forward to the replies.

[Rusty Thompson]

You might also want to look into the rules of your PMI. I know that mine is 5years & 80%. So even though my property is already bellow the 80% mark I still have to wait 2 more years to drop the PMI.