Pay Off Rental Or Purchase Another One

[Guevara M.]

It's been a good while since I've been on here and I want to get a little more serious about getting into real estate investing for my future. I purchased a 1 bedroom, 1 bath townhome years ago and it's been rented out since then. Really isn't making me much money other than the equity its acquired throughout the years. Principal and interest payment is $330. and HOA is $178. Annual insurance comes out to about $40 a month. I'm only renting it out for $600 a month due to the same older lady has been there for years and I know she can't really afford much more plus the unit needs some good updating in the inside. The unit downstairs from me has the exact same floor plan and square footage as mine and is being rented out for $875 a month but it's been completely updated throughout the inside. Plans for mine were to pay it off as quick as possible and then go in there and update it to rent it out for more money but now I'm thinking if I should just use the money that I was going to pay it off with to purchase another rental property.

I owe about $25K on it and have about $25K saved.  If I pay it off I'd probably put half of the $25K towards the principle and pay the rest off within the year. So wondering if it is wise to just pay it completely off then go in and update it, rent out for more money and start saving again to purchase another rental property in a couple of years or should I just use the money I have now to purchase something else and pay off the $25K later down the road.  

I have plans to use my current home that I purchased back in 2009 as a rental as well sometime in the future. I just refinanced it down to a 15 year fixed from a 30 year fixed, went from a 5% interest rate to a 2.9% interest rate. I'd like to have at least 3 paid off rental properties within the next 10 - 15 years or less. I know that doesn't seem like much to most of you guys but for me that's a lot. Now of course if I can have more rentals then that would be great.