Payoff mortgages or not

[Jason Waldo]

I have two rental properties in Missouri. Both with a mortgage. One of them has $25k left on it and the other one has $90k on it. If I pay them off in the next few years I would be cash flowing right around $1,800/month. Should I pay them off if I can have them both paid off in 5 years or not?

[Joe Villeneuve]

No you wouldn't be cash flowing around 1800/month.  That "extra" money you are adding to the cash flow is just money that is now catching up to the cash you negatively put into your properties.

Since you don't mention what the payments are now for those two mortgages, I'll assume it would be a total of 1000/month you are now paying for them.  That said, it would equal 12k/year.  That means if you pay off 115k, cash out of your pocket, it will take you about 10 years before you break even.

If you want to increase your CF, take that same 115k in cash and buy another property (20% DP) that will cash flow, and let the tenants payoff your mortgages.  That's their job, and they're really good at it...don't help them...they don't need it,