Pay off car loans or save for another down payment?

[Victor Robinson]

I presently have a portfolio of 25 doors. A mix of sfr, quadplexes, and one 3-unit office building.

I’m pretty highly leveraged at the moment. Roughly 80% across the entire portfolio.

I have a decent w-2 job, low 6 figures. And 2 modest, albeit relatively new vehicles.

For the 2 vehicles I owe a total of ~$50k. One at 2.5% and other at 2.75%. Total monthly payment of $1,100.

I’m saving for next downpayment and trying to decide if I want to eliminate the auto debt (and essentially “buy” an extra $1100/mo of cash flow to save/invest), or if I should let those low interest notes hang around (after all, 2.5-2.75% seems like cheap money).

If these were mortgages spread out over 15+ years, it would be a no-brainer, but they’re not. So while interest rates are low, payments are relatively high.

Anyway, I would interested in some feedback/comments from the BP community.

Thanks in advance.

[Steve Vaughan]

interest rates aside, I'd pay them off for the $1100 per month savings.  Conservatively that's the same as earning $1400 per month after taxes.  But this takes no extra job, no new tenants or rahabs or hunting for deals. No taxes, hassles or risk. 

If your goal is to simplify and have peace and choices, this is it and what I do. I paid off the equivalent net cf of acquiring another 20 doors in 2017 and haven't regretted it once. In no time your opportunity fund will be replenished And your DTI that much better.

I miss having clear and focused goals like paying off bad debt.  Embrace it!