Young Landlord Seeking Advice

[Juvawn Parker]

I am 27 years old. I currently have 3 properties. 2 of the properties are long term rentals (1 SFH, 1 Duplex), and the other property is a primary residence.

I have a high paying career and I have managed to keep my expenses down. The only loans I have are my real estate properties, no other debts are owed (no car loans, credit card loans, student debt loans, etc). With my career and relatively low expenses, I am able to put away an extra 40k a year. That means by the end of 2023 I will have 40k put away assuming nothing goes awry. 

The background information is needed to determine what I should do. In my position what would you, a seasoned investor with experience, do? Would you pay off a rental property you currently own (my SFH rental can be paid off with a sum of 40k), and place it inside of an LLC? Doing so could help reduce debt and also start a company to help liabilities? Once SFH is paid could even take a heloc and pay off another investment property (SFH is worth about 110k).

Would you buy more rental properties? Would increase my debt and liabilities since every property would be in my name, but could be a chance to get greater appreciation in the future? Time in the game is essential afterall.

Would you focus on paying off your primary residence? At my savings rate I could probably pay off my primary in about 7-10 years. Once that's paid off my debt would greatly be reduced, and my living expenses would be drastically reduced since the living expenses are my biggest expenses.

Would you do a combo of all three? I prefer buying and holding. Maybe an occasional cosmetic brrrr if the opportunity arises. I also prefer to heavily focus on my career as of now since I believe I can increase my income even more as time goes on and I gain more certifications.

ANY AND ALL ADVICE WELCOME. THANKS!!!!

[Greg Scott]

I would never pay off my personal residence or a rent property.  The cash you use to pay down the mortgage only gives you a rate of return equal to the interest rate, so what, 6%.   If I can borrow money at 6% and have it earn 10, 15, 20, 50%, I will do it all day long.

Related to that, it does not seem you are aware that on rental properties a portion of the income from the rent property is added to your income.  When done correctly, your debt-to-income ratio and your ability to qualify for a mortgage improve with each rent property.