Strategies for Allocating Cash Flow

[Eric D.]

I am seeking financial advice about what to do with my cash flow which is $1k each for two multi-families -- invest it in the market or pay off the mortgages more quickly? Or something else?

Basic info: within the past year, I purchased two multi-family rental properties in north NJ in the $400k-$500k range, putting down 25% and obtaining 30 year mortgages (4.7% and 5.25%). I owe a little over $300k on each.

After paying my mortgage/tax/insurance, I cash flow about $1k per month for each.

I hear that paying off extra on your mortgage within the first 5 years can really shorten the life of the loan. And it is like making an investment with a guaranteed 5% return in my case.

OTH, by paying off the mortgage with the cash flow, I feel like I would be too heavily invested in my properties and should diversify. Further, I feel like over time the home value and rents will increase so that it is not really necessary to allocate money I could use now into the mortgage.

What would you do?