Pay Off Mortgage On Rental Or Buy Another Rental With The Cash?

[Danny N.]

So I have 1 property worth $650,000 in miami beach, I still owe $232k on my mortgage, Im making bi-weekly payments and paying an extra $1000/mo and its leased for $3500/mo and maintenance + taxes are around $1300/mo. Im looking to invest $250k cash and potentially buy another condo for cash. Im wondering if it is better to pay off my mortgage on the 1st property and clear $2200/mo at that point or buy another property for $250k and probably clear much less. Is it better to keep the leverage in place in that situation or pay it off?

I have alot of low income high cap rate properties back in texas but this particular property I bought foreclosed and have seen around 25% appreciation so far in 15 months and miami beach just doesn't rent for high dollar amounts, but appreciates very well. Anyways just curious what you would do in my situation. Thanks

[Marty True]

@Terry Dunn - just curious, what do you love about having no debt? No debt = less cash to invest. All the most successful investors I know always leverage debt when possible.

If you only plan to have a single property or two and really need the cash-flow, then paying off the debt makes sense. But if your strategy is to continue building wealth through more assets, then leveraging debt is the way to do that.

@Danny N. - if it were me, I would take the $250k out and reinvest into several more properties. Rather than buying one for cash, why not use the $250k as DP for 2-3 more assets? Unless like I said, you really need/want the higher cash-flow immediately.