So...this is going to sound like a humblebrag, but it is not.

I have a few buildings will low mortgage balances, about $55k each at a 6% rate. I have tons of cash sitting in a bank account right now earning 1%. I am tempted to pay them off because of the spread. Why pay 5% for nothing right? If I paid these mortgages off, I would not miss the cash in the bank account.

Any reason you all think I should NOT pay these mortgages off? Mortgages are harder and harder to get these days.

Mortgages aren't hard when you have equity.

Pay off Mortgage(s)

I did and I suggest you do, also.

Do any of your current properties need improvements (up coming) like a new roof, windows, doors, siding, etc? If not then the second thing I would think of is do you have enough in the bank to purchase another property (ies) - if you are interested?

It's an expense that you can write off (I think) so even though there is a "5%" spread are there tax benefits of having the mortgage? I'm not a tax person so I don't know (and I don't have any mortgages on my rentals right now).

I wouldn't. without doing any math, interest and tax deductions would both be minimal at this point.

"cash is king" ... even if you have plenty more, having cash on hand is better, in my eyes, than having bricks and dirt. it doesn't sound like you are going to take that cash and go to Tahiti with it or gamble it away ... so hang on. Yes, paid off is nice but in your situation, what would it matter if you still have the cash sitting there to pay off at any time.

do you have a significant line of credit? if so, that might change my mind.

I am sitting on a couple million in cash. Does that change anyone's view point?

Pay them off yesterday. Go visit Dave Ramsey and debt-free scream your head off...sign the wall...get free cookies!

You don't need mortgages: you have money!

Couple of million in cash? Yes that does change our perspective. Makes us like you less.

Just kidding. Of course you should pay the mortgage and any other debts you have. Then consider doing something profitable with the rest. I assume since you're not on a home buying spree, you're looking for something with less hassle. Become a 3rd Party financier (Hard Money) or add to your stock/bond portfolio.

If you had paid off houses and didn’t have the cash would you borrow money at 6% to put it in the bank? If the answer is no then you should pay them off. If the answer is yes then hold onto the cash.

Different people have different preferences for risk, etc., so we can only tell you what we would do for our own preferences, not what you should do for yours.

Landlord of the Flies, I live a good life, but have few needs (beer, meat, music, travel), so paying off the loans is a bit more academic. We have no debt other than our rental properties. We own our personal residences (three) and vehicles outright (three). We hate debt but would prefer to use it wisely if people think it is better to have the loans outstanding for some reason.

Sounds like I should pay these things off!

Thanks all!

All mine are paid off (I bought each with cash).

I like being debt free. I sleep better at night because of that.

I have all my money in places where I don't want to touch it (except for emergency $). My income and dividends are higher than the mortgage interest being charged. My tenants are paying off all my mortgages, interest included, and there is still rent $ leftover.

The "secret" is not paying them off in lump sums, but paying extra ea month toward principle only. That way you decrease the loan from both ends. Payments w/principle and interest get applied to the loan going forward--where most $ goes to interest and little to the principle. But extra principle-only payments get applied at the end of the loan--where interest is small and principle is high. You pay both ends to the middle. As your principle-only payments are applied at the end, you drop months and months,eventually years off the life of the loan. I do not wipe out my cash on hand--but I DO recoup years of payments.

I'd pay them off. I LOVE being debt free. Even if my tenants are paying my mortgages off.

Then I'd probably take a few thousand & just roll around in it like a pig in mud. Cuz I've always wanted to do that for some reason....... :)

At this point its such a small amount it hardly matters either way. I'd pay them off simply to avoid having to think about them.

At this point its such a small amount it hardly matters either way. I'd pay them off simply to avoid having to think about them.

At this point its such a small amount it hardly matters either way. I'd pay them off simply to avoid having to think about them.

Live,

Even if you did not have tons of cash I'd set aside an emergency fund and pay off everything I could. Then let the cash reserves build up again rapidly due to no debt service.

Paying them off is like getting 6% on your money.

The goal of RE is paid for property.

As long as there is a mortgage there is risk. When carrying debt the equity is worthless. All the equity in the world will not help when the rent stops coming in but the bank still wants their money.

Do this for your family in case something happens.

hmmm...good time to update your will!

BRAD

It is very common that properties with no loan get stolen by scammers. They record a phony title change like the property was sold. Then they advertise property for sale, tenants living there, do not disturb. Then sell it for cheep. The title insurance company and escrow are in on it.... They steel around a dozen homes at one shot, then one day your tenants call you and say, "why did you tell me you sold the property"?

Unless you have a Family Trust, Limited Liability Partnership or some kind of difficult why you hold title that can not be stolen that easily -- you are looking for trouble paying off your property.

Simply. Yes. Pay off the mortgages. Then invest the rest in mutual funds or buy more property.

Like Sid said, Dave Ramsey usually has good advice. The interest difference by paying off the mortgage would pay for a couple of nice dinners out each year.

Consider too that your rental income will increase with not debt service, so check your tax burden on that, if any.

In your situation (as you described it) it is a no-brainer to pay them off.

The only argument one "could" make is to instead put that money in index funds, since index funds "could" make more than 6%.

Don,

What is your goal at this point?

Is it to grow the number of units?

Is it to have more cash flow?

Is it more freedom?