Happy Saturday Housing Heroes,

I recently received a great question from one of our readers, Aaron: Should I pay off my investment property, and what are the implications if I do? This is a topic that many investors wrestle with, so let’s break it down.

Financial Considerations

If you have a low mortgage rate—say, around 3% to 4%—it may be more profitable to invest your money elsewhere. Historically, the stock market, particularly through ETFs, has averaged about 10% returns over time. Even current treasury rates might offer better yields than your mortgage rate. Strictly by the numbers, keeping a low-interest loan and investing the extra capital elsewhere can make more financial sense.

The Psychology of the Decision

Morgan Housel, in The Psychology of Money, emphasizes that financial decisions are not always just about numbers. If paying off your property helps you sleep better at night, provides a sense of security, and gives you peace of mind, that emotional value might outweigh any potential financial returns from investing elsewhere.

Personal Goals

Some people prioritize financial freedom and want to eliminate debt completely to reduce financial risk. Others prefer leveraging their capital for higher returns and are comfortable carrying a mortgage. If knowing that your home or rental is fully paid off aligns with your personal values and long-term vision, it may be the right choice for you.

A Balanced Portfolio

You don’t have to choose between only paying off your mortgage or only investing elsewhere. A hybrid approach can work well. You might allocate some funds to investments with higher returns while gradually paying down your mortgage. Rental properties can provide consistent cash flow and offer tax benefits, making them a valuable component of your overall financial strategy.

Final Thoughts

There is no universal right or wrong answer—it all depends on your financial situation, risk tolerance, and personal priorities. As Morgan Housel wisely puts it,

If the security of owning your property outright matters more than a few extra percentage points of return, go for it. If you’re comfortable with leverage and focused on maximizing returns, keeping the mortgage and investing might be the smarter move.

🎥 Want more? Watch my 60-second reel where I break this down

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Don’t wait until the last minute—start reviewing your policies and implementing changes now. If you have any questions, please feel free to reply to this email.

Steve Welty CEO @ Good Life Property Management DRE #01744610 ​​​​

5252 Balboa Ave #704, San Diego, California 92117
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