[Cajundaddy]

It's that old standard equation of risk vs return. Which do you value more? Do that.

I don't like RE with a mortgage other than my personal home so I would probably find a way to pay it off and manage the rental very carefully to make sure rent keeps up with inflation and provides long term income. For me, RE needs to produce 4% net annually in rental income with a 5% estimated average appreciation rate over 10 years. A 6.5% mortgage plus insurance, taxes, and property maintenance essentially eats all of the rental income for a net zero return. Not my dream ROI.

I recently sold my last rental property in CA and have moved into the market. I see too much risk in CA real estate rentals, and managing them in a state where the tenant has 95% of the rights with landlord having 5% keeps me awake at night.

For my own home I have a 3% mortgage and plan to keep that forever. I have enough in a MM account that I could pay it off tomorrow but so far the MM is a better place for my $$ right now. As rates come down over time I may re-evaluate.

Pencil out your real net return after mortgage, ins, ever-increasing taxes, and annual maintenance expense to see what makes sense. What if the tenant becomes a squatter, has a slip and fall, or gets electrocuted through no fault of your own but you must now defend yourself in a lawsuit, cover the mortgage, and have zero income on the property?

There is risk in everything we do and everything we don't do. Best wishes on making the right long term choice for you and your family.