Deciding what works best for yourself can be difficult when you have experts telling you to do something else. However, the experts are part of the problem because every situation has two opposing experts telling you that their way is the best way. Should you pay down your current real estate or should you leverage additional money to buy more real estate? It's a tough question to answer because both ideas are smart and well thought out.
Pay Down Your Real Estate
No one can argue that paying down a loan is a bad idea, no matter what type of loan it is, but people argue that there are better ways of spending additional cash. Adding money to your mortgage payment saves you from paying interest on that money, it lowers the amount you owe the bank and it increases your credit score. Mortgage rates are still low. Refinance & Lower Your Payment! If you continue to save money and add it to your mortgage you will save thousands and thousands of dollars by the time it's paid off completely.
What I'm Doing
Now that I own 3 pieces of real estate I decided to start paying down all of the mortgages instead of buying more property. I could use $20,000 as a down payment on another condo instead of adding it to my mortgage because it would increase my monthly cash flow, however, I'd be leveraging more money from the bank and putting myself at a higher risk of tumbling down the road. When I pay off the real estate I currently own my cash flow will increase dramatically. It's not necessarily the best possible plan, but it works for me and it's still a well thought out plan to save money.
In essence, no one can tell you it's a bad idea to buy a residential home just because buying an apartment complex would make you more money. Saving is saving and investing is investing, keep things on your own level.
Buying More Real Estate
Believe it or not, there may come a time in your life where you own a home and you've saved $20,000 in the bank. At that point you'll have to decide between 3 options, 1) Leave it in the bank and collect 1% interest, 2) Put it into your mortgage loan and save yourself from paying 3-4% interest, 3) Buy another piece of real estate as a long term investment. There are many more investment options for $20,000, but this relates to real estate. All three of the options mentioned are "smart" but one of them fits your personality, or your current financial situation, better than the other.
I'm going to play the safe game for a few years because I already leveraged enough money to get my hands on 3 pieces of real estate. Once I pay off all of my properties I will certainly invest in more real estate, but it's important to me at 32 years old, to have a solid base before getting in too deep. Try using my free real estate calculator to help you make your decision. It gives you options based on what you can afford.