[quote=spdrun]First of all, property is still a good investment in many areas. A few West Coast cities and DC with mini-bubbles are the exception not the norm. Secondly, if paying off early helps you to qualify for financing on a “second home” that’s a rental, I say have at it.
Lastly, having a $400,000 home that you only pay taxes, utilities and repair costs, can rent out at 7-8% profit, and quit your job to bum around Thailand on the proceeds would be niiiiiice. Basically, being in the position to scream “FUCK YOU, I’M OUTTA HERE FOR A YEAR, TRY AND STOP ME, YOU DUMB DONKEY-PENIS!!!” in your boss’s face is a beautiful thing.[/quote]
I agree with your first point.
Regarding your second point, I don’t think this makes sense. People who have invested with borrowed funds can confirm that the lowest loan rate is always found on the owner occupied home. Usually, investment property loans are at least .25-5% higher. Also, it can be can be harder to be qualify an investment property for a loan, because it will depend on other factors (for example, owner occupancy for an attached home in a complex). It seems like if someone has funds to pay off either their primary or rental, it would make more sense to pay off the rental first and keep the mortgage on primary, which would have the lower interest rate. Regarding taxes, I don’t think it matters which deduction you take (schedule A or C).
Also, I don’t follow your last point. I think the original person was talking about a primary home, not an investment property. For practical purposes, money sunk into your primary (until you sell it, or turn it into an investment property) doesn’t produce income. Most people aren’t interested in time-sharing their primary home with a stranger even if they aren’t occupying it full time.
