Pause 401(k) to payoff rental?

If you're trying to grow your rental portfolio, then do not pay it off. Use leverage to buy more.

I should have been more specific on our original plan with the rental. The whole idea was to keep until paid for, then use the rent $$$ to double-up on our current mortgage to pay off quickly. Or, if nothing else use the rent $$$ to make our regular mortgage payment, thus “eliminating” that bill from our normal monthly outflow. I don’t know that we want to be landlords long-term. Rent $$$ is greater than current mortgage payment.

I understand there is opportunity cost in not contributing to the 401k during this period, but not sure if it outweighs my inner Dave Ramsey voice telling me to get this paid off ASAP.

is the rent check enough to cover the rental mortgage payment and the cost of the management company? If so I’d just let it ride

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my inner Dave Ramsey voice

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There's a big difference between paying of credit cards and being responsible with your money and having a low interest loan for an investment property.

Max your retirement savings as much as possible now. You never know what the future holds and there could be a time when you really HAVE to scale back your retirement savings.

Your retirement account should easily outperform the interest rate you're paying on the mortgage, plus you get the bonus of your money compounding. Then there's also the aforementioned opportunity cost of getting money into the market over the next several months.

Don't steal from yourself is my advice.

Dave Ramsey does a great job of helping people manage money, but I think he's gets people totally freaked out by having any debt. If you're smart, and it seems like you are, there's nothing wrong with some low interest debt especially if it's on an appreciable asset and the money you held on to is earning more than the debt is costing you.

This is really a no-brainer to me. You say you're only 32 and have years to make up for missed savings, but I don't think you can ever make up for missed years when it comes to savings.

On the other hand, you're only 32 and have an income property that pays for itself plus offers profits and has equity. If the debt becomes too much for you to handle, just sell the property, or refinance the loan to something more manageable.

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Max your retirement savings as much as possible now.

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This is what I would advise.

Also, you indicated above that you’d be turning down some of your employer match to pay off the rental. If you do, you’re literally refusing to accept free money. I’d recommend against doing that.

Thank you all for the input. For what it’s worth, I wouldn’t be cutting my contributions to 0. I was thinking of doing the minimum that would still get me the employer match, somewhere in the 5% range.

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15 year at 3.5% and you want to pay off the loan early? Do you think the market is gonna be sub 3.5% the next 5 years? Do you think your second rental is going to yield sub 3.5% cash on cash?

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Another thing to consider is the because the interest is tax deductible, the effective interest rate is actually lower. So if he’s paying 30% in taxes that could have been deducted (federal, plus state and maybe even local depending on where he lives), his interest rate is actually more like 2.5%.