Lin Yuan did not need the three Crocodile-Eating Marsh Otters. They ate the Marsh Crocodiles and should be able to reduce the population of the Marsh Crocodiles in the area.
However, Lin Yuan now had Wendy and the Medusa Snake Demon that could control the Marsh Crocodiles.
Hence, the more Marsh Crocodiles there were in the water, the better it would be for Lin Yuan.
Moreover, the Crocodile-Eating Marsh Otter was not intelligent nor large, excelled at hiding itself, and was knowledgeable about the area.
If he did not kill the three Crocodile-Eating Marsh Otters after taking over the territory, he would have to suffer continuous harassment from them until he finally gave the territory back.