Originally posted by @Craig Montesano:
Thanks Harry....I was able to run my numbers fine on my single family homes, but this one is throwing me for a loop. At first I thought it was a good deal, then I didnt. confused???
Your numbers helped alot.
I think the problem is I was concentrating on a 15 year fixed at 3.5% and with Prin., int., taxes, ins. I was coming up with a $880 (roughly monthly payment)
I need to look at a 30 year. Looks like a better deal going that route. Does your 399 mortgage inclue taxes and ins?
ALso, could you recommend a good mortgage calculater.
Hey Craig, the 399 mortgage payment I came up with doesn't include taxes and insurance. That went into the 790 I put for expenses.
I just ran it with a 15 year loan and 3.5% interest, and the P&I part of the mortgage goes up to 563, cash flow down to 227, for 9.3% cash on cash, but 23.2% total ROI when you factor the mortgage pay-down.
My opinion is that 15 year mortgages don't make a whole lot of sense for investing in RE. The difference in interest is usually only around 0.5%, but in return you're agreeing to make this extra principle payment for 15 years. That extra principal payment would make a much better return if it was used towards the down payment on the next property. And there's nothing stopping a person from reaching a point where they have enough properties, and then voluntarily paying down the principal on the mortgages. That just seems like a lot of flexibility (and potential return) to give up for about an 0.5% difference in interest rate.
Regarding mortgage calculators. I'm not sure if we're supposed to post outside links here, but if you google "mortgage calculator" or "amortization calculator" or "amortization schedule" it will come up with a bunch of them.
Do you have excel or open office? If so, you can you can use the PMT function to figure it out too.