Loan amount and interest question over the long term

[Christopher Davis]

Hi, Newbie here. At the moment I am reading The Bigger Pockets book Rental Property Investing, getting the basics down. I am also starting to analyze some properties in a particular market. I have a general question about loans.

Let's say its a conventional loan for 300k, 30yrs, at 4%, that comes to a monthly payment of $1,432.25. 

Total interest $215,608.52, total loan $515,608.52.

A total loan cost of $515,609 is a heck of a lot more than the initial $300k.

My question is, what would be a strategy to mitigate this overall long term loan cost? Would you ideally sell the property in a few years so you're not actually realizing that total loan cost? Would you just say no big deal as long as the monthly payment is made? 

Obviously I understand the bank needs to make money. So I'm wondering how an experienced investor would view this, and what could they do to mitigate this over time? What would be a strategy to try and limit this total cost?

Thank you very much for any guidance!  

[David Barnett]

@Christopher Davis This is a great question.

I don't want to speak for all experienced investors on this site.  From what I've observed on the site, most experienced investors view it this way.  The tenants are paying the mortgage.  So although you are making the mortgage payment, the tenants are really paying the mortgage in rent, and therefore, are paying the interest of the loan off.  It's a cost of doing business.

There are two ways to not pay the full interest.  The first is to sell it off before the loan matures.   Assuming there is no pre-payment penalty, you would only pay the interest due through the month of the sale.  So, this is one way to skirt the majority of the interest.  The second way is to pay the loan off faster than 360 months (30 years).  If you make extra principal only payments, you wouldn't pay anywhere near the full amount of the loan and interest over 30 years.