Terms for refi question

2 Replies

I am new to BiggerPockets and real estate investing.  I am developing my strategy and have a question. 

I would like to get a general feel on what length of notes (10, 20, 30 year) people look for when they buy or refianance (brrr method) a property.  What are the thought processes of choosing one over another.

Thanks!

Hey @Jarrett Grosdidier ! welcome and good luck!! BP is a great place to learn and get assistance.

@Jarrett Grosdidier , welcome to BP! Tons of resources for you, just poke around and ask questions. For the term, it will depend on your situation. If you are looking for more cash flow, then stretch out the term as long as possible and don't leverage as much. You can almost always pay down principal if you have surplus cash and want to pay off the note early. If you get a short term then your rate will be better and interest over the course of the loan way less but your monthly nut is higher. With a long term buy and hold strategy, tenants are paying the interest so I have gone for the 30 yr fixed. This allows me to scale more easily but in a pretty leveraged fashion. I plan on shifting from acquisition to debt reduction once I hit my monthly passive income number. At that point maybe 15 yr terms will make more sense, not sure yet.

It is really going to depend on what you want to get out of the investment and what the numbers tell you to do (or which options you have). If you post some real world scenarios it will help frame the question a little better.

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