First Rental Property (Duplex) / Loan Question

2 Replies

A little on me first, yy wife and I are in our Mid 30’s.  We are debt free expect for our current house we live in.  The past 2 years I have been saving cash and researching real estate investing.  I now have my 20% cash to purchase my first rental.

I am buying my first rental property, I decided to go with a Duplex (with current tenants @ $775 per unit).I have been crunching a lot of numbers. Annual income for the property is $18,600 – I am giving myself a 7% vacancy allowance so the adjusted annual income is $17,280.After Taxes, Insurance, mortgage and property management the NOI is $1338 or $111 per month --- This is with a 15 year note. If I use the same numbers but change the loan to a 30 year my NOI goes to $7908 or $659 per month.

If I do the 30 and pay an extra $200 a month to the principal this brings it down to a 17.6 year note.  Given this is my first rental property, I want it to be a blessing not a burden.  I feel more comfortable doing the 30 year note and paying extra.

A friend of mine says I should do the 15 year

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Hello Nick,

I think you answered your own question.  If you pay the extra money on your loan it will go down faster and if you ever run into financial problems you'll have a 30 yr and not a 15 yr loan.  You can still achieve what you want with a 30 yr note and have the benefit of a lower payment just incase you need it from month to month.

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