30 year loan versus 15
I own two properties, (one was bought and one we built) both are duplexes. Everything I listen to and most of the forums on BiggerPockets it seems focus on 30 year mortgages. However, in my area (central Nebraska) I have yet to find a lender who will loan on an investment property for anything over 15 years and 10 years is preferred. I have had a couple of lenders says they would loan up to 20 years in specific circumstances but most will not say what those circumstances are. I have been to approximately 8 banks in our area and with the exception of two national/regional chain banks, the others are actually locally owned banks. Another thing is that most any of the properties that I find will barely make the 1% rule and I have yet to find one at 2% or one that each door will cash flow at $200 as suggested, at least on a 15 year note.
My brother and I (we are partners) generally view property as a savings account. For example, the first property (duplex) we purchased we paid $116,000 for and it rents for $650 per side or $1300 per month (this is the high end for the area). It is on a 10 year note and with PITI the payment is $1254 per month. We pay for any maintenance out of pocket as well as vacancies. However, we look at it as over the 10 years, even if we had to put $200 a month into the property (for Cap X expenditures, lost rent, maintenance etc.) that at the end of 10 years we will have a property that is worth $124,000 plus. In other words we contributed $24,000 to get $124,000 plus.
I guess my question would be, other than private financing or owner financing (both options I am exploring), how do others deal with the length of the loan? Especially to find and secure property that will cash flow at the 2% rule or $200 per door as suggested on this site. I am not in a position to drive to out of state locations repeatedly to look at property, and if I had to hire a property manager it would drastically increase my costs on a 15 year loan. Also, I own my own home and my wife loves it so buying a multi-family home on a FHA loan or something similar and living in it is out of the question. Any feedback/advice would be appreciated.