15 or 30 year mortgage for rental property?

Private Lending & Conventional Mortgage Advice
5yFollow

15 or 30 year mortgage for rental property?

Andrew Palmer
Member since 2021 · 3 posts · 0 votes

Does it make more sense to get a 15 or 30 year mortgage on a rental property? I understand there are pros and cons to each but does having your tenants pay off the mortgage in 15 years rather than 30 outweigh the additional monthly cash flow? 

0Reply
14 views

Most Popular Reply

Greg ScottPro Member
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
5y

I'd never get a 15 year.  Use the monthly cash flow to save up for another property.   

If you decided you wanted to later, you could always pay off a 30 year mortgage early, turning it into a 15 year mortgage.  Doing the reverse just causes your property to end up in foreclosure.   

1Reply
See this reply in the discussion

6 Replies

Jump to latestLatest
  • Greg ScottPro Member
    Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
    5y

    I'd never get a 15 year.  Use the monthly cash flow to save up for another property.   

    If you decided you wanted to later, you could always pay off a 30 year mortgage early, turning it into a 15 year mortgage.  Doing the reverse just causes your property to end up in foreclosure.   

    1Reply
  • Andrew Palmer
    OP
    Member since 2021 · 3 posts · 0 votes
    5y

    Thanks for the feedback Greg

    0Reply
  • Ned J.Pro Member
    Investor · Manteca, CA · Member since 2017 · 1k+ posts · 2k+ votes
    5y

    30.... I've never seen the benefit of the 15...... you can always make the monthly payments like its a 15..... but you cant make payments on a 15 like its a 30......

    The 30 offers you flexibility...... the 15 FORCES you to make the higher payment no matter what your life situations...... loss of a job, health issues, some other financial kick in the gut..... and stuff in life happens, and that 15 year payment may all of a sudden become very hard to keep up with....

    Got a 30 and want to pay it off faster? ok...... make a bigger payment.....

    1Reply
  • Elise Marquette
    Lender · Frisco, TX · Member since 2019 · 546 posts · 270 votes
    5y

    In addition to the above comments, it also depends on how long you plan to keep the property and your investment strategy. If you're wanting to do buy and hold and have the properties eventually be free and clear, I'd usually recommend the 30 year and just pay more each month. If you plan on keeping the property for less than 15 years, then I'm not sure it really matter in the long run. Rates aren't going to be that drastically different to make up for being tied into 15 year mortgage payments.

    1Reply
  • Ryan MoyerBusiness Member
    Property Manager · Orlando Kissimmee Davenport Salt Lake City, Park City · Member since 2019 · 990 posts · 1k+ votes
    5y

    As others have mentioned you can always pay the 15 year amount on your 30 year mortgage and it will work out the same.  The only advantage a 15 year has is that you get a slightly better interest rate.  I don't think that is worth the added flexibility of the 30 year loan even if you plan to initially make 15 year style payments on it.

    Cosmic Vacations4.9170 Reviews
    WebsiteView Page
    1Reply
  • Carlos Ptriawan
    Member since 2019 · 7k+ posts · 4k+ votes
    5y

    It only makes sense to get 30-year financing on rental. Without 30 year financing, I'd rather invest in stock market. Why? The gov. pays your money.

    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free