Dearborn, MI · Member since 2016 · 13 posts · 2 votes
why do people who try to explain use 30yr mortgage vs 15yr mortgage on 100k properties. The difference in interest is huge and wouldnt a 15 year vision be more closer to a home run?
The tenant pays the mortgage. The longer the term, the lower the mortgage payment, and the higher the cash flow. The tenant is the one buying the property for you. Don't help them.
If it's a house to live in and want to pay down debt as soon as possible, then 15 year makes sense.
If it's an investment property and goal is to minimize ALL expenses as much as possible to get the best cash flow (just like running a business), then 30 year would be best.
Leverage increases returns. The return on paying down debt is only equal to the interest rate on the debt (say 5%). Good real estate investments return a lot more than 5%.
The tenant pays the mortgage. The longer the term, the lower the mortgage payment, and the higher the cash flow. The tenant is the one buying the property for you. Don't help them.
The tenant pays the mortgage. The longer the term, the lower the mortgage payment, and the higher the cash flow. The tenant is the one buying the property for you. Don't help them.
why do people who try to explain use 30yr mortgage vs 15yr mortgage on 100k properties. The difference in interest is huge and wouldnt a 15 year vision be more closer to a home run?
There is always the option to pay the 30 year mortgage like a 15 if you changed your strategy to reduce principal, but not the other way around. If you get in a pinch and need to reduce expenses, paying the 30 year payment will help vs being stuck paying the 15.