15 year Mortgage Strategy
Hey BP Community!
This is my first discussion thread. Yay!
My Question is in reference to the most recent BP Episode (BiggerPockets Podcast 290: 7 Paths to Financial Independence)
In the episode, Brandon and David discuss the 15-year Mortgage Strategy. Buy a house between 100-150K, put it on a 15year mortgage, repeat each year, then in 15 years Refi and pay yourself a tax-free salary.
This strategy is super appealing to me. My main question is what the best market for this strategy might be.
The numbers:
$100,000 property on a 15year with 5% down @4.5%: PITI = $996
Estimated rent payment needed to "only" cover costs (as per the strategy): ~$1,500
$150,000 property on a 15year with 5% down @4.5%: PITI = $1,480
Estimated rent payment needed to "only" cover costs (as per the strategy): ~$2,000
This puts us at needing to find properties that will rent for ~1.5% of the purchase price. In my market (Washington, DC) that is basically unheard of (as is a $100,000 house). There are some properties like this in and around Baltimore, but most (if not all) of the properties in these price ranges require a flip to get into rentable condition.
I am looking for recommendations for other markets to apply this 15-year strategy if anyone might have some.
All the Best,
TJ Fleming