30yr Loans vs 15yr Loans
So of the 20 rental homes I personally own in Memphis, the first 9 of them were put on 30yr loans and the other 11 on 15yr loans. To give you a simple example of the difference, here is what you can expect:
$100k price, P&I at 4.875% 30yr - after paying $529.21 for 30yrs, the amount of interest you have paid is $90,514.36
$100k price, P&I at 4.875% 15yr - after paying $784.30 for 15yrs, the amount of interest you have paid is $41,173.54
Depending on the market you are in, if a home provides a high amount of cash flow you might consider a 15yr. No one can truly realize the potential until the homes are free and clear.
The negative of a 15yr is less cash flow and when you have a vacant home it takes the cash flow from more homes to cover it.
Is anyone else doing 15yr loans? If so would love to hear why you put them on a 15.
