15y vs. 30y strategy - convince me i'm wrong
Hello everyone,
First things first - I'd like to thank all of the contributors to this forum, your advices and inputs taught me *A LOT* - so I'm grateful for that.
TL;DR: For a new RE investor with a good starting point (liquid assets), would it be better to take "x" amount of 15-year mortgages, or "2.5x" amount of 30-year mortgages?
Full version (For the sake of argument, I'll make up some numbers to help explaining my question):
Consider the following case - Individual with $500K and no properties other than residential house.
Let's say residential properties in the area are going for $200K.
Comparing two relatively "conservative" strategies, let's assume individual wants to "cash out" 15 years from now (hence: get as much passive income from said properties once you reach the 15y mark):
Strategy 1. "Bulk up" - put 25% down payment + 30y mortgage, get as many assets as you can (let's assume 400K/50K=8), keep bulking from additional savings. Once you reach the 15y mark, you "cash out" some properties to pay the rest of the mortgages.
Strategy 2. "Sprint" - put 50% down payment + 15y mortgage, get less properties - but pay less interest to the bank as well (lower interest rate + higher equity gain ratio per loan). The properties will be payed in full once you get to that 15y mark, but you will have less properties.
Let's assume that both of the aforementioned strategies yield the exact same monthly payment to the bank, and same cash-flow. Let's assume cash flow is low-to-none.
AFAIK:
The main advantage of bulking up: More properties --> more gain if there's high appreciation
The main advantage of sprinting: Less money spent on interest payments (about 3.5x less), which also means higher equity gaining ratio.
Everywhere I look, people are saying that you should *always* go for the 30y approach. But when I look at the aforementioned strategies, it seems logical to me to try the 15y approach too. It sounds like a classic risk/reward issue, not like an "open-shut" case as depicted from all my research I've been doing so far.
I'm trying to realize if I'm missing something here, will appreciate your inputs.
Please forgive me if this question seems trivial, I tried looking up the answer prior to this post but most of the cases I've seen spoke about different cases (low initial liquid assets / high cash-flow properties + snowballing / etc)
Thanks