All Forum Posts by: Brett Schmidt

@Jon Kelly maybe that is where I am getting confused? When I use this calculator to run those numbers, https://www.calculator.net/rental-property-calculator.html, my yearly COC is showing better with the 30 year; however, if I were to sell/refinance/etc at 10 years, the total COC is better with the 20 year. So I need to be able to accurately predict how long I will have the property, correct? I greatly appreciate your assistance in clarifying this for me.

I think the other part that confuses me, is when I run that calculator with a 20 year loan and 25% down, my overall COC at 10 years is still showing better. That is because the calculator is predicting I will be selling the property and I have more equity build up correct? Or am I doing something incorrectly to get those numbers? Should I only be looking at the yearly COC?

@Brian Gerlach

@Caleb Brown

@Zachary Beach

@Jon Kelly

thank everyone for your responses! I just received a call from the bank and had a wrench thrown into things. They are no longer doing 15% down and 20% would be my new option. I was able to negotiate closing costs down a little bit but there was a lot I could negotiate since they were already so much less.

It also looks like the interest rate my increase a little bit. 3.9% to be exact. Not a huge amount but still worth mentioning.

Several of you brought up a really good point, that I will probably want to refinance anyways so my thought is to still go with the 20 year option cause I will still be saving a total of about $6500 at closing (with DP and CC). Plus, my monthly cash flow will increase a little since I will be putting more down (even with the higher rate).

Does anyone disagree or have any other thoughts?

@Zachary Beach yes, the cap rate is below 10. I am getting a 7.5-8% cap rate using conservative estimates. 3.8% interest rate.

Thank you for your reply. It is reassuring that my initial thought to go with the 20 year when I would typically do a 30 is justified based on the lower down payment. Especially with being new to REI.

@Theresa Harris @Stephanie P. thank you both for your responses! My typical thought would be a 30 year as well but this is a unique situation that I agree changes that. I did decide to do the 20 year and look forward to using the cash I am saving on the down payment to purchase another home in the future. 

@Brad Hammond thank you for the reply! It is actually a local bank willing to do the 20 year loan. I was surprised as well when I heard the terms. 

To make sure I understand correctly, you would recommend the 30 year cause I am locking in the low rate for longer or the 20 year since I will have more immediate funds now?

Hello all, this is my first post, and I am looking forward to learning from everyone. I am new to real estate investing and have already learned so much from this site and everyone on it. You all have actually a huge motivation for me. It is an honor to even be here!

I am not sure what info I can provide to assist in my question but essentially I am trying to decide between 2 mortgage options for a new rental property. 30 year w/ 25% down and 6k in closing or 20 year w/ 15% down and 4K in closing. Purchase price is 110k and interest rates are the same.

With both options the property will cash flow. Obviously the 30 year will cash flow better from a monthly standpoint; however, I will be saving roughly 12k in down payment and closing costs going with the 20 year loan. It would take roughly 6 years for the 30 year loan to make up that 12k.  

I have been researching this extensively and I have not found a scenario like this, but please point me in the correct direction if I have overlooked something. Based on my research, it seems the majority recommend 30 year mortgages based on the fact you can immediately reinvest the additional cash flow. I’m this scenario though, I will actually have more money through the first 6 years with the 20 year mortgage to invest. I feel I have to be overlooking something right in front of me but I’m struggling on deciding if the 20 year is worth it based on the additional  immediate funds I will have access to or if I should play a longer game with the 30 year. I greatly appreciate any help or advice!