Many investors will argue different sides on this topic. Some investors will say that more cash flow with a 30 year mortgage is more advantageous because it frees up your money to do what you please, including reinvest. While other investors will argue that you pay less interest with a 15 year mortgage. Also, you pay the loan off more quickly and at that point get more cash flow.
So is there a clear answer? I have my opinions but I think that looking at the numbers will be more helpful.
To help see the numbers, lets create a hypothetical rental that you are purchasing and how the numbers play out on a 15 year note and a 30 year note.
Purchase Price: $144,000
Down Payment: $28,800
Loan Amount: $115,200
I think a hybrid approach can also be a good approach if you have the discipline. That is, put the loan on a 30 year note but pay it down on a 15 year schedule. This way, should you need more flexibility one month, you are able access more of the cash flow.
So what are your thoughts? Comment below as to what you think is the best route to take.
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