Cash Flow or Equity: 15 Year Vs 30 Year Mortgage for Rentals

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

15 Year Mortgage

Interest:         3.25% 
Payment:       $809
Rent:              $1,200 
Cash Flow:    $391 

After 5 Years
Amount Paid:                 $48,540
Interest Paid:                  $16,205 
Principal Paid Down:    $32,335 
Cash Flow Total:            $23,460
Total Profit:                $55,795

After 30 Years 
Amount Paid:               $145,620 
Interest Paid:                $30,505 
Principal Paid Down:   $115,115 
Cash Flow Total:         $286,380 
Total Profit:              $401,495

30 Year Mortgage

Interest:         4% 
Payment:       $550 
Rent:              $1,200
Cash Flow:    $650

After 5 Years
Amount Paid:                 $33,000
Interest Paid:                  $21,994 
Principal Paid Down:    $11,006 
Cash Flow Total:            $39,000
Total Profit:                $50,006

After 30 Years 
Amount Paid:               $198,000 
Interest Paid:                $82,794 
Principal Paid Down:   $115,206
Cash Flow Total:         $234,000
Total Profit:              $349,206

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.