Investor Loan; Pay off FAST or MAXIMIZE cash flow? - Posted by Ron Crawford II, Philly

Posted by Jeff on January 22, 2003 at 18:51:16:

Todd: Feel free to email.
If your from Colorado you know what Colorado Springs is like. Like Fort Collins its a small version of Denver, and as you know very different from the Western Slope. Its a high tech town so they are feeling the slump in the econony. Real Estate however is holding strong.

Investor Loan; Pay off FAST or MAXIMIZE cash flow? - Posted by Ron Crawford II, Philly

Posted by Ron Crawford II, Philly on August 23, 2001 at 10:31:16:

Hello all,

I’m pre-approved for an investor loan for a property that I just made an offer on. The price is $110k.

The loan is a 90-10 LTV with 4 points and 8.625% for 30 years. My question is do I want to pay MORE in mortage and shave the years down from 30 to something like 15 or 10 years?

I want and NEED positive cash-flow but I’m hearing from folks that I might want to consider paying it off in 10 or 15 years. If I do this, I won’t have cash-flow in my pocket from this property for 10+ years!!! That’s a LONG time to hold a property and give away cashflow that could have gone directly in your “Hip National Bank”! :slight_smile:

What are your thoughts? Would you go 30 years and make positive cash-flow while paying down the mortgage or would you try to pay it off in, say, 10 or 15 years without pocketing any of the cashflow??

Thanks for your time.


Ron Crawford II

Pay off FAST or MAXIMIZE cash flow? - Posted by Bud Branstetter

Posted by Bud Branstetter on August 23, 2001 at 13:02:58:

If you paid the additional principle that a 15 year amortization provides then you would pay it off in 15 years anyway. You are not locked in to a higher payment. As an investor you will require discipline.

The other factor to look at is that if you pay an additional dollar of principle you are investing it at the the interest rate of the mortgage. You should be able to do better than that. If it causes you to lose sleep it may be another story. You may want to reconsider your investment direction.

Stay with 30 year notes. - Posted by bronchick

Posted by bronchick on August 23, 2001 at 10:59:57:

I prefer 30 year loans because it makes your credit ratios look better. When a lender looks at your current liabilities, it does not matter whether you are paying a 10 year loan or a 30 year loan. Since the monthly payment on a 10 year loan is higher, it negatively affects your debt/income ratio.

Instead, get a 30 year loan and double-up the principal payments to pay it down faster. Unless the lender gives you a much better interest rate on 10 or 15 year amortization, don’t bother.

Re: - Posted by Carey_PA

Posted by Carey_PA on August 23, 2001 at 10:57:46:


I suppose it depends on what YOUR investment goals are.

I mean if you WANT and NEED cashflow then why would you listen to those folks telling you to forget about the cashflow for now and just have the thing paid off in 10-15 yrs. Maybe THEY don’t need the cashflow now and their game plan is to have thier properties paid off in 10-15 yrs., etc.

Me, personally, I wouldn’t want to NOT have cashflow on a place for 10-15 yrs., but that’s just me :slight_smile:


Re: Anyone from Colorado springs area… - Posted by todd

Posted by todd on January 22, 2003 at 16:56:34:

thanks for responding to my post. Actually, I am from the western slope and am contimplating moving over to the eastern slope. I have been to Denver many times but never been to the springs. I will have more questions soon…can I e-mail you later?
thanks again for your time
Todd Williamson…(CO)