Posted by Oleg Orel on February 17, 2005 at 09:08:44:
When you are doing your excel speadsheet, do not forget that inflation rate is 3%/year in average. Adjust your payment schedule accordinly, in 99% you’ll found that differing payments would decrease your expenses.
Posted by sandie on February 16, 2005 at 23:08:14:
Should you get the longest mortgage you can (30 year note)on rental income property? Or should you take a shorter note for the sake of paying the propery off sooner? The numbers work either way. Please e-mail firstname.lastname@example.org
Posted by Ed Garcia on February 17, 2005 at 10:13:50:
My suggestion is to borrow long and payback short. Meaning borrow for 30 years and pay it back in 15 if that is financially convenient for you. When I tell you this, I?m assuming that your intentions are to portfolio the subject property.
The reason for my suggestion is CASH FLOW. I feel that if your intention is to continue to invest in real-estate, you will demonstrate a stronger cash flow.
Keep in mind, when penciling your deal, you must deduct 25% from your rental income to cover (taxes, insurance, vacancy, and of course expenses).
Hi Sandie, That is a difficult question to answer. On one side, you will get a better rate on a 15 year mortgage. On the other hand a 30 year mortgage will bring down your monthly payment… If you have a surplus of money in the bank, I would probably take a 30 year and pay a calculated amount of extra money each month so that you pay off the note in 15 years anyway. If you run into a money problem, you can just make your normal payment (That was based on 30 years)… Does that make sence?