Type of Loan

I am at the age of 24 and my family has been really successful in real estate. The question i have because I want to hear your thoughts is My dads saying is "if it cashflows on a fixed 15 year fixed mortgage after (20-25% down) including taxes, insurance, and HOA, Its a good buy! That excludes taking into account vacancies, and upkeep maintance. So with that advise I have now purchased 4 propterties (2 townhomes, 1 fourplex, 1 home). My brother and i are buisness partners and split everything 50/50. We manage all our properties by our selves as well. 
townhome #1-mortgage+insurance+taxes + HOA=876, RENTS FOR 1,000
townhome #2-mortgage + insurance + taxes + HOA=890, RENTS FOR 1,000
fourplex-Mortgage + Insurance + taxes +water&sewer=2,200, RENTS FOR 2,700
home-Mortgage + HOA=1,950, RENTS FOR 2,200

payment for all mortgages=5,916
cash flow=6,900

In saying all this, all properties are on a 15 year fixed mortgage. I have been reading your blog and haven't see anything about wither to put rental properties on 15 year or 30 loans????

WHAT ARE YOUR THOUGTS????

Comments

  • Like Mark, I like 30 year fixed loans. Reason is this increases your monthly cash flow. More monthly cash flow means more cash on hand to buy more rentals which means more cash flow. Without using leverage you have to be really rich to buy rental properties.
  • I always thought that cash flow in property investment means incoming money - cost = cash flow, which would mean your cash flow is $1000, and not $6900, isn't it?

  • Jenna101 said:

    I always thought that cash flow in property investment means incoming money - cost = cash flow, which would mean your cash flow is $1000, and not $6900, isn't it?

    Yes, I would agree with that
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  • Posts: 0

    Bootsfei, I think your doing great by owning all these properties at your age, I'm sure you'll be going places. But managing 7 rentals (4-plex and 3 homes) for a monthly cash flow of $1000 is a lot of work. I know only by my own experience, but managing 7 rentals is almost half a job at times (which translates to a fulltime yearly salary of 24K, plus some home appreciation and tax deprecation).

    Forum people, what is your return on "time investment"?

  • Now lets assume you get a 30 year loan. There are different types of 30 year loans. So you can choose a loan that is over 30 years fixed, or with a 3 arm, 5 arm, or 7 arm. A fixed loan would have the highest interest rate because you know what you would be getting every year, plus we are in a rising interest rate environment. And once you understand what the lenders prepayment penalty is, you can focus on when you will refinance the loan to get a better rate if you plan on holding onto that property for a while.
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