The world of mortgages has changed a TON since I first got into the business. So, in the interest of full disclosure, I have not financed a property through a traditional bank since about 2007. So, I'm not going to talk too much about where to get loans -- instead, I want to focus on the type of loan to get.
As tempting as it may be, DO NOT GET 30-YEAR LOANS. You will get soaked in interest for the first few years.
Let's take my little 2BR house that I bought with a $55k loan.
| Years | % | Payment | Loan balance after 10 years |
|---|---|---|---|
| 30 | 5 | $295 | $44,600 |
| 20 | 4.5 | $348 | $33,300 |
| 15 | 4 | $407 | $21,700 |
A 15-year loan costs $112 more per month (~$13k over 10 years), but after that same 10 years, the balance is a whopping $23k less. I almost never go over 20 years, though I have gone to 25 once or twice if I thought I got a GREAT deal on an appreciating property.
Keys to being a landlord →
My name is Dan & I've been an active real estate investor since 2004. I also have a broker license in 2 states: Florida & North Carolina. I've seen the best of times (2005-2007) and the worst of times (2008-2010).
