15 or 30 year mortgage for landlording?

[Mitchell J.]

Hi all,

I'm curious to get your thoughts on whether you think a 15 or 30 year mortgage is the right way to go for a buy + rent out strategy?  Suppose my goal is not necessarily cash flow (say I have a full time job that pays around $250-300K a year and I don't plan on leaving it, and this provides enough cash to acquire properties), but rather wealth accumulation -- does it make sense to take the 15 year loan with lower interest so more of the rent payments go towards building equity in the properties?  Or does it still make sense to get the 30 year loan?

Would love to get your thoughts on this.

Thanks!

[Patti Robertson]

@Mitchell J. - I'll tell you what one of our lenders taught us.  If you intent to keep growing your portfolio and want to keep borrowing you need to protect your debt to income ratio.  It's best to stretch your loan term out as long as possible, because that will minimize the minimum payment reported on your credit report.   You can always pay a higher payment if you want to, but the higher payment will not be used to calculate your debt to income ratio.