Should I invest in ROI 16%(15yrs) OR 20.2% (30yrs mortgage)!!!!

[Elsa Hsu]

I'm a teacher in CA and do house hacking. My current property is easy to manage by myself. However, CA is too expensive to invest any more for my teacher's salary. 

This is my first rental property out of state in Ohio. I'm looking for a high cash flow area that allows me to gain more capital. 

I saw this property in Cleveland and would like to invest as a long-term rental. This is a single-family 5 bedroom 1 bathroom house with 2 garage spaces in Area C. 

Price: $103,000

Loan amt (43% down )- $44,599

interest: 6.5%

15yrs Mortgage payment: $509/month 

Closing costs ( 1.5% of total purchase and sale )- $1,545

Expenses ( taxes,insurances,maintenance,vacancy,capital expenditures )- $950

CoC ROI: 16.39%

Current rent: $1400. Potential rent: $1600 

3 questions: 

1. What's your opinion in investing in this Single-family property if my goal is to build more capitol? 

2. Should I do 15yrs mortgage to have ROI 16% ($630) OR 30yrs mortgage to have 20.2% ($769)?

3. OR should I be patient and wait for multi-family property

Thanks for your comments

[Patricia Steiner]

I like SFH as investments; so does institutional investors. It is estimated that Wall Street owns 40% of all SFHs in the US. Why not hang with the big boys! There's a lot available online about the change from MF to SFH by institutional investors and the reason for it. Here's one article that you may find interesting: ttps://www.cnbc.com/2023/02/21/how-wa...

Real Estate is about leverage. You should look at your mortgage payment as 'what is paid by the tenant' through their rent - in addition to your profit. The interest rate is not the driver here; it's the ROI.

Be sure you know the market you're considering - to include the year-over-year property and rent price appreciation.  If a market doesn't have both, reconsider.

Hope this helps.