16 unit analysis with 25yr or 15yr amortization?

[Taylor Witt]

My long term investing goal is to continue to move up into larger apartment complexes which I will eventually buy and hold.  This would be my first apartment complex and I want to get opinions on whether I should amortize over 15 (less cash flow but less money tied up) or 25 years (more cash flow and more money tied up) knowing my goals.  It appears my net profit would roughly be the same amount if I sold after 4 years...

Attached is the sames analysis of the apartment building with the 2 different financing terms.

15 year amortization

25 year amortization

https://www.biggerpockets.com/calculators/shared/4...

https://www.biggerpockets.com/calculators/shared/4...

[Mike Dymski]

The 25 year amortization gives you more flexibility at exit should you choose to pivot your strategy in 3-5 years or if the market dictates what you should or can do.

Are you comfortable that your lender will will do 15% down with 15 year amortization?  That is not common in my market.  DSC = 1.27 using your underwriting and $2,900 per unit in expenses and lenders in my market would underwrite to a more conservative expense per unit and drive the DSC below their acceptable requirements.

On a personal level, at $800/mo cash flow, it would not take much (a couple of vacancies, HVAC replacement, economic downturn, etc.) to have to rely on alternative sources of income to support the property and debt service; so, the bank's ratios and their interest lines up with yours as well.

Good luck and keep us posted.