How to calculate debt service payments?

[Jonathan Olivares]

I've been watching videos and reading books on multi family investing. But I just don't understand why when I see them analyzing their annual debt payment, they just multiply the interest percentage by the amount borrowed, and go with that as there annual debt payment. But from what I know that's only interest. What about the principal amount borrowed? I never see anyone include the annual principal payment. 

[Chris Mason]

Originally posted by @Nick Mercurio:

@Christopher Phillips

I'm curious...Why would it be more more beneficial to do interest only payments on a seller financed loan? 

 I've yet to refinance someone out of seller financing that was fully amortized, with no professional loan servicing, where the old lender and my borrower did NOT disagree about the current balance (except in scenarios where only one party does the math...). Anyone here that's ever created their own amortization table, and tried to compare it to their institutional mortgage statement each month and track the amortization (or compare it to the amortization table in your loan docs), will be able to attest to it not being so straightforward as everyone thinks.

I/O makes it simple.

Rate * Balance / 12. 

$120k note @ 10%? Payment is $1000/mo.

To make it more simple and keep everyone honest, you can also write in the note that partial principal payments are not allowed. You either make the simple interest payment, or pay it off entirely (by writing a check, refinancing, or selling).