15 or 30 year mortgage on 1st rental?

[Masud Khan]

I’m in the process of buying my first rental property. My credit union is offering 3.1% on an15 year while another lender is offering 4.87% on an 30 year for investment properties. I’m 46 and aim to retire by 65. With only 20 years on the retirement horizon, do I go with a 15 year or 30 year mortgage?

A couple considerations:

-my goal now is but and hold. in retirement it would make sense to have all the rent come on as cash flow and not have to pay down a mortgage.

-in my area, prices are expensive, so I my rent would not quite cover the Monthiy expense even for a 30 year mortgage. This means even more out of pocket for a 15 year!

Any help would be appreciated!!

[Jeff Kobernus]

I made a mistake doing a 15 year on one of my rentals.  The reality is you will have a little bit higher rate doing a 30 BUT you can always pay at a 15 year rate.  When market went down and oil went to $25  a barrel my unit went unrented for 3 months.  I ate 2,100 month being on a 15 year.  That was the time I wished I was on a 30 year paying $1400 or so while times weren't so good.  Take what your 15 year payment would be and pay it on a 30 and you'll have it paid off in 15 BUT if for some reason your vacant or a big repair comes you aren't tied to a higher mortgage.