My goal is to maximize cash flow, what are the best loan terms?

[Jose Petitfrere]

Hey BP buddies, im 22, and Im poised to purchase this property in Tallahassee; my mentor always told me if you want to focus on scaling and maximize cash flow, your mortgage term should be interest-only payments and no escrows. But I wonder, how about getting fixed rate debt now? Locking it in and paying future eroded dollars due to inflation running at 8.5% using BLS stats but based on shadow stats, that uses metrics of on CPI back in the 70s & 80s, it shows CPI is well above 15%. Assuming the fixed rate debt is 30 years at 5.5%, which would maximize cash flow? Without taking expenses into consideration and adjusting for inflation. 

Purchase Price: $143,000

Down payment: $35,750 (25% Loan to Value)

[Riaz Gillani]

Agreed on your comments re: inflation. Core CPI (CPI with Food & Energy prices stripped) is still on an uptick.

Also agreed on your mentor's comments re: how to scale. More debt + more liquidity is how to achieve hockey stick-like growth. 

But, that's assuming you have the resources and access to capital to reach economies of sale. A new investor who's using the greater portion of their savings to finance a one-off purchase really shouldn't focus on cash flows. Using the the PP you listed and my familiarity with DSCR's over the last few months, best case scenario is you'll be netting a few hundred dollars a month. Unless you have an investment vehicle that can 2x those dollars, the value Real Estate is unlocking for you is (1) tax benefits and (2) potential price appreciation.

Over time, interest only options and abstaining from escrows will provide you with more liquidity that enables an opportunity you'd otherwise not be able to afford. If you're just starting out, let your money work for you with the amortizing debt.