Forcing negative cash flow in short term mortgages

[Pedro Machin]

Though forcing short terms negative cash flow seems misguided, it seems to me like a level-minded long term strategy if you have enough capital to buffer your monthly losses. Please chime in if there's an angle I'm missing.

Take my case:

I have a 135K loan at 6% with a private investor. Assuming 50% losses, I stand to make $1525 a month net.

Comparing the cumulative cash flow of 5, 10, 15, and 20 amortizations, if you hold the property more than 8.5 years, the total cashflow will be more in the 5 year amortization than all other cases (at 10 year amortization, property nets approx zero). If you add equity to cashflow, the 5 year plan is superior any time.

Doing a Net Present Value (NPV) calculation makes all income streams a wash at around 7% return, however rents would be scheduled to increase accordingly. (Though I guess I would have to take inflation into account)

Any thoughts?