Pros and Cons between 15yr, 20yr, or commercial 5/20- LET'S TALK!

[Andy Krzanowsky]

Hey all just looking for a little discussion for my options on getting financing going after my "BRRRR" in Lawrence, Kansas.

I will be able to get all my capital back out of this deal when I refinance here in the near future.  I sat down with my lender and we talked about a few options.  Technically I could probably pay myself cash and take a loan for $140k instead of $120k but I'm just going to finance the amount to get all my capital back so I end up with ZERO $ in the deal.

I'm leaning towards conventional financing at a 15 or 20 year amortization for the rates.  However, a commercial loan will allow me to not have to season my money and can replenish my capital NOW instead of in 60ish days.

20 year- 4.15%

Total Payment is $1000 with PITI

15 Year- 3.875%

Total Payment is $1145 with PITI

5/5 with 20yr Amortization

4.89%.  Was started for 8 months interest only and then rolls into the 5yr lock on 20 year am.  On our other deal the cap was a rate no more than 7% at the 5 year adjustment.

So the difference is about $150/mo.  Being up front that is not going to change my life in any way on a monthly basis right now.  We are comfortable but we live well within our means to be in this position.  @ScottTrench basically wrote a book about my life lol... where are my royalties?

To shed some light on the Property... 

It rents for $1450/mo this year but next year we project we will be renting it for $1650-$1800.  So, regardless my projections will put us in a good spot after expenses

What am I missing here on my thoughts?  We are pretty conservative people and I put a lot of value in paying down my assets and being in a good place in case things change in our life.  I don't want to lose it all and try to rebuild by being over leveraged.  I realize there are a lot of preachers of "Leverage until they drop" but that isn't me.  I can always leverage the equity at another time but to me the value of security means a lot more.  This is not my full time job.

My biggest thought is maybe I'm missing something from a tax advantage standpoint... I'm giving up 5 years of writing off big interest.  However... Trump or someone else could always change that anyway.  Few things are guaranteed in this life.

Regardless I feel blessed and am in a great spot. This was my very first project... took it on alone... and in my opinion hit a home run. We are going to cash flow $4-700/mo after PITI but before expenses on a SFH with ZERO $ invested. I wish they could all be this way.