Should I refinance a 15 year to a 30 yr to gain cash flow wAirbnb

[Denise Fitzgerald]

I currently have a 15 year mortgage on a rental home I bought 8/1/16.  My rate was 3.25% I have a renter in the home and I just break even every month.  When I bought the home I was not interested in cash flow, just pay it off and later reap the benefits.  

I would like to refinance the home into a 30yr so I can get cash flow and the rates are looking higher now 4%-4.5%  

The renters lease is up June 1st.  At that time I would like to use the property as a vacation, short term rental.  I will put the place on several websites and Airbnb/VRBO.  I have another property I have been successful with for 3+years for vacation/short term rental.  I have 300+ reviews on Airbnb for the other property.

If I get a 30 year mtg. I am looking at cash flow of $1,500/mo after all expenses are paid that would be average monthly.  Some months will be less and some months will be more but the average would be $1,500.  Please remember I have 3 years of experience managing another short term vacation rental.

I would appreciate any advice on what to do financially.  I just don't know if it makes sense.

Thanks in advance --- Denise

[Andrew Postell]

@Denise Fitzgerald most investors choose 30 year fixed rates if they are using the "buy-and-hold" strategy (essentially renting).  There are 2 main reasons for this:

1. It allows the investor to cash flow more profits to use on things right now. - so if they wanted to reinvest the profits into another property or use that money for another purpose.  There is an important economical phrase called "time value of cash" which essentially states that $1 is worth more now than $1 will be worth in 10 years.  This is because of inflation.  So if you have an opportunity to receive funds now, and spend them on other income producing funds, then this is a superior method to paying down debt in order to receive funds 10 years from now.  Hope this makes sense.
2. It allows the investor to qualify easier for future loans.  - So if you need to get another loan having a LOWER payment held against you will help you qualify easier.  Admittedly, one 15 year loan may not disqualify you from another loan, but having multiple 15 year loans could...or one 15 year payment with other high payments might.  So why risk it?  Just keep the lower payment...and your loan won't have a prepayment penalty so pay extra if you want to.  But the debt payment that is held against you is the MANDATORY payment.  And a 30 year payment will be a lower payment.

Hope these help in some way.  Thanks!