Option to pay for points or not with conventional financing

[Tyler Silverman]

Hello everyone that reads this,

I'm reaching out to anyone that may have already done the math/thought exercise. My question is if buying points for a lower interest rate on a traditional-financing loan has any $ advantages for an investment property. If the cash flows are positive in either case (buying and not buying points), is the advantage of a lower interest rate really only observed after so many years of tenancy compared to not having bought points? What about buying points to make a deal cash-flow positive, jibberwash?

Approx 20% down payment for a property about $100k.

Thanks, BP community! :-D

Tyler

[Matt K.]

Originally posted by @Caleb Heimsoth:

This may vary by lender but I looked st this for my recent one and it was 1 point for .125 percent but down and 3 points for .75 percent but down. So it’s not linear and I’m sure they do that on purpose. I chose not to do it because I may not even have the mortgage long enough to recoup those points (would take 7 plus years to recoup)

 I'd rather toss that into my reserves and reduce my capex or whatever lol