Podcast 473: Why did David refinance into 15 yr mortgages?

[Nick M.]

Hi everyone

Just listened to podcast 479 and during the intro @David Greene said his best day was refinancing into 15 yr mortgages.

I don't understand why he would do this? 15 yr = bigger payments, less cash flow.  I understand you'll build equity in the properties more quickly but if the goal is to accumulate properties, wouldn't it be better to save the cash in order to fund more acquisitions?

There's something here I'm missing.  Would love some help.

Thanks, Nick

Here is the full quote: 

David:As odd as this sounds, I would relive the day that I refinanced four California properties out of 30-year mortgages into 15-year mortgages. Because the day that I did that, I ran it through an amortization calendar and I realized how quickly this was going to scale as far as equity was going to go. I was going to pay him off faster than 15 years. But I ran it through a calculator where I realized I can pay off these 15-year mortgages at nine years, and then refinance them, buy more properties, do the same thing again.

David:And I was going to turn these properties over four times and grow it to $12 million, instead of a million and a half that it was worth and that feeling of compound interest working for me just had me jazzed up. I was like walking on the clouds. And I know it’s a weird story. But I remember being super excited when I saw that worked out. What about you?