Rental Unit: 30 year vs. 15 year mortgage

[Greg McCullough]

My fiance and I are looking at a rental property that would would yield about 8.4% Cash on Cash ROI based on a 30 year loan and the low end of rental income possibility. We've considered doing a 15 year loan since our incomes could support it, but then we would basically hit a 0.0% Cash on Cash ROI. Does that even make it worth it? I'd rather have the passive income, pay extra when possible, and turn a monthly profit. Am I thinking about this correctly? Other than the surface advantages (such has shortly loan, lower interest, etc), are there any other advantages? Thank you!

[Matt Ziegler]

Greg,

If I were you and was using conventional financing, I would go for the longer term. This will allow you to enjoy cashflow, and or pay the note down faster when possible. What is the rate difference between the 15 and 30 yr loan?