15 yr or 30 yr note? - Posted by Karen

Posted by Karen on April 11, 2002 at 21:50:26:

work his way through college, but this money was a gift, and I think it is my responsibility to invest it for him as wisely as I can to help him with college.

thanks all for the advice.


15 yr or 30 yr note? - Posted by Karen

Posted by Karen on April 11, 2002 at 18:21:17:

I am going to purchase a SFH for a long term (about 12 yrs or so) rental in my neighborhood. I will sell to finance kid’s college in 12 yrs. if I get a 30 yr loan, the property will have a small positive cash flow, but less equity than if I get a 15 yr loan, where it will have a small negative cash flow (under $100 per month).

Looking for people’s opinoins on risk vs. equity vs. cash flow.

I own several rental properties and have a pretty good grasp of the cost/benefits of buying this property, this is my main decision.

Re: 15 yr or 30 yr note? - Posted by Tim Fierro (Tacoma, WA)

Posted by Tim Fierro (Tacoma, WA) on April 11, 2002 at 18:34:28:

Since you know you are going to keep this for at least 12 years, I would go with the 15 yr note and pay the ‘under $100’ per month difference. Call it a fancy savings.

Between now and the 12 years, the rents will go up, the value will go up, and your equity position will be ripe for the plucking.

Some start a college savings fund, some go into mutual funds to pay for a child’s college, but I like your nominal $100 a month for a period of time and then it won’t be anything as rents increase. Then in 12 years, the house is almost paid for that you will get a pretty good cash sale. The kid goes to college, and parents go to the Bahamas; sounds like a plan to me!

Re: 15 yr or 30 yr note? - Posted by David Krulac

Posted by David Krulac on April 11, 2002 at 18:34:00:

can you handle the negative cash flow even when there is a vacancy? if so go for the 15 years. one compromise would be to get the 30 year and when extra cash is available pay extra principle payents. you can always pay a 30 year loan off in 15 years, but not the reverse.

alos if there is positive cash flow from the other rentals then the negative here can be paid from the positive on the other properties.

David Krulac
Central Pennsylvania

Re: 15 yr or 30 yr note? - Posted by tom

Posted by tom on April 11, 2002 at 18:53:22:

I’d let the kids work their way through college