Hey everyone. Welcome to another short episode of the podcast. In this episode, I want to talk to you about why I would always get a 30-year mortgage and not a 15-year mortgage as a real estate investor. Now, I have a hard time with the word always because there seems to be an exception to every rule, but I do feel really strongly about this one, and I want to explain why. So most of you probably know there are different lengths of mortgages that you can get a 15-year mortgage. A lot of people would make the argument for getting a 15-year mortgage,, first of all, the interest rate is typically lower.

Like today, I just looked up as I'm recording this in January 2025, a 30-year rate online that

I saw was 6.4% and an equivalent 15-year mortgage today was 5.7%.

So that's a difference of like 0.7% on your interest rate. You know, not insignificant. That can make a difference. And the argument would be, first of all, it's cheaper if you do that. You also build equity faster with a 15-year mortgage because every payment you make is going to be adding more to a principal. So you're paying that bet down faster. And ultimately, if you like having a free and clear property, you're going to get there faster with 15 years than 30 years. All right. So that's,

that's the argument for doing that. But here's the argument why I would not do that as a real estate

investor. There's two big reasons. Number one, risk and number two, flexibility. So let's talk

about risk a little bit. I ran some numbers on a hypothetical situation where you borrowed $200,000 with a 30-year

mortgage and a 15-year mortgage using those interest rates I told you before, 6.4% for a 30-year,

5.7 for a 15-year.

The payments on those are the big difference.

You know, to pay it down over 15 years, you would have a $1,656

payment. And then if you had a 30-year mortgage, you would have a $1,251 payment. That's a difference of

$405 per month. So let's talk about risk. One of the biggest issues in real estate investing,

and this is the follow of a mantra of Warren Buffett who says, rule number one of investing,

don't lose money. And rule number two is don't forget rule number one. Well, in real estate

investing, I have been in the business for 21 years. And the only way I've seen people go out

of business is because they couldn't make their mortgage

payments because they ran out of cash.

They didn't have enough cash flow.

It's like if you had a big fancy Ferrari and it goes really fast, but then you run out of gas

and you're stuck on the side of the road.

That's kind of the way these real estate investors that I saw go out of business in 2007,

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