Cash flowing on your rental properties is the key initial element when evaluating a potential purchase. It’s relatively easy to research current market rents yourself by logging on to any real estate agent’s website and look at rental rates for properties in the area in which you’re interested.

Of, if the adjust mortgage termproperty is currently rented then all you have to do is ask the tenants or the agent selling the property. But again, cash flow is the king here and regardless of the rental income, the real concern is whether or not the rent covers your expenses.

Most real estate investors and mortgage customers in general know that the longer the loan term, the lower the principal and interest payment. When looking at potential financing options you’ll be provided with a range of loan terms from 10 to 30 years. All too often borrowers think they have to choose between a 15 year and a 30 year fixed rate loan. Financial planners and other tax advisers may tell you to take the shortest term possible to avoid long term interest but if the term is so short the project no longer cash flows, should you move on and find a less expensive property or look in an area with higher rents? That’s always an option but you don’t have to take a term shorter than 30 years and still keep your financial planner happy.

Mortgage loans today have no prepayment penalties. In fact, there haven’t been any prepayment penalties for years now but for some reason the “make sure there are no prepayment penalties”
advice appears on multiple “advice” websites. That’s important because you can finance a property with a 30 year loan and make extra payments when you feel like it. Take a $200,000 loan using a 30 year 4.25% rate and a 15 year 3.875% rate. The payments are $983 and $1,466 respectively for a difference of $483 per month. You may elect to pay the $483 each month to pay the loan off in 15 years even though you have a 30 year loan term. And you do it at your leisure.

Yes, it’s not as regimented as a 15 year loan where you’re forced to make the higher payment, but you do have the option to pay more when you please, not when the mortgage company says so.