I'm gonna try to make this quick, as it seems that spending all day reading blogs might not be the best use of our collective time. But, I think this is important to know.
Fellow investors, especially those of you who are "buy and hold" investors, let me give you a quick tip.
1) If you live in a city where the market is doing well and you're likely to make between 5%-15% a year in appreciation (maybe more depending on where you live) then your primary equity building tool will be appreciation, not paying the mortgage down.
2) If your property is in a less-expanding market then you are probably counting on paying down your mortgage in order to acquire equity.
For those of you in the first situation, you should ignore products like a 15yr mortgage, and maybe even fixed rates. And, you shouldn't be putting large sums of money down on your properties, as that will only save you a small amount of money monthly and you could most likely invest it elsewhere, where it will make you more money than it could save you, had you put it down. (make sense?) For you, 100% financing is not a bad choice and neither is an interest only loan. After all, on a $1000 mortgage payment you're really only going to be paying about $200/month toward the principal, which is $2400/yr. On a $180,000 house, that's hardly a dent. You may as well save that $200/month for other investments or to offset low rent ratios, since (at 10% appreciation) you're going to be making $18,000 in equity anyway.
If you happen to be in the second situation then you should do the exact opposite. Consider finding ways to put more money down and to pay a little extra toward your mortgage every month. Or, and I'm sure you've heard of this, you could pay half of your monthly mortgage every 2 weeks. It seems the same, but it's not. You'll actually make 1 extra mgt payment every year. In the long run, that will save you about $25,000 on a $200K mtg, which will be a couple of years of payments.
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