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Re: Buying house, interest only loan the way to go?
[ QUOTE ]
200k * .80% = 160k 160k @ 30yr/7% = $1065/mo Assume tax and insurance @ 4k/yr or 335/mo about $1400/mo PITI. This doesn't include utilites, which you would pay anyway. $1100/mo in rents leaving you paying $300/mo. Can you get a 4th person to rent? In 5 yrs the principle is $150,611. Depending on appreciation you have now gained about $9k of equity on your $40k investment. Not a bad return. [/ QUOTE ] First off, 25% over 5 years is not great, you can get that in a savings account. Second this is much too optimistic. There will be maintenance costs, utilities, vacancies(?). Not to mention closing costs of ~3% on each end, thats 12k right there... You will probably be relying on appreciation to turn a profit here and thats not the safest bet right now. It's possible that this could work out in you favor, but I'd be surprised if its works out better than a variety of other investments that are lower risk and less work. Oh and if the point of this is to build build equity, please don't take out an interest only loan [img]/images/graemlins/crazy.gif[/img] |
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