What caused you to pick a 10 year note? Did I miss something that Flyguy posted about that in his scenario?
Cutting through much of the above: a %20 down payment of $245,000 is $49,000. In the propsed scenario $20,000 collected annually pays the mortgage/int/taxes, breakage etc.-All costs associated with owning. Let's disregard rent increases or decreases and consider it breakeven throughout Flyguy's ownership. If at the end of 10 years we use your 3% appreciation and have a sales price of $329,000, less your commision rate, we end up having turned $49,000 into $120,000. Using my nugget and the rule of 72 that seems to be a pretax return of a bit more than 9% annually over the course of 10 years. Significantly higher if the appreciation rate is upped.
Maybe this is the difference in our calculations, my assumption was that the debt service was not included in the 20K? If that's the case, then his carry costs are not 20K, they are 6K per year. That changes things a bit -
appreciation - after tax return
3% - 11.4%
4% - 13%
5% - 14.6%
Which is a good investment. Is 6K a year for all ownership costs outside of the interest on the 30 year loan reasonable for a condo? I've never seen anything that low in the few condos I've looked at. It's usually much higher, around 10K-17K annually for a new development.
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