Rustico – to adress your questions – I was taken aback by your comment “monthly principal pay-down is significant, starting at payment one” since that isn’t my perception at all – I guess it is all relative

Here are some numbers on a $475K mortgage – 30 yr fixed at 7% – monthly payment $3160 – $389 principle and $2770 interest – at the end of 10 years the principle portion of the payment reaches $777 per month

I don’t consider $389/mo ‘significant’ when talking about a $500K asset or in comparison to the $2770/mo interest payment so I have always ignored the principle paydown when doing cashflow analysis – this may be a weakness in my analysis – on the other hand, very few loans these days are conventonal fixed-rate so principle paydown is rarely even talked about – I have a 10/20 IO loan on my property so I’m not paying down principle at all until 10 years after the loan originated