I don't what kind of loan they are getting, or what their payment is – I'm just doing the appraisal. But for the property in Valley Center, the sale price is $660,000, with 20% down, so the loan amount is $528,000, and the estimated market rent is $2900 per month. At a 6% loan for 30 years, their payment alone would be $3300+. Real estate taxes add maybe $9,000 per year.
How is this an "intelligent investment"? Including taxes, the investor owes over $4k per month, and hopes to rent for $2900. That's ~ a $13k loss per year, not taking into account that a modest savings bond will yield + $6k per year on the $120k down payment, or $500 a month.
Essentially, this investor is cash flow negative $1600 a month, before the mortgage break.
