In NSR’s scenario, it looks like about a $1300/mo. rental discount, but note that the calculation is based on 100% financing.
I assumed 100% a 6% interest because it benefits the owner.
If you put 20% down, you’ll still only get a loan at 6% currently. Unless you ARM it. If you actually finance 100% you’ll probably pay more than 6%.
how much does $120,000 invested earn a year? 10%? do you want to CD it and make 6%?
Putting the downpayment in a CD and paying 40% taxes on it the numbers are still 67% and 81% depending on the range of rent. For monthly out of pocket cash it is 44% to 53%.
If you make more on your investment, say 10%, the numbers are much worse, out of pocket is 37% to 45%, expense is 53%-64%.
I know several homes in my neighborhood asking $3500 or less for rent and trying to sell at $1.4M or more.
