My reference was for neighborhoods such as Carmel Valley, 4S Ranch, Encinitas, and for homes in a 2500 sf range. Somethign where many people I work with who are looking for a place to live that is commuter close and decent school districts. No way I see an FHA based mortgage payment on a 97% financed loan approaching a rent payment in these neighborhoods. Now if you want to use other neighborhoods as an example then yes there is an opportunity.
Now I also have two friends who have FHA loans and have had an inspector come to the house to make sure they live there. So if you are planning on using an FHA loan and not being honest about primary occupancy of the home, that is your risk to make.
As for creating the spreadhseet to determine the analysis correctly you should take a few different loan scenarios and plot them out over say 20 years. Do the same thing with your projected investment of the unused downpayment money to see what kind of return you get. Your assumptions on the return you will make is the biggest unknown here, not just what the return will be but for instance when will the high interest rate environment become a reality. So this portion of the estimations will be challenging but useful.
lonestar yes for certain homes/condos in certain areas and yes considering the write off, there are some areas getting close. Again, my reference (and sorry for not stating clearly) was for neighborhoods that are not close yet. Also again, and you can correct me on this, FHA loans are for owner occupied housing. So anyone eluding to grabbing an FHA loan and converting they property to a rental is essentially committing fraud.
