Quote:
Originally Posted by Toymeister
We bought five years early to take advantage of leverage.
Let's say a 300k home, 20% down. 8k in misc costs and 4k annually in costs not covered by renters. Three years advance purchase.
80k all in. 300k with 5% annual housing price increases = 347k home. 47k appreciation on 80k investment in three years.
Yes, yes, yes! There are risks, it can be a hassle, housing costs might not increase 5%, nor am I including the principal reduction. No I am not including opportunity costs of the 80k expenses. The point is leverage can work handsomely for the OP.
It has worked well for us. Renting can be easily handled and does not require hiring a property manager with the associated 17% commission on rent.
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I agree a good investment, but I totally disagree with one part of your calculation - You will make more than enough to cover all your costs without throwing in $4k - the only way you would have to throw in money is if you use one of those high priced management companies. I have 2 rentals and they both cashflow positive, even with a mortgage. Jan-April, October and November are a lock, December and May are a bit tougher but rent about 80% of the time. I have even rented the summer months about 50% of the time. Villagers homes 4 rent is the secret. You won't get rich, but they appreciate every year. Easy to track that since there are always lots of each model for sale. The house I bought for $245K in 2014 is now easily worth $310, probably $320.