[TrudyM]

I am wondering if the number of months you can keep it rented might be very different from a patio home to a designer. When I look at the rental sites it seems there are a lot of patio homes not rented for more than the three top months.
We were thinking of doing the same thing buy now and rent however the unknown variables, (how much the value will actually increase, the economy etc.) and the added stress of a second property to manage made us decide not to do it. If you buy something you wouldn’t be comfortable living in then you have the real estate commission and sales expense of trading up to add into your calculations and when I did that It was too iffy for me. But here are some of the numbers I came up with and they do work if you buy what you really want and if nothing goes wacky in the world.
Here is what I came up with on the after tax cost of the mortgage if that’s helpful.
We were looking at a courtyard villa at the minimal as I was afraid the patios wouldn’t stay rented so for example sake I used a $175,000 Beauregard. So if 20% down plus closing costs a Mortgage would be $140 thou. I used a marginal tax rate (the rate on the last dollar you earn ) of 25% as we are both working currently and a mortgage interest rate of 4.5% to figure the real cost after taking in income tax deductions into account.
Cost of mortgage per thousand after tax is 4.108769 per month.
Sumpter county tax mil rate 14.4368 or per thousand after tax is 0.9023 per month.
So that would be $575.23 for the Mortgage and $157.90 for the taxes (Not including bond) so a total of $733.13 a month, If you use L2ridehd’s estimate of ½ the mortgage not being covered that would be a negative of $3451.37 a year at a minimal. A designer (what we really want ) is about 50 thousand more or $250.55 more a month. Or if 50% covered an additional $1,503.32 negative.
So a designer at $225,000 would have a negative cash flow of $9,909.37 over two years so it would hve to have increased to $234,909.37 or 2.2% a year which is very possible.
The paid down principal that is included in the negative cash flow is 1.3169 per thousand per month if you want to adjust for that I didn't as I wouldn't get the money back just a paydown on the future, I also did not calculate the value of getting a low rate loan now as in retirement we will pay off our loans.
These are kind of rough and may not be accurate just what I came up with. Sorry for the run on post.