Quote:
Originally Posted by Stormer
The mortgage could actually increase your return on investment (ROI). For example if you were getting a 6% return on the price of the unit after expenses but excluding financing costs and you borrowed the money at 4%, you would make a better ROI. If you borrow $300K and had 100K equity, you would earn 6% on the $100K and 2% net on the $300K. This works out to a 12% ROI (your investment being $100K). Of course your risk is substantially increased.
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One of the problems is that a $300,000 mortgage will carry a monthly pricetag of $1600 per month PI. Add Condo fee of $200 (low side), taxes of $100 per month and you are at $1900 per month as an expense. At a rental of $2500 per month, you will be left with $600 per month/ $7200 per year or 7.20% ROI. You must include your expenses as part of the ROI. Good luck with the rental rate.
Not sure how you get the extra 2% on the 300k as you arent investing the additional 300k in anything that will give you 6%. The bank has that money, not you.