Originally Posted by
SammyS
Let’s run that calculation again. Please feel free to correct me if I’m wrong.
Purchase price = $80k
Down payment = $20k [[25%)
Interest rate = 5% [[30 yr)
Property taxes ~$6k/year at 67 mil
Monthly payments = ~$900/month [[$877 to be exact)
After 5 years,
~$15,500 payed in interest
~$1.200 in principal [[$58,700 still owed)
~$5,000 in insurance
~$30,000 in taxes [[what a rip)
If the house appreciates by 10% pa, then the value after 5 years is $80,000 x [[110%)^5 = ~$129k
Subtracting downpayment, balance owed, interest paid, insurance and taxes respectively = $129k - $20k - $59k - $15.5k - $12k -$30k = -$8k
Let’s now subtract the RE costs for selling:
-$8k - $129 x 6% = -$16k
So on a $20k investment, you walk away with -$16k after 5 years. That’s an actual loss since the interest and taxes are ~12% every year.
But......
Compare that to renting an $80k house. Let’s assume $900 per month + $300/year in renters insurance:
Total after 5 years of renting = $57k
Total delta = -$16k + $57 = ~ $41k
So Wesley Mouch is sort of correct. On a $20k investment and assuming the original scenario, you’d be up 100% as apposed to renting.