Quote:
Originally Posted by blankall
Considering buying a condo for rent. Let's say I earn $1000/month in rental income. I pay $100 for insurance and $150 for condo fees.
I have the option to go with a 30 or 25 year mortgate. The former will cost me 900/month, which will result in a 150/month loss. The latter will cost me 750/month which will allow me to break even.
Can I write off the 150/month loss if I go with the shorter mortgate term?
All help is greatly appreciated.
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What is your interest rate for your models?
You could be looking at 5-6% or more when it comes time to renew your mortgage and you could end up with with bigger losses to cover then anticipated. If you are using 2-3% like many of today's variable mortgages I'd bet heavily against it holding out that way for 5 years.
Also, what is your level of risk tolerance concerning the potential burst of the housing bubble?
I am looking into a rental property myself, but am thinking of holding off for a year or two to see if the prices start to drop. I'd probably kick myself for years if I bought in right before housing shed 10-20% of its market value. If you intend to hold the property for 15-20 years you may not be bothered with trying to time the market, and be able to look past a short term loss more easily.