Quote:
Originally Posted by Mike Oxlong
It's really quite simple.
Numbers used for easy Math:
If you have 10,000 to invest:
$100,000 house
$10,000 down payment
$90,000 mortgage
Using your 4% rate
House is now worth $104,000
ROI is 40%
$10,000 spent on bonds
5.75% rate
Investment is now $10,575
Does that make sense?
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Not quite (using the simple math):
$100,000 house
$10,000 down payment
$90,000 mortgage
Using 4% rate
Value is now worth $104,000
Less carrying costs at 7% on $90,000 = -$6,300
Equity = $7,700
Whereas:
$10,000 spent on bonds
5.75% rate
Equity = $10,575