Leverage at work
|
A
|
B
|
|
| Purchase Price | $200,000 | $200,000 |
| Down Payment (100% / 25%) |
$200,000* | $50,000* |
| Mortgage (25 year amortization / 5 year term) |
None | $150,000 |
| Net Annual Rents after all expenses (except mortgage) | $8,000 | $8,000 |
| Annual Mortgage Payments (2.50% - Current 5 year fixed rate) |
None | $7,100 |
| Net Annual Income (Net Annual Rents + plus mortgage reduction) |
$8,000 | $900 + $3,400 mortgage reduction |
| Net Selling Value (1 year later) with 10% value appreciation |
$220,000 | $220,000 |
| Net Cash Position / Down Payment |
$228,000 / $200,000 | $74,300 / $50,000 |
| Net Return | 14% | 48.6% |
*Does not include legal fees, closing or land title registration costs.
Please note this an example, not a predictor of actual real estate growth.
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