I can get 3% annually return on fixed deposit.
If a house is worth $10000, and I can get 70% mortgage from Bank at 4% interest rate,
I need $3000 as initial capital and borrow $7000 from bank to purchase this house,
Luckly, if I can get $500 rental annually, then I get 5% ROI on rental property, but I need to pay 4% mortage rate, so I get 5% - 4% = 1% net income from rental property.
If the price of house keeps unchanged for a period of time, should I place $3000 on fixed deposit or should I purchase $10000 house for 1% net income annually?
Does anyone have any suggestions on how to do this math?
Thanks in advance for any suggestions :>
If anyone cares to know, this was answered at http://answers.microsoft.com/en-us/offi … 740e6573dd and other places. Just google his question.