I have 3 issues with your calculation

1. HELOC rate is indexed to Prime rate, Prime rate is 5.25%, normally you can get 4.75% right now. However, prime rate can go down and can go up as well, you can't assume it goes down for ever, I will just get $1m loan 30-year fixed for about 7.5% under current market condition.

2. You buy a $1.25 Rental property? The monthly cash flow is way too negative, from IRR perpespetice, the house price appreciation has to be double digit for a considerable time to overcome this, I will avoid this kind of investment.

3. 1 to 3 payment to your income is way too agressive for rental property. Because the rental can't cover your month expenses to this propety, I will argue you need to push to 1 to 12, which you means you may need at least $1M cash income to feel comfortable to take this project. Well, if we are in this income range, we may not debate here any more:)

In nutshell, I think you are too agressive in the calculation.

所有跟帖： 

• I would like to take a little risk -skyport- ♂ (526 bytes) () 04/11/2008 postreply 06:37:28

• 回复：I would like to take a little risk -Wisdom101- ♂ (201 bytes) () 04/11/2008 postreply 06:44:28

• Thank you -skyport- ♂ (55 bytes) () 04/11/2008 postreply 06:49:51