He's right. Your math sucks. Plus your numbers are unrealistic.Originally posted by ercchry
.... You should read and not skim
Where are you going to find a 3 bed home for $200k in Calgary? Forgiving this ridiculousness, let's continue with the analysis....
Plug 25 year amortization, $190k mortgage, 7 years at 4% monthly into a mortgage calculator and you'll get:
Monthly payment $999.44
Amortization Period 25 years
Interest Cost for the Term $48,060.65
Balance at the end of term $154,107.69
Interest Cost at Amortization $109,848.05
So 7 years dealing with the hassles of 2 roomates or tenants for a net gain of $36k or just $5k/year on the mortgage.
But you're stashing the $800 under your mattress, right? Your costs are still $1000k per month (+property tax which we'll say equals $150 per month) putting you in the hole $350 on a monthly basis.
But you're $36k up on your mortgage, right!? Well, let's deduct $3k for buyer fees, $1k/year for maintenace and insurance, and we'll say $5k in fees if you were to sell. Suddenly you're only $21k, or $3k per year ahead. Oh, and don't forget you're shoveling sidewalks and mowing the lawn to avoid by-law penalties.
Let's not bother considering the risk of floods damaging your basement or a nasty storm forcing you to re-roof or re-side the place or your PB pipes leaking. I'm sure you're getting a gem of a house for $200k so let's not consider any of those risks!
I know you think the value of the place will go up 180% in 7 years, but that's simply retarded given the current market. It would be just as likely to lose $50k in value when mortgage rates jump.
My conclusion:
You couldn't plan your way out of a wet paper bag.