You buy a house for $70,000 with an 80% LTV loan at 4.25%. It will rent for $795 with expenses of 30%. If you used all of the net rent for the payment, how quickly could you pay the house off?
(The answer will be posted with the new calculator problem in 2 weeks. Or if you can’t wait that long, you can go to http://www.facebook.com/pages/Gary-Johnston-Seminars/111368472221424 for the answer.)
No!
1.25% * $70,000 = $937.50
$937.50 / $40,000 = 2.34%