I can’t really wrap my head around it, you can have a tenant in there that maybe covers the mortgage, but it’s not really a good investment if you’re not getting a return?
Even if you use 500k to buy a property cash, wouldn’t that money be better off in the market?
In: Economics
You pay a down payment of 20% of 100k assuming house is worth 500k. Your a mortgage is roughly 3000 a month.
Tenant pays you 3000 a month covering mortgage, or 36,000 a year that you gain in equity. That’s a 36% return on investment year. Market returns average 7% meaning you generate 7k a year
There’s a lot of other numbers to consider like taxes and interest, but that’s the gist of it
There’s also the benefit of diversification and low risk dependent of the property
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