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Strategies & Market Trends : Value Investing
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To: bruwin who wrote (59245)4/1/2017 6:22:06 AM
From: staring  Read Replies (1) of 78842
 
Assume you use an LTV of 80%. The location of the property is good. If mortgage and operating expenses are comparable of that of a rent. Since the location is good, in 30 years time, it is likely that the property value won't be much lower than today in real terms. Therefore, in 30 years time (once the mortgage is repaid) your 20% equity will be 100% or near that (5x your initial equity, or near 5% annual return in real terms). The key thing is to do the math right, understand the risks and, if possible, ring fence the main risks.
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