I need to live in Chicago for 5 years. I also want to own more investment real estate I am looking at a Chicago condo for $125k. Assume $25k down, and 100K mortgage (5/1 ARM at 3% (30 year)) Amort table shows $421.60 monthly payment. After 5 years, I will have paid $14k in interest, and have a balance on $89k ($11k principal paid) Over 5 years, I will have paid $12,500 in taxes. Total 5 year "sunk... [more]
I need to live in Chicago for 5 years.
I also want to own more investment real estate
I am looking at a Chicago condo for $125k.
Assume $25k down, and 100K mortgage (5/1 ARM at 3% (30 year))
Amort table shows $421.60 monthly payment.
After 5 years, I will have paid $14k in interest, and have a balance on $89k ($11k principal paid) Over 5 years, I will have paid $12,500 in taxes.
Total 5 year "sunk cost" (interest+taxes) = $14,k + $12,500 = $27k
The $27k can be written off on taxes, so that saves me 1/3rd (now down to 18k)
So, if you take $18k and divide by 60 months, you get $300 per month.
Plus $200 in common fees = $500 per month in "sunk" costs
At the end of 5 years, I would owe $88k, which I would pay off with cash. That would leave me with a place worth $125k (roughly, assume no increase or decrease), that I have $125k into, but got to live there for $500/mo for 5 years. This is much cheaper than renting something for those 5 years.
Transaction costs = $2k
Furnishing the apt = $1k
Is my math correct? Am I overlooking anything major?
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