I would change the calculation a bit. Of that $2500 mortgage payment, I would take only the interest portion. If utilities are paid by the tenant, I will take them out.darXider wrote: ↑ i have a question about the total cost of home ownership: i've been checking several properties online in the range of 600k-800k. for example, redfin.ca has a payment calculator that gives you the total monthly payment (mortgage, property tax, home insurance, and mortgage insurance), according to which, a typical house with a monthly mortgage of ~ $2500 would have an extra ~ $1100 per month just for property tax, home insurance, and mortgage insurance, which brings up the total monthly payment to ~ $3600. i have found several houses that have been sold recently and are being rented by the current owner, but the rent price is much lower than the total monthly payment according to these calculators online. i understand that the down payment and mortgage interest rate are big factors in determining the final cost, but playing with these parameters in the calculator doesn't change the overall picture. how can one generate positive cash flow when the total monthly cost of home ownership (which includes property tax, etc.) is more than the rent?
property tax, home insurance, and mortgage insurance totalling to 1100 is a bit higher, IMO it should be around $700. For a 800K house even if the owner is able to rent the house for about $2000K+utilities the owner should be in net positive. There are recurring costs of maintaining the house to keep it in good condition.