We did kinda assume that the buyer would set the rent to at least cover her ongoing costs. In the UK, for example, you can only get a “buy to let” mortgage if you can prove that you can reasonably charge enough rent to cover your mortgage payments.
You’re totally right about reinvesting the earnings into stocks etc — we excluded this in the model to simplify things and not be too prescriptive. But if I were thinking of doing this, I’d definitely want to take that into account :)
It’s more than just mortgage payments — taxes, maintenance, management fees, empty losses, etc. all make it easy to have negative carrying costs.
There are _lots_ of people owning to rent that don’t cover their actual carrying costs. They just justify it by thinking about the equity growth.
In fact, even the default example has negative carry costs. The initial interest on $480k plus $6k isn’t covered by $2k monthly rent, let alone principle payments and a more realistic maintenance amount.
We did kinda assume that the buyer would set the rent to at least cover her ongoing costs. In the UK, for example, you can only get a “buy to let” mortgage if you can prove that you can reasonably charge enough rent to cover your mortgage payments.
You’re totally right about reinvesting the earnings into stocks etc — we excluded this in the model to simplify things and not be too prescriptive. But if I were thinking of doing this, I’d definitely want to take that into account :)