Andy,

Thanks for this advice. I came up about $400 short. That's not much,
but it's enough that I don't want to risk it.

Thanks again!
Joseph

Joseph O'Brien wrote:
- quote -

I don't think you should do this unless the numbers add up to where you
are making at least a small positive cash flow after taking into
consideration all of the expenses. Otherwise you are just buying a
very expensive drain on your bank account. Here are the numbers you
need to crunch for the cash flow:

Positive cash flow: Rent
Tax deduction for interest on mortgage (?)
Tax deduction for depreciation

Expenses:
Mortgage payment
Insurance
Real estate taxes
Allowance of one months rent per year to cover average vacancy rate
Repairs (based on your experience with your unit)

If these don't give you a positive cash flow on an annual basis, then I
wouldn't do it.

Andy

I've been throwing this idea around for a while, and I would like to
get some objective input.

Here are the details:
Age: 27 (wife and me)
Credit card debt: $0 and holding since 2002
Student Loans: $20,000 at 4% simple
Mortgage: $95K taken in 2002 at 7.25%APR fixed for 5 years with $2000
prepayment penalty for a $105K condo (...I know, we were young)
Savings: $500-$1000/month (total of $10,000 right now)
Retirement: Contribute monthly to employer IRA

More details: we live in an old Victorian home turned 3-unit condo. We
have a dream of one day owning the entire building and reverting back
to a single-family. I am considering buying the first floor unit at
$105-$120, moving in, and turning our second floor unit into rental
property (it's OK with the condo association, which will be me at that
point). I think we can get almost our entire mortgage payment in rent.

Generally, we are very conservative with money. However, I just can't
shake this idea. I'm not sure how the financing would work... I wonder
if it's possible/advisable to somehow combine our current mortgage with
a new one at today's good rates? Or would it be best to take out
another mortgage for the new property? Is this totally crazy? Running
the numbers on this kind of thing gets very confusing to me, so while I
understand that it might be difficult to comment on my specific
situation, perhaps someone would give me some general advice, and maybe
some good resources.

Thank you,
Joseph