Suppose you have $300,000 cash, no liabilities, and you make $100,000 a year. Assume the...
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Suppose you have $300,000 cash, no liabilities, and you make $100,000 a year. Assume the interest rate is 5%, tax rate is 30%, property tax rate is 1%. And there are two identical houses you can choose. You can either rent house number one with a rent for $3,000 per month, or buy house number two with $1.2 million. Please try to discuss which option is better. If you buy house number two, and I want to rent it to somebody else, how much rent you are going to set so you can get a break-even situation as you rent house number one?
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