Don't Get Emotional About a Property
One of the biggest mistakes new investors make is falling in love with a property. It may look perfect, in a great neighborhood, and seem like an easy rental—but numbers don’t lie.
Here’s a scenario: you find a condo you love. Expected rent is $1,600/month, purchase price is $170,000. At first, you anticipate a mortgage interest rate of 5%, which looks fine on paper. But last minute, the bank quotes 7%. That changes everything.
| Purchase Price | Down Payment | Loan Amount | Interest Rate | Mortgage | Rent | Monthly Cash Flow |
|---|---|---|---|---|---|---|
| $170,000 | $42,500 (25%) | $127,500 | 5% | $864 | $1,600 | $736 |
| $170,000 | $42,500 (25%) | $127,500 | 7% | $1,003 | $1,600 | $597 |
Notice how a 2% change in interest rate drops your cash flow by over $100/month. Emotionally, it may still feel like “your property,” but the math shows risk has increased.
Key lessons:
- Always trust the numbers. Use calculators or software like MyDoorsPro to model different scenarios.
- Unless you have deep pockets to carry it for several years, don’t stretch for a property that barely works on paper.
- Consider a larger down payment or look for markets with strong growth potential if you want to absorb higher rates.
Emotions are real, but real estate investing is a numbers game. Protect your cashflow and your long-term success.