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Updated over 4 years ago on . Most recent reply

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Peter Morgan
  • Rental Property Investor
  • West Des Moines, IA
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447
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What is the right way to look at numbers?

Peter Morgan
  • Rental Property Investor
  • West Des Moines, IA
Posted

Hello,

If I own a single family home for my own personal use with PITI = $3000 and if $1000 of PITI

goes into principal payment, is it safe to consider my effective monthly real estate expense is $2000 and the other $1000 as a forced saving?

Thanks

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Joe Villeneuve
#5 All Forums Contributor
  • Plymouth, MI
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Joe Villeneuve
#5 All Forums Contributor
  • Plymouth, MI
Replied

No.  It's a $3000 cost.  You're taking cash out of your bank (liquid), and putting it into the floors of a house (solid).  All you're doing is transferring that money from one location to another, except when it's in the bank you have a choice of where it goes next.  When you choose to put it into the floors of a house, you've made that choice.  It's not different than buying a car...or anything else for that matter.

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