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all cash,

Using the same calculator I found online to do my original caclulations in my original example, and plugging in your variables, I came out with the same numbers.

Using your numbers (and mine), Total interest over 30 years =$139,509
Adding $100/month drops it to $89,002 and 247 months
Adding $200/month drops it to $66,813 and 193 months
Adding $300/month drops it to $53,863 and 180 months

The way I made my conclusions were:
Adding $100/month saves 139,509 - 89,002 = approx 50k
Adding $200/month saves 139,509 - 66,813 = approx 73k
Adding $300/month saves 139,509 - 53,863 = approx 86k

So at an additional $100/month, you save 50k
So at an additional $100 on top of the $100/month ($200 total/month) you save 73k-50k=23k more.
So at an additional $100 on top of the $200/month ($300 total/month) you save 86k-73k=13k more.

So with every additional $100 you add, you get less and less savings per extra $100. That is what I meant when I said diminishing returns. The intial $100 gave you 50k, the next $100 gives you only 23k, and the next $100 gives you 13k.

Does that make sense? Am I looking at the cost structure in a wrong way?

I appreciate everyone's comments.

The reason I want to plunge in is because I feel like so many people are afraid to take the first steps into doing something radical with their lives. Believe when I tell you that I am one of the pickiest people in the world when it comes to large purchases. I spend weeks researching my car, my pda, computer, etc... But there are some things where you can be book smart and know a lot but you can't apply it in the real world. Experience matters I think. In this case, I've read a few books but in no way shape or form do I believe I'm any higher than novice. I'm till definately green behind the ears but I believe making my first purchase is the only way to learn. I'm not in such a tight financial situation that if I make a mistake I could ruin my life. I have little debt (my creditcard), and the worst case scenario (that's reasonable) is that I buy a property and it doesn't quite appreciate as fast as I wanted or something to that effect. I could always sell at a later date which means basically I lost out on closing costs and whatever costs associated with selling. I can live with that if I can learn about the whole process of buying and selling better. And if I get screwed somewhere in the process, I get to learn from it when we're talking small money amounts as opposed to a bigger deal (hopefully) later on.

That's just my thought process.

All Cash,

Yep, I am definately trying to stay way from PMI. So I pretty much won't go into any financing deal if that is required. I got preapproved already so I don't think it should be a problem for now. I mean I told my broker my situation about only being able to put down 10% down and I didn't want PMI so unless they somehow switch it up on me the last minute...

One question I did have was regarding Rehabbing costs. Do most people get a separate loan with that? Or are you suppose to come up with that cash yourself?

And I realize how important it is to "slam every nickle" into the mortgage because when I used one of those mortgage calculators, adding an additional 100-200 dollars makes a HUGE difference in the amount of interest you would pay out for the life of the loan. Thing is, there seems to be diminishing returns as to how much money you save the more money you put in per month. When I set it at 100 extra a month the savings was close to 10k...at 200 it was 6k..and at 300 it was 2k only. So I'm not sure if slamming "every" nickle is so wise but definately adding extra is a good idea. Maybe there is a better strategy as well. I had a friend who had mentioned over the dinner table about splitting up your mortgage payments into two payments so you pay twice a month. Effectively you have 24 payments a year but you still end up paying the same amount. At the end of the loan you are suppose to be able to cut a few years off and some interest. I mean, it makes sense in theory, I'm just wondering whether it's worth the hassle.

And one more question..sorry for asking so many...

How often does a lender have stipulations on paying your loans off early? Because I know some can, but is that normal?

Thanks in advance for everyone's time for reading my questions.

Responding to All Cash and Emdvee:

Assuming I can only put 10% down and get an 80/10 loan---or it called an 80/10/10? you get the idea :)--- and say I can pay 25-50% ontop of my current mortgage each month, how quickly do you think I can have a decent amount of equity? does 25-30% equity position actually mean you've paid 25-30% of the value of the house? Doesn't that sound low? What exactly does prepaying on a mortgage mean?

I definately wanted to think about doing a duplex but the only ones in my price range are in suburbs. Does anyone have any thoughts on townhouses or converted condos? Like when they might be considered a good investment and what to watch out for? (i.e. really really old building?)

Thanks All Cash for your reply.

When you say "slam ever nickle into rent" are you proposing I try to pay more than the actual mortgage payment? Is that what you meant by building up equity? Can you explain the philosophy behind that?

And would everything you suggested change if I told you I did not intend on living in the area but I plan on "possibly" moving in the next 3-5 years? Just because I'm originally from NYC, and I could have worked there, but I felt like I would have better opportunities to get my feet wet in real estate in Chicago since NYC prices are ridiculous.

And would anybody have any suggestions as to what would be the best unit to start out with? I wanted to do a 2-3 flat unit but I don't think I can afford that unless I live on the edge every month. so I decided maybe I should just stick with a Condo.

Okay, so I ended up starting two threads in one day but while I was stressing over where I'm gonna end up living 3 months from now:

I feel like I'm having such a hard time deciding on what I want to do because I always thought the best way to own a property just starting out with little cash is to be an owner occupant. You get better rates and you get tax breaks. But the hard part is I want to live in a nice area and nice areas tend to be much harder to get positive cash flow (assuming I imagine I'm paying myself normalized rent prices for that area).

If cash flow is so important, which it is to me since I'm basically trying to build up capital for future investments, maybe it's better if I rent some place cheap with friends and buy a less expensive property in an area I don't want to live (really south when I'm trying to stay closer north). Because where "I" want to live is becoming a determining factor in what properties I'm willing to invest in while if I just decide to rent, I can simply invest purely on the numbers.

But the real question is do the benefits from being an owner tenant outweigh the expansion of my investment opportunities?

Hey all,

This is my first time posting so bear with me. I've recently decided to start investing in RE because I'm sick of paying rent but often when I read about all these good deals, the numbers I see posted on these forums are usually all really low compared to the prices you would see in a larger city. In my case I am in Chicago and it is almost next to impossible for me to find a positive cashflow property in a decent part on the Northside. Since I can only put 10% down my philosophy right now is to find a rehab condo, owner occupy for at least a year, and see what happens from there. I'm almost certain I'll lose money in the beginning but that's why I'm trying to work some sweat equity through a rehab. More importantly, I'm just trying to gain some experience in the whole process of actually making a purchase. I just want to take the plunge, I just don't want to lose all my money in the process. Right now, with 10% down, my mortgage payments on a 150k property might be around 900. Add in *** and Tax and that will bring me to around 1400.

Current rental market for a place in that location looking through online ads look like only 700-900.

Is this just a really bad idea and should I simply consider looking for another area of Chicago where the mortgage payments would be closer in line with the rents? I just can't imagine positive cash flow without putting down more money. Any body have any suggestions?