Shingle-style house on 1.6 acres
Sagaponack Shingle House
Renting an equivalent home is about $12,583 a month cheaper; owning wins only if values grow faster than 4.4% a year.
Confidence: ModerateNet yield3.3%
Year-one rent after 1 month vacant, less taxes, charges, insurance, management and upkeep, divided by the price.
Cash on cash-7.6%
Year-one cash after the mortgage, divided by the $1,872,505 you put in (deposit plus $322,505 of buying costs).
IRR, 10 years6.3%
The annual return that equates your cash in with every year's cash flow and the sale proceeds after 6.5% selling costs. Values grow 4.4% a year.
IRR after tax3.1%
Rental profit taxed at 45% after interest and depreciation; the gain at sale at 33%, including recapture. General illustration, not tax advice.
Total return106%
Every dollar of cash flow plus the net sale, less what you put in, as a share of what you put in.
Break-even rent$54,075/mo
The monthly rent at which year one covers the mortgage ($28,934/mo at 6.35%) and every running cost.
Year by year
| Year | Rent | Net operating income | Mortgage | Cash flow | Value | Loan |
|---|---|---|---|---|---|---|
| 1 | $310,500 | $204,505 | $347,208 | −$142,703 | $6,472,800 | $4,596,529 |
| 2 | $319,815 | $210,640 | $347,208 | −$136,567 | $6,757,603 | $4,539,562 |
| 3 | $329,409 | $216,959 | $347,208 | −$130,248 | $7,054,938 | $4,478,871 |
| 4 | $339,292 | $223,468 | $347,208 | −$123,739 | $7,365,355 | $4,414,211 |
| 5 | $349,470 | $230,172 | $347,208 | −$117,035 | $7,689,431 | $4,345,324 |
| 6 | $359,955 | $237,077 | $347,208 | −$110,130 | $8,027,766 | $4,271,933 |
| 7 | $370,753 | $244,190 | $347,208 | −$103,018 | $8,380,987 | $4,193,743 |
| 8 | $381,876 | $251,515 | $347,208 | −$95,692 | $8,749,751 | $4,110,442 |
| 9 | $393,332 | $259,061 | $347,208 | −$88,147 | $9,134,740 | $4,021,694 |
| 10 | $405,132 | $266,833 | $347,208 | −$80,375 | $9,536,668 | $3,927,144 |