Do you like playing Monopoly?

If you bought a townhouse between 2000 and 2005 in the City of Harrisonburg (perhaps in Liberty Square, Beacon Hill, Avalon Woods or Harmony Heights) I would encourage you to check with a lender to see if you can buy a second townhouse.

I have many clients who bought two-level townhomes between 2000 and 2005 and bought them for anywhere between $100K and $125K.  As a result, their mortgage payments are somewhere in the neighborhood of $700/month including principal, interest, taxes, insurance, and homeowners association dues.  ($115K purchase price, 100% financing at 4.5% over 30 years)

That townhouse can very likely be rented in the current market for $850/month to $900/month.

There continue to be isolated opportunities to buy re-sale townhouses in these same neighborhoods for around $125K to $140K.  The new mortgage payment could thus be around $800/month including principal, interest, taxes, insurance, and homeowners association dues.  ($135K purchase price, 96.5% financing at 4.75% over 30 years)

Monthly cash flow now:
Mortgage payment (etc) = -$700
Total cost = $700/month

Monthly cash flow after acquiring a second townhouse:
Mortgage payment (etc) on 1st townhouse = -$700
Rental income from 1st townhouse = +$850
Mortgage payment (etc) on 2nd townhouse = -$800
Total cost = $650/month

You'll actually lower your monthly costs by $50 by acquiring a second townhouse.  Furthermore your tenant will be paying off your first mortgage for you, and you will own approximately $270K of real estate instead of only $135K.

So, what do you say?  Are you ready to invest?