Hi Tua. Don't fret, here's lots of potential in that townhouse as long as you can comfortably hold on to it. I've purchased properties before as a residence, that were in negative cash flow initially, which are doing great now. Rents pretty much always go up here, with the exception of the last to years where they've been flat and even softening in some cases. We manage a bunch of townhomes for clients and we are now for the first time having to do slight reductions on turnovers. The silver lining to that is that, because rents increases have been suppressed for a while, there should be some upward pressure on them to snap back up after home prices start to rise again, which is effectively happening now because rates finally went down. There's a price/rent lag because leases are typically for a year so there's the delayed effect of old leases playing out before upward pressure on rents does it's thing.
With that said, there's also your ability to refinance out of that rate and improve the rentability of it that way. Keep in mind that your refi options change dramatically once you do move out because you will loose the option to use a homeowner's refi and the much better rate that provides. If I had been talking to you before the closing I would have recommended that you choose the 2-1 buy down, which would lower your rate by 2% ($500/mo) in the first year and 1% ($250/mo) in year two. That ship has sailed now but you should keep the 2-1 buy down in mind as a possible tool for future purchases. It's ideal for the current/recent market conditions where everyone is projecting rate reductions in the near term.
Your current rate is so high that you are already arguably in a worthwhile position to refi but you may have to wait on that for the first 6 months or 1 year of your loan. That will likely be an even better time to refi anyway. If you have any other questions feel free to reach out to me directly. I'm happy to help!
