So you've got roughly $540k in equity.These are all just guesses, and you may have more into in; I just want to give you an easy example to work with.Your return on equity is your annual net income of $400/month x 12 months = $4,800/year.Your equity sitting there is $540k.Divide $4,800/year by $540k = .88% ROE (return on equity).That's a lot of money tied up into a small return, BUT, if you are confident that your townhouse will continue to skyrocket up in price, then hold for appreciation.

If ROE on a property is lower than the ROI on some other investment then we need to find a way to get that equity out of the property and into the other investment. 

You might get real lucky with a rise in rents and break even or squeak out a little cash, but your ROE is going to be horrendous.I don't really see the point of owner financing in this case.

Using your assumptions, @Michael Klinger, I think the most important metric is Return On Equity (ROE).

Will loan paydown and appreciation still create a high enough ROE when compared to other more liquid investments?

I think you should be asking yourself whats your ROE!  

Sounds like some kind of new stoner's underwear line :D  in the same line as  roe wade how you would think of Simon and Garfunkle :)   it was two senators who passed the legislation.IN CA the developments are so massive that the capital for the infrastructure .. the banks were un willing to lend say 50mil to build out a project and do a large amount of off sites. 

They're going to be down for a while, especially if it's pegged to the Fed rate.As @Nicholas Lohr mentioned, ROE is important here (I'm usually one of the people screaming about it in the forums).

If you are one of the ultra conservative, pay off debt, and don't worry about ROE, then the 30 year makes sense.

, just a month of tenant overturn negates loss,if rerent at 1000/m, how much could you loose if bad tenant comes in