But there are so many unknown variables here.

Another thing to consider - What my parents paid $70,000 for in 1978, my son paid $160,000 for in 2017 (well his is smaller) BUT there are a couple of other differences - My parents - bought the home with a mortgage at the going rate of interest 14% - payment - $829My son - put in about 20,000 - refinanced the place at $180,000 (appraised value $280,000)   interest 4% payment $859It's hard to compare the same neighborhood 30-40 years later without comparing all variables - BUT do I think we add to the issue - for most of us I would say no - what we do increases the value to everyones home.

Pros: -Interest only payments for 15 years -Can pay down the principal if you wish on your own timeline in that 15 years, and leave it open for future use if you want if you want-Whatever available funds are available also function as a rainy day or emergency fund if you see a need (but will need to get paid back, obviously)Cons: -Most are variable rate and fluctuate with the whims of the Fed; standard seems to be around a point above prime (could be better and/or fixed if you shop around)-For future lending, they can hammer your DTI ratio because lenders could base your potential monthly payment on a worst case scenario high interest rate (I was told 10%).

There are a lot of other variables here though...

You can’t run an efficient business if your most common cost is variable and outside of your full control.

So, this metric posits that your cash is more valuable than the borrowed money you put into a project (since you can't spend that cash on anything else), and that you should measure the return you get on it.And not ALL the potential or variable or eventual return from an investment, JUST the straight cash return you get on it.

Hello Everyone!I've seen previous posts that are a few years old when searching and just wanted to clarify what I should be plugging into these percentages. I've seen David Greene plug 5/5/5/8...but that seems pretty ...

Be sure to read all the details about the loan terms; rate type - is it fixed, floating, or variable; conditions of the note - what are you allowed and not allowed to do with the property; etc...

The variability in rents and the limited buyers on an exit make it a less attractive investment opportunity in my opinion.  

A balanced mix of continued learning and doing is, like anything in life, the best recipe.My two cents would be: It depends on quite a few variables, some being your character, mindset, goals and where you are at on your journey.Ultimately our goals are passive residual income, not active residual income.