Buying a house

I was reading this book titled ' Start Late, Finish Rich' by Davis Bach. It is actually stuff I already know but never took a step further to understand. I want to retire by 40 with 5 houses and a car. That will be 9 years away. Can I do it?

Own your home

We do but it is public housing. It is a safe bet as it is fully paid for with a sweetener(grant) thrown in. If we were to sell it in 5 years time (2 years away), we will make a profit. So should we sell or rent it out when the time comes. We could rent it out for 2 years and earn passive income. Eg $700 x 24mths = $16800 or just roll over the money to a bigger apartment. But the question is public or private housing?

If we rent a private condo for a year at $1500, it will set us back $18000. We can use that money to place a downpayment for a condo (5% of sale price)and try to rent it out but with full knowledge that we must have enough money to cover interest in times of no rent.

If that is the case, we must set aside $20k for downpayment of flat $400k. And another $50k for loan repayment. But getting a loan for that amount will mean in the first 5 years, interest will be on par with loan repayment. An obsene amount to pay the bank.

So we need to have at least $220k in the bank before we buy. So the target is 200k by 1/8/2007. We calculate whether we should hold on to the old place by collecting rent or selling it and clearing the bank loan further.