[libertyhouse]

Your 15% leveraged return is only true if you have no borrowing costs. If you had a 4% mortgage you would actually be losing 1% the first year.

A leveraged return L = (asset return - ((1- %down) x loan) rate)/%down. With a 4% mortgage that's (3% - ((1 - 20% ) x 4%))/20% = -1%

[phamilton]

How does the utility derived from the asset factor in? There's an argument that the cost of borrowing is also paid by a renter (passed through from the landlord). The true cost of borrowing would then be interest paid minus the corresponding portion of comparable rent.

The real point of the article stands. "Run your own numbers"