Here is how I look at it,

Your rent intake from roommates is income.

You have a leveraged investment using $14k in cash input in year zero. You acquire an asset that has gained in value and is worth the sale price, minus the realtor fees, minus the mortgage owing.

You have $1800/month cost avoidance (treat liken another income stream), assuming it MUST be paid.

What does a 10 year Internal rate of return look like?

Iintial cash used to purchase -14000

PMI/yr -2400

Interest + taxes + principal payment/yr (assumes very long amortization, see below) -30000

Roomates income/yr 16800

Maintenance/yr -14400

Cost Avoided (1 bdrm rent not required)/yr 21600

Property increase at 2%/yr

Sale Costs 6% Fees

Sell in 10 years:

8% 10 years: IRR at 2% home appreciation / yr

8% 5 year IRR @ 2% home appreciation / yr

3% 10 years IRR at 1% home appreciation / yr

How to interpret:

If your house appreciation is only 1% or less, then your internal rate of return after 10 years is marginal.

OR if your home is sold in only 5 years, with 2% appreciation, you still have positive cash

Greater annual home appreciation would make it show better returns, obviously.

**Assumption**:

Room mates pay for their share of utilities separately -- you do not pay more utilities than you would in a 1 bedroom place.

no capital gains taxes, and

that interest is actually constant over the 10 years (it is not, but close to it, after 10 years on a 30 year amortization, this means your actual IRR is slightly better than stated).

***Principal amount would not be used elsewhere, if you did not invest it in your mortgage. After 10 years, $600 per month is a LOT of money. Worth about $100k if invested for 10 years at 6%...if you throw in this lost opportunity, you actually need at least 3% home appreciation PER YEAR to break even. Or just charge your room mates $175 more a month (each)... but it is all a numbers game, so don't get hung up on that amount.