- Mortgage rate = 3.5%
- Term = 30 y
- Down payment = 25%
- Closing fees = 3%
- Appreciation = 2% / y
- Municipal taxes and fees = 2% / y
- Maintenance = 2% / y
- Insurance = 2% / y
- Closing fees = 7%
Mortgage rate is going to average 1% percent higher for investment property loans. Toss out appreciation in your analysis. Appreciation is icing on the cake and deal analysis should work without calculating appreciation. You can also find portfolio lenders who will lend 85%-89.9% LTV. You may need to have 2-3 properties already, or sizable assets, before you get the best terms with these lenders.
I started and continue to buy my rentals at 70% of ARV or better. I didn't even know there was a 70% "rule" when I bought my first property, but I knew that was the number I wanted for myself. All my rental properties, I have made rental ready. Rental ready costs for me have averaged $3000 - $5500. Some of my properties would be ready to sell at full market price in the rental ready state, and others would need $15000 to $20000 more to the get maximum ARV. All of them I could sell today and recuperate all costs and commissions plus pocket extra. Since I'm not selling, the real number that has meaning to me is cash flow. Cash flow is running at 15% for the lowest and 21% for the highest.
What that means for me is, on average, I cash flow between $4,000 to $6,000 per property. I've been buying a property every 6 to 12 months on average with the cash flow. Next year, I'm hoping to add 2-3 properties and scale up from there as my portfolio allows.
TL;DR You make your money when you purchase, not when you sell. If you are trying figure out how to make money on a deal down the road, you need to move on to another deal.