Which sounds like a better investment???

Purchasing a house with 50% down (100,000) down, and use it as a rental and have like $200 positive cash flow or have the money in the bank CD and Get like 5% interest.

Go with the CD or the following stocks: WNR, FTO, BVF. WNR is up around 140% since mid October of last year (probably still has room to grow, believe it or not); FTO might just be the next WNR (I hope it is, anyway); and BVF just trickles on up... a little at a time. All are up handsomely. My total portfolio since mid-October is up around 36% --> I'm trying a new method of investing and it appears to be working (of course, the market has been in an upward trend, so most people have done well).

Anywho, good luck with it... and that one person was correct, $200/month is hardly worth the headache of a 2 AM call to fix a broken water heater.......

I am biased.

I pick the house, long term you can not go wrong.

CD...

The reason I say that is because on the house you will have upkeep, taxes, and headaches. No $200 a month is going to help you there!

The CD you just... Let it sit.

-Tim

You have to do the math. Not knowing your tax bracket, it's impossible to say, but it depends on the interest rate that you're paying for the 100K and how much of that interest is tax deductible (depends on your bracket). When you say you have 200 positive cash flow, have you considered that you have to pay income tax on the rental income? What about the cost of routine maintenance of the property? Not all is tax deductible. What if your property remains empty for 2 months without a tenant? Will the property likely appreciate? Depends on your neighborhood and the i-rates. Again, you have to do the math and calculate that in and then see how that compares to a CD with 200K @ 5% (taxable or non-taxable CD?).

If you are only getting $200 positive cash flow with 50% down, my guess is that without it you will have a negative cash flow. Calculate the difference with and without the 50% down and compare that to your CD return. If you want to be more realistic you would also need to do an after taxes estimate both ways.

Details are missing like tenure of loan, interest payable on loan, projected value of the house after the loan tenure ends and/or resale value of the house, etc. I would consider Discounted Net Cash Flows over a period of time to evaluate this investment, whichever is positive go for that. Other tools can also be used for arriving at more appropriate selection.

If you're not sure you can find a renter for the house, I would go with the CD. The real estate market is cooling off, and it still depends on where you live. But everyone is right- there are more headaches that come from the house that you certainly won't have with the CD.