After 6+ months of waiting, bank finally approved.
This is my 2nd house in Temecula. In piggington fashion, here is some number:
Per sqft price it is 10% higher than what I paid 4 years ago.
Overall price 40% higher due to its a size upgrade.
But thanks to FED, the payment is only 15% higher. My salary increase in the last four years can’t handle 40% standard of living increase, but I can handle 15%. So, FED is a decisive force here.
Strategically, this allows me to reach my goal of being a landlord at 40 ahead of schedule (I will rent out the unit I bought in 2008 as I originally planned). I can tolerate slight negative cash flow at the beginning years, with rent inflation giving me positive cash flow in future years. My zillow rent estimates is $1.1k above my mortgage, $600 above PITI+ HOA, so hopefully there is some cushion because I am not handy.
Hopefully, everything works out, less stressed about buying this time around.
Sheesh, everything’s a risk. I could be hit by a taxi crossing the street. Temecula has a fault, San Diego has bushfires, Phoenix has crazies with heavy artillery, NYC and Miami have hurricanes.
Strategically, this allows me to reach my goal of being a landlord at 40 ahead of schedule. I can tolerate slight negative cash flow at the beginning years, with rent inflation giving me positive cash flow in future years. My zillow rent estimates is $1.2k above my mortgage, $700 above PITI+ HOA, so hopefully there is some cushion because I am not handy.
Hopefully, everything works out, less stressed about buying this time around.[/quote]
Congratulations. Are the rent estimates you mention i.e. $1.2k > mortgage on a per year basis?
[quote=dumbrenter]
Congratulations. Are the rent estimates you mention i.e. $1.2k > mortgage on a per year basis?[/quote]
Per month. But I mis-calculate for about $100. So it should be $1.1K and $600 respectively (hey, it’s Temecula! And I bought almost at rock bottom four years ago.) I refinanced in between so the clock restarted…but the monthly payment is much lower as well as the rate.
I will probably price $100-$200 lower than the zillow estimates and there is vacancy. Plus I am really not handy. And I haven’t factor in any additional costs. I am sure insurance will be higher as rental property. And I probably also need some good umbrella insurance coverage. So in the end, I don’t expect too much would be left…with chance of negative cash flow at the beginning. But rents will for sure keep rising in the long run. I hope it can help me to pay part of my daughters’ college in the future …and that’s why it is strategically important to me as long as I can hang on with all the headaches of being a landlord.
I bought one small home there but I have no interest buying more.[/quote]
Yes, there is risk. But on the bright side, I moved to Temecula 6 years ago and I rented. What a difference that made. Because both properties are about 50% off from their ~2006 peak pricing, so there is always a bright side to look at.
Just remember, you don’t have to be overly-handy to do regular maintenance. Oftentimes, it’s just basic stuff. Probably a good idea to find a couple of trustworthy handymen who live near the rental if you’re really worried about it.
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