$2700 hopefully has you in a REALLY nice place in Diamond Bar. I know what $3000/month rents by the beach in HB and it’s pretty sweet, 3/4 BD 3BA, pool, spa, 3 car gar, good size yard…
$2700 is a lot of expense, after tax, it’s even more assuming your income won’t walk you into AMT. Assuming you’re in the 31% Fed rate zone, $2700 in rent is equivalent of $4500 in interest and taxes which puts you about in a $900K home with 20% down or a $750K home with nothing down. Again, assuming $50,000 of deductions doesn’t walk you into AMT.
In the end, spent is spent. Your choices:
1. Live in a $2700/month rental. Downside, rents might go up, slight non-premenant feel.
2. Live in a $750K-$900K house, downsides: live in a house not as nice as your rental, watch it depreciate and lose the downpayment or equity. $100K, $200K or $300K plus worth of equity. Of course, there is an upside, houses could go up. (unlikely but possible)
Probably the best thing for you to do is go out to the open houses today and look at homes in the $800K range to see how you like them compared to your rental.
