Well, the key figure is the % spread post-tax benefits, not pre-tax.
The townhome I rent in OC near the beach.
Purchase price $620,000 (similar unit sold in Feb ’07)
monthly costs
Pmt at 6% $3717. (No money down)
HOA $ 300.
Taxes (1.25%) $645
interest portion of payment ~$3084.
Pretax Expense portion of owning $4030. Pretax Cashflow of owning $4663.
Marginal tax rate 40% combined. Effective expense of owning post tax $2542. Cashflow $3205.
Cost of rent? $1600-$1950. Prices vary greatly according to time of year.
Costs of renting assuming a 40% combined marginal tax rate before other special HOA assessments or ownership expenses like maintenance after taxes is 63 to 75 percent.
Another similar unit has been advertised since October 1st was available Nov 1 and is still empty at $2150. Two other units have become available.
