4plex, you are right I did not calculate interest rate fluctuation nor did I even look at what a natural disaster or serious loss in employment would do to rents, I was simplifying it. I was actually thinking the 2/2 had a floor price of 130-150, not the 1/1.

Grey, don’t think you have ten years to save and it may be too optimistic to think you will be paying under market rent to buy from day one, those opportunities are rare. Just like the up cycle didn’t last forever despite popular opinion, nor will the down cycle. The overshoot time period can be a year or less so you need to be ready now and you need to be prepared to pay more than market rent for a few years in order to buy. My rule of thumb is that with 20% down and all closing costs paid upfront (not rolled in) it should be equal to market rent so the overage is the loss of interest on your downpayment. Another goal is to be paying 25% under market rent within seven years so if you choose to convert it to a rental there is enough cusion for it to always be cost nuetral or positive since you need the extra to cover repairs, vacancy, etc.

Don’t just hope it goes down, get ready for 12 months from now by deciding what you have saved and how much you need to save to meet a 20% on 150k=30k, you have 12-18 months to save a total of 30k or you may miss this one.