As an exercise, can we grind through the math for a 2/2 in Mira Mesa, assuming the couple will need an FHA type loan?
A 2/2 in Mira Mesa rental probably is around $1400-1500/month.
A comparable 2/2 for sale would be probably around $200k
Hoa is about $300/month (maybe slightly less)
Property tax is about $250/month
If the property qualifies for FHA loan and the person(s) has good credit, he/she/they can probably put down only 3.5% or $7000. Though I think they would need to pay 1% closing cost for something similar to PMI. Out of pocket would be closer to $9k.. Plus there’s a monthly fee for an FHA loan (I forget how much)…
Assume $193k financed for 30yr FHA loan @ 4% that’s $922/month (rate might actually be lower now)
Total monthly is about $1472/month, xcluding the FHA monthly fees. It also doesn’t include the tax benefit from deducting the mortgage interest on a Schedule A.
So I guess if I were planning stay 4-5 years in a 2/2, I’d probably be looking to buy.
As a rental, it would probably lose about $100/200 month, before tax deductions and that would assume 100% occupancy.
So I think it would make a bad rental. So if I wasn’t planning to stay 4-5 years, I’d rent instead of buying the condo..Special consideration also because the couple doesn’t appear to have sufficient cash reserves to bridge between months that the rental property would be vacant due to tenant turnover. In fact, I don’t think the couple is in a position to have a rental until sufficient cash reserve has been built.
Cost of walking away (if need be later) would be roughly $10000 + having a bad credit report for a few years.
Comments?
BTW: no way going to get a good 2/2 condo in MM for $150k in this current environment.
