Careful using calculations based upon an IO loan and not an amortizing loan. You are not building up principle, and are effectively renting from the bank. In addition, you trade the mobility of renting for the lack of mobility on owning. Trade between mobility and lack of mobility on an even monthly price point is not an even trade. The only thing that would balance such a trade would be speculation on further home value increase, which is not such a good bet right now.
@surveyor
Approach by looking at effective ROE. Interesting but I don’t think it applies in this instance because the individual seems to be looking at offsetting current rent by owning. On the other hand, if they are looking to buy as an investment property, ROE based calcs are appropriate.
One thing I noticed about the listed property.. Railroad tracks!!! In fact, double tracks, which is where locomotives pass each other(bottom of image). They sometimes have to idle in these locations till the other train arrives from the other direction. Somewhere around half of the units at that location have windows/sides facing the tracks.. Pools seem small (not lane’d) and only two for the entire complex. Parking is either open space or carport. 2 tennis courts, 1 basketball court at the far end… I wonder what those trucks are doing on the access road below the hill near the basketball courts..
I would be careful about using Craigslist for the rent figure. It could be condo-flippers trying to make sure they cover costs. Take a look at http://www.forrent.com and find equivalent apartments. There is also a new apartment complex near completion in that general area, which should decrease demand significantly. Go to hybrid view on the associated google map for the property and look north. That in-process construction is nearly done.
