Asianautica, the 125x rent multiplier is absolutely still a valuable yardstick. The 3% swing in interest rates is offset by the market psychology and media. Things are different now, they are worse, appreciation is a non factor so rent nuetral is the new buzzword. Why become a landlord in MM is you have to exceed the rent multiplier while you don’t have to in another area, in this county and state or not. You don’t live there, your wife doesn’t care where the rental is, it is all math. Most in-town landlords became such because they moved up and kept their old house as a rental. Pure landlords buy where it pencils out the best. There are many rental markets where 125x can be obtained today and that is where the landlord dollars will go. If you can buy a place today for 250k that will rent out for 2k within days, and it’s still there, unsold, then 125x becomes the standard EVERYWHERE. I can almost buy rentals that are rent nuetral (meaning the rent covers the mortgage and the taxes/ins after a 20% down payment, try getting 6% with 5% down on an investment property in a declining market). Most of San Diego County doesn’t pencil out for a landlord yet which is why the areas that someone with money wouldn’t want to live are falling faster, they were more dependent on investor price support.
Venture into the areas people with money want to live and want to send their kids to school and the dynamic changes, because the deciding factors change (happy wife, enjoyable life, etc.) people are more willing to overlook the math. For how long that remains is the eternal question on these boards.
