cricket, do the same math but take out the 300 for hoa. It’s basic but the tax deduction offsets the hoa, taxes and insurance. With out knowing the specifics of the hoa, they are not for profit so you get the 300 back in other ways (pool, painting, landscape, structure fire insurance, trash, water, etc.)
Calculate rent nuetral without hoa, taxes and insurance. In your scenario, if you rent for 1500 and could buy 250k worth of house for 1500 P&I (it’s actually higher at todays rate but I digress), then it is rent nuetral. Equilibrium is within 10%-20% of rent nuetral. When people can buy their place for a couple hundred more than rent, they usually do, that is the floor price. This is taking into account net price after tax deductions. The 100/125/150 rule is for investment purposes, which is another floor for prices.
Of course none of this takes into account the overcorrection that we will experience soon. You should see 100 to 125 scenarios in the coming 24 months, in my hood they are the norm. I can buy a 1500/mo rental for below 200k, sometimes well below but haven’t spotted a pure 100x just yet. I cannot explain why a 1500 rental in rb is 300k while a 1500 rental elsewhere is 200k or less, what I can explain is why that makes rb a bad investment as a rental and logic says that will create downward price pressure. hang in there, pain train is a comin, October 1st is the end of zero down as we know it.
