DWCAP, rental rise in the last few months took me by surprise as well. If you have a nicely remodeled 3/2 home in MM, you might be able to get 1900-2000 for it easily, considering the rental stock right now and how fast it flying off the market. I think gas price might have something to do with it as well. You’re right, MM is the only game in twon right now.
esmith, I’ve looked up the rental of PQ on craigslist and those that are under $2k/month are either condos or are small old houses. Most of those are repeat of the same one on 9930 Caminito Bolsa, San Diego, CA 92129 as well, which is right next to low income housing as well. Not all PQ are nice, even though they’re in PUSD.
[quote=noone]
I think your math is a bit off. I think you are forgetting that you have to pay the property taxes first. Then the deduction lowers the annual income that you have to pay taxes on. It’s not a tax credit.
You are correct that $225k at 6% with 0% down P&I will be about $1,350 (can you even get 6% with 0% down these days?). Adding taxes an insurance gets you up to about $1,600 a month. If you’re paying 1% in property taxes on $225k that’s $2,250 a year. Assuming the 30% tax bracket, you will be reducing your taxes by about $675 a year or $56 a month. So even including the tax deduction you’re monthly cost is over $1,500 not $1,200. For an older & smaller 3/2 in Mira Mesa that is probably the going rent.[/quote]
My number are rough estimate, but I use the same assumption for today’s number as 1996 numbers. So, the home ownership premium stays the same.
No you can’t get 6% with 0% down, but I’m trying to make as fair of a comparison as I can. You forget that you will get a tax deduction on the interest as well. I think the most fair comparison between rent vs buy would be rent vs Interest + tax + insurance – tax deduction. You shouldn’t count the principal payment because that’s not money you’re throwing away.
Right now, I see all the 1100-1400 sq-ft 3/2 houses in MM asking for $1800-2000 in rent. So, lets run the # again, shall we?
$225k with 0% down @ 6% will run you ~$1100/month in interest. Tax @ 1.1% is $206/month. Assume insurance is ~$200/month. That’s $1500/month before deduction. Assume 25% fed tax and 9% state tax, you’re looking @ 34% tax saving on $1300/month which comes out to be ~$490/month. So after tax deduction, you’re looking ~$1000/month. This house can easily find renters @1700/month, considering apartments in this area is going for $1500/month.
