[quote=flu]I think one could probably get a loan for a rental for this at 4.5%, maybe I’m wrong. Or you could end up putting 30% down. Half jokingly…since your interest rate in a savings or CD is effective 1% or lower, it doesn’t really matter in this environment,because you aren’t really going to be losing much of your principal “doing something else”… Well, maybe if you gamble in the stock market, you might have a chance for decent returns. But then if you were going to do that, you would be defeating the purpose of investing in a rental property versus higher risk class of investment.
But one thing to consider. The fact that rent does end up being more or at least break even in CV tells me why people are looking to buy. Either as a rental (with the expectation that things will cash flow in the future), or as a primary (because things already seem to pencil out as better than rent).
So unfortunately, I think at least in the short term there will be a floor on prices of attached homes in CV. I don’t see a 3/3 falling $400k or lower anything soon.[/quote]
Maybe you can get rental for 4.5%, but I’m just going by what aimloan say, and even them are saying you need a few grand in closing cost for 5%. Maybe because it’s a condo. Who knows, but 4.5% seems optimistic based on my guestimate.
Although you might not be able to park your money in CD and get better return. That doesn’t mean CV condo/townhouses are a great investment either. If you want good investment in this general area, I think SFR in MM will get you MUCH better return. They’re going for mid to high $300k for a turn key place for high $200k for a fixer. Based on craigslist, the rent are also around $200k. You have no HOA or MR. So, the ROI is better.
You won’t get any objection from me that rent parity does put a floor on prices. Unless interest rate goes up, then price will go down. But I don’t think CV is cheap enough that investors are flocking to it and put that strong of a floor in.
