We’re saying the same thing regarding financing – that the no-skin 100% financing carries an interest rate premium that will obviously result in a larger rent vs. own spread than conventional financing. A much larger spread.
As for what to do with the downpayment $$, that is of course not a novel debate. It’s possible to put it in the market and make a killing, and it’s also possible to get creamed. You can go ultra conservative and put it in a mattress. The options are many. I think the general philosophy of pouring alot of dough into real estate up front is to reap the benefits of excellent interest rates, reduced monthly overhead and – gasp – the antiquated idea of getting a huge running start to complete ownership.
It makes perfect sense that the rent vs. own spread increases when you get into the higher end properties that you cite in your neighborhood. The higher the rent, the less demand. The obtainable rent is not likely to rise lock-step with the value of the property up through this range.
Anyway, from my experience, based on my properties, there is nowhere near a 50% discount for renting, apples to apples.
