I’m with you Ocean, that is wishful thinking that someone can offer the bank 27 cents on the dollar in one years time and walk into a 30% profit producing property with nothing down, get a refund on those real estate books. It is also flawed thinking to call it a 1300 rental because of a 189 hoa, that’s part of the carry costs I calculated and even an sfr has landscaping, trash and fire insurance which must be backed out when the hoa provides all three. This complex also has a five year track record of no giant fee increases. Even if you didn’t borrow a thing you need to consider the cost of the money when calculating the feasability of an investment property and the price in which others will buy it before you. 100k at 6% fixed is $600 a month, 200 for hoa and 200 for taxes and additional interior insurance is a $1000 total carry with a rent of 1500, one third profit from day one ignoring appreciation which will kick in sometime in the next ten years. I would buy it a cost neutral and I can buy a bunch of them, plus there are more scavengers out there like me that will stock up on cost neutral rentals in this downturn. The rents will fall based on inventory theory won’t play out because rent didn’t go up much, they don’t bubble and they don’t crash in the same way as purchase price does. I also laid out a cogent argument why this particular area lacks rental stock and the 3000k sq ft repos don’t directly compete, they influence but they don’t directly compete. My family liquidated most of it’s rentals in the last two years, we are down to just a few that are paid off. I know we are not alone on the sidelines for proprties like this to get near 150k to jump back in, in fact I think we will be beaten to the punch as they approach cash neutral which is sub 200k, but I have a feeling things will overshoot a little an I can get a couple like it for near 150k. The kool aid from the permabulls was poison, but the koolaid from the doomsdayers is also just as lethal, fundamentals and math are the guiding light in a dark world and all the kool aid is tainted.
