PerryChase I would tell your auntie to continue to rent and take it year by year.
“I am wondering if she should just rent and never buy”
If you run the numbers right now, the bottom line is that she should rent. However when her lease comes up, take a new sample of prices around town, then rerun the numbers. At some point it “may” make sense to buy. However also take into account her age. I don’t want to sound morbid but if she may need assisted living in several years then yeah maybe buying is not the greatest idea. Consider all the factors with regards to her life, health, and time horizon.
For sure though now is DEFINTELY not the time for her to buy.
Jabr – You mentioned is 250k the correct, or fair, price for Lucera. I don’t really know. Pricing is determined by the market. We all here, or alot of us don’t think pricing is “fair” on all SD properties because we are using
a – our common sense and good judgement
b – a multiplier of 7 as a median price vs income multiple
c – analysis of inventory, market times, etc.
d – the fact that prices NEVER have been this high in the history of man!
I would say that at least one way to determine “fairness” is to do a simple cash flow analysis. Thus if I put 20% down and finance the rest, then rent it out, back out all expenses include financing interest, hoa, taxes etc… Am I earning a decent return on that 20% down because I have a positive cash flow.
I wonder if you do that, and use the average rent for a 2/2 in the area if 250k is what you arrive at… You may need to get even lower!
