So, the unit in question ‘cash flows’ at about 260 x rent with 20% down. Does that make sense to you?
Why use a rule of thumb (price as a multiple of rent) when the numbers are all laid out already.
Rules of thumb do not account for progressive tax rates or the loss of those breaks at the point where the standard deduction exceeds itemized.
A break-even analysis for rent versus buy is completely different for someone buying making 60K compared to someone making 130K. Therefore the ratio of price to rent at which renting and buying are equivalent on a monthly cash flow basis are significantly different, depending on income levels. Thorough analysis trumps rules of thumb.
