[quote=spdrun]Taxes are about 1.1-1.2% of value at sale, and can increase at 2% per annum to account for increased valuation.
1.2% tax per annum on $1,092,000 is almost $1100/mo ($1092). $42 for HOA. $50 for insurance. Call it $1200 total.
$4000/mo – $1200 = $2800/mo or $33,600/yr.
$33,600 is about 3% of the purchase price of $1,092,000. Not a great rental return for a property, especially since other expenses are neglected in this calculation.[/quote]
spdrun, I have taxes at $1065 mo (1.17%); Mello Roos at $104 mo (listing states $1244 yr), HOA dues of $42 mo and $225 mo for insurance (replacement value policy). This totals $1436 mo which almost totals my entire PITI! And we haven’t even discussed what the P&I payment is yet! There is no way this property would be cash flow positive …. not now and not ever …. UNLESS the buyer/owner has a VERY small mortgage or no mortgage at all (not typical for this age of home).
I don’t really know what misayako meant by his statement, “Welcome to SoCal” in the OP. The link he provided showing an “Econobox” isn’t typical of 85-90% of SoCal housing and is in no way representative of how the masses live in SoCal (or anywhere else in the state, for that matter). It is only typical of newer neighborhoods where the developers were permitted to build largish boxy homes on smallish lots. His comment makes it seem as if that is all buyers have to choose from out there. But we all know that is a crock of BS.
Yes, I find it hard to envision that this “Econobox” with a hole in the wall for a FP, the liberal use of carpeting throughout and situated on a barely standard lot will actually sell for anywhere north of $1M. I just find it amazing that there are buyers out there who are truly that stupid.
