You don’t need to go into more details on the #’s for me. I own 3 properties in SD and with just a quick look at my properties I can tell you that the rental discount is nowhere near 50%. It’s looking like 10-15%. I’m spitballing here but it’s close. And again, I’m looking at apples to apples, using conventional financing. Once you start running numbers using the 100% financing option, of course that is going to jack up the rent vs. own spread. You are financing way more $$ at a higher interest rate. You’re paying a steep premium for the luxury of not putting any skin in the game – as you should.
In NSR’s scenario, it looks like about a $1300/mo. rental discount, but note that the calculation is based on 100% financing. If you run the #’s using conventional financing, the spread probably gets knocked in half.
If you run the #’s based upon financing options that have not been historically available, you cannot determine whether the spread is historically high, low, or average. My guess is that it’s probably a bit higher than average, but not massively outrageous (ie 50%).
