Balboa Ridge Condominiums

[urbanrealtor]

The thing I would add to Davelj’s post is that you really need to add the hoa fees into that rent equation.

This area is going to be good for rental (essentially forever) due to its proximity to rte 41/27 bus line and UCSD (yes I used to live there) but the rents are what they are. While parents may be duped by gated complexes and nice neighborhoods, most students are poor and will not pay above market.

Specifically, the unit is going to take in rent minus hoa fees. The real annual rent is this times 12. I would knock off 20% to account for repair and vacancy costs (as well as other costs like tax and insurance). This can get you a sort of rough cap rate.

I would find these compelling if I could get at least 8% of sale price back annually (based on the above numbers) I would find that compelling enough to consider. Part of my reasoning is that rent increases every year and vanilla loan payments do not (emphasis on vanilla).

[barnaby33]

I would add that projected rents aren’t real, hence the word projected. I would also say that the idea of rents going up every year depends part and parcel on the same inflationary belief that got us to where we are. It could be true in the future, but I wouldn’t be willing to bet on that In the next 5 years.

I do agree that if the total cost of ownership returns 8% after all is said and done it could be worth the risk. That is if you are considering a future as a land lord.
Josh

[barnaby33]

I would add that projected rents aren’t real, hence the word projected. I would also say that the idea of rents going up every year depends part and parcel on the same inflationary belief that got us to where we are. It could be true in the future, but I wouldn’t be willing to bet on that In the next 5 years.

I do agree that if the total cost of ownership returns 8% after all is said and done it could be worth the risk. That is if you are considering a future as a land lord.
Josh

[barnaby33]

I would add that projected rents aren’t real, hence the word projected. I would also say that the idea of rents going up every year depends part and parcel on the same inflationary belief that got us to where we are. It could be true in the future, but I wouldn’t be willing to bet on that In the next 5 years.

I do agree that if the total cost of ownership returns 8% after all is said and done it could be worth the risk. That is if you are considering a future as a land lord.
Josh

[barnaby33]

I would add that projected rents aren’t real, hence the word projected. I would also say that the idea of rents going up every year depends part and parcel on the same inflationary belief that got us to where we are. It could be true in the future, but I wouldn’t be willing to bet on that In the next 5 years.

I do agree that if the total cost of ownership returns 8% after all is said and done it could be worth the risk. That is if you are considering a future as a land lord.
Josh

[barnaby33]

I would add that projected rents aren’t real, hence the word projected. I would also say that the idea of rents going up every year depends part and parcel on the same inflationary belief that got us to where we are. It could be true in the future, but I wouldn’t be willing to bet on that In the next 5 years.

I do agree that if the total cost of ownership returns 8% after all is said and done it could be worth the risk. That is if you are considering a future as a land lord.
Josh

[davelj]

[quote=urbanrealtor]The thing I would add to Davelj’s post is that you really need to add the hoa fees into that rent equation.

Specifically, the unit is going to take in rent minus hoa fees. The real annual rent is this times 12. I would knock off 20% to account for repair and vacancy costs (as well as other costs like tax and insurance). This can get you a sort of rough cap rate.

I would find these compelling if I could get at least 8% of sale price back annually (based on the above numbers) I would find that compelling enough to consider. Part of my reasoning is that rent increases every year and vanilla loan payments do not (emphasis on vanilla).[/quote]

Yeah, my response was incomplete. You have to take into account the HOA and property taxes. So, specifically, compare imputed rent (assume no growth) with [mortgage interest + HOA + property taxes]. Tax effect the interest and property taxes if you like. This is getting a little technical but the basic idea is to compare your all-in cost of ownership with your all-in cost of renting. If they’re about the same then you probably won’t get hurt too bad in the long term in buying. But in the short term all bets are off.

Since it sounds like you’re planning on owning this place (as opposed to being a landlord and renting it out), I’d disregard the vacancy and repair friction above in your calculations. You want to make an apples-to-apples comparison, after all.

[davelj]

[quote=urbanrealtor]The thing I would add to Davelj’s post is that you really need to add the hoa fees into that rent equation.

Specifically, the unit is going to take in rent minus hoa fees. The real annual rent is this times 12. I would knock off 20% to account for repair and vacancy costs (as well as other costs like tax and insurance). This can get you a sort of rough cap rate.

I would find these compelling if I could get at least 8% of sale price back annually (based on the above numbers) I would find that compelling enough to consider. Part of my reasoning is that rent increases every year and vanilla loan payments do not (emphasis on vanilla).[/quote]

Yeah, my response was incomplete. You have to take into account the HOA and property taxes. So, specifically, compare imputed rent (assume no growth) with [mortgage interest + HOA + property taxes]. Tax effect the interest and property taxes if you like. This is getting a little technical but the basic idea is to compare your all-in cost of ownership with your all-in cost of renting. If they’re about the same then you probably won’t get hurt too bad in the long term in buying. But in the short term all bets are off.

Since it sounds like you’re planning on owning this place (as opposed to being a landlord and renting it out), I’d disregard the vacancy and repair friction above in your calculations. You want to make an apples-to-apples comparison, after all.

[davelj]

[quote=urbanrealtor]The thing I would add to Davelj’s post is that you really need to add the hoa fees into that rent equation.

Specifically, the unit is going to take in rent minus hoa fees. The real annual rent is this times 12. I would knock off 20% to account for repair and vacancy costs (as well as other costs like tax and insurance). This can get you a sort of rough cap rate.

I would find these compelling if I could get at least 8% of sale price back annually (based on the above numbers) I would find that compelling enough to consider. Part of my reasoning is that rent increases every year and vanilla loan payments do not (emphasis on vanilla).[/quote]

Yeah, my response was incomplete. You have to take into account the HOA and property taxes. So, specifically, compare imputed rent (assume no growth) with [mortgage interest + HOA + property taxes]. Tax effect the interest and property taxes if you like. This is getting a little technical but the basic idea is to compare your all-in cost of ownership with your all-in cost of renting. If they’re about the same then you probably won’t get hurt too bad in the long term in buying. But in the short term all bets are off.

Since it sounds like you’re planning on owning this place (as opposed to being a landlord and renting it out), I’d disregard the vacancy and repair friction above in your calculations. You want to make an apples-to-apples comparison, after all.

[davelj]

[quote=urbanrealtor]The thing I would add to Davelj’s post is that you really need to add the hoa fees into that rent equation.

Specifically, the unit is going to take in rent minus hoa fees. The real annual rent is this times 12. I would knock off 20% to account for repair and vacancy costs (as well as other costs like tax and insurance). This can get you a sort of rough cap rate.

I would find these compelling if I could get at least 8% of sale price back annually (based on the above numbers) I would find that compelling enough to consider. Part of my reasoning is that rent increases every year and vanilla loan payments do not (emphasis on vanilla).[/quote]

Yeah, my response was incomplete. You have to take into account the HOA and property taxes. So, specifically, compare imputed rent (assume no growth) with [mortgage interest + HOA + property taxes]. Tax effect the interest and property taxes if you like. This is getting a little technical but the basic idea is to compare your all-in cost of ownership with your all-in cost of renting. If they’re about the same then you probably won’t get hurt too bad in the long term in buying. But in the short term all bets are off.

Since it sounds like you’re planning on owning this place (as opposed to being a landlord and renting it out), I’d disregard the vacancy and repair friction above in your calculations. You want to make an apples-to-apples comparison, after all.

[davelj]

[quote=urbanrealtor]The thing I would add to Davelj’s post is that you really need to add the hoa fees into that rent equation.

Specifically, the unit is going to take in rent minus hoa fees. The real annual rent is this times 12. I would knock off 20% to account for repair and vacancy costs (as well as other costs like tax and insurance). This can get you a sort of rough cap rate.

I would find these compelling if I could get at least 8% of sale price back annually (based on the above numbers) I would find that compelling enough to consider. Part of my reasoning is that rent increases every year and vanilla loan payments do not (emphasis on vanilla).[/quote]

Yeah, my response was incomplete. You have to take into account the HOA and property taxes. So, specifically, compare imputed rent (assume no growth) with [mortgage interest + HOA + property taxes]. Tax effect the interest and property taxes if you like. This is getting a little technical but the basic idea is to compare your all-in cost of ownership with your all-in cost of renting. If they’re about the same then you probably won’t get hurt too bad in the long term in buying. But in the short term all bets are off.

Since it sounds like you’re planning on owning this place (as opposed to being a landlord and renting it out), I’d disregard the vacancy and repair friction above in your calculations. You want to make an apples-to-apples comparison, after all.

[jpinpb]

I have to agree about the idea of rents going up as not necessarily being the case. I just took the plunge and signed up for a rental for another year, since it doesn’t look like I’ll be buying yet, as much as I’m trying.

The place I’m at now in UTC is a 2/2 for 1700, nothing special about it. I saw one closer to PB w/a distant view of the ocean for 1900, 2/2. Much nicer place. They agreed to 1800.

[jpinpb]

I have to agree about the idea of rents going up as not necessarily being the case. I just took the plunge and signed up for a rental for another year, since it doesn’t look like I’ll be buying yet, as much as I’m trying.

The place I’m at now in UTC is a 2/2 for 1700, nothing special about it. I saw one closer to PB w/a distant view of the ocean for 1900, 2/2. Much nicer place. They agreed to 1800.

[jpinpb]

I have to agree about the idea of rents going up as not necessarily being the case. I just took the plunge and signed up for a rental for another year, since it doesn’t look like I’ll be buying yet, as much as I’m trying.

The place I’m at now in UTC is a 2/2 for 1700, nothing special about it. I saw one closer to PB w/a distant view of the ocean for 1900, 2/2. Much nicer place. They agreed to 1800.

[jpinpb]

I have to agree about the idea of rents going up as not necessarily being the case. I just took the plunge and signed up for a rental for another year, since it doesn’t look like I’ll be buying yet, as much as I’m trying.

The place I’m at now in UTC is a 2/2 for 1700, nothing special about it. I saw one closer to PB w/a distant view of the ocean for 1900, 2/2. Much nicer place. They agreed to 1800.

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