Buying a small condo in UTC as an investment?

[davelj]

[quote=Scarlett]Davelj, when does it make sense, though, even with those assumptions, to pencil out as an investment?

[quote=davelj]
when calculating the interest-only payment I’d use (…) the RATE assuming 20% down (but applied against the entire cost of the house – as if you’re putting zero down). Hope that makes sense. And, this is looking at buy vs. rent, not looking at it as an investment. Just to be clear.
[/quote]

Thanks, Dave,that is actually a good and simple way to calculate – using the best rate (at 20%down) but with the loan value = sales/purchase price (like a 100% LTV).

If you figure out what mortgage payment WOULD be with the assumptions above (the good rate,but the whole purchase price loan), for an investment I guess you want to be at least a couple hundred bucks better off paying that THEORETICAL P&I and HOAs and MRs than rent income – or HOW MUCH MORE? (assume no PMI, because you WILL put 20% down at least). In REALITY, one would put 20% down, on which he would lose any return, even a safe 3%, but get a lower total P&I. Or there isn’t a rough number?[/quote]

4plexowner – I assume he owns a 4plex or two? – is a better one to answer this question, but… the basics are that you’d take your total rental income and subtract out operating costs including vacancies, which generally amount to about 35% of rental income. Then you apply a cap rate to that net operating income (NOI) – these days 7%-10%, depending on the property, and that yields a value. Now, one of the checks is that this value also has to ensure that your debt service coverage (DSC) on your loan is 1.2x or greater or you won’t get that loan. In this day and age, I’d probably look for a property where you can apply a 10% cap rate and have at least 1.35x DSC and a 65% LTV. That’s gonna be pretty cheap with a pretty big margin of safety. But, again, I’m assuming that 4plex does this for a living, so he can offer you better insights into buying these things as investments.

[4plexowner]

I never took the time to understand cap rates – bought everything based on gross rent multiplier (GRM) where price = GRM x annual rents

when I started buying in 1998 GRMs for 2-4 units west of I-5 were still in the 10ish area – bought a Mission Beach 4plex in 1999 for 11.5 GRM and thought I was paying too much but rents were rising quickly at the time – by the time I stopped buying in 2001 GRMs were 14 and 15 even in areas like North Park – wasn’t uncommon to see properties listed as high as 21-22 GRM (dreamers!)

in 1998 and 1999 I could ALMOST but not quite make the numbers work (break even or positive cashflow) but rents were rising and I had the income to cover negative cashflow – I figured I’d get to breakeven cashflow within a few years

by 2001 it was obvious to me that prices had gotten out of control – there was no way to make the numbers work or even to pretend that they might work at any point in the near future – I started selling my properties in 2002 and was out of the rental market by 2006 – one of my properties sold at 18 GRM

[4plexowner]

I never took the time to understand cap rates – bought everything based on gross rent multiplier (GRM) where price = GRM x annual rents

when I started buying in 1998 GRMs for 2-4 units west of I-5 were still in the 10ish area – bought a Mission Beach 4plex in 1999 for 11.5 GRM and thought I was paying too much but rents were rising quickly at the time – by the time I stopped buying in 2001 GRMs were 14 and 15 even in areas like North Park – wasn’t uncommon to see properties listed as high as 21-22 GRM (dreamers!)

in 1998 and 1999 I could ALMOST but not quite make the numbers work (break even or positive cashflow) but rents were rising and I had the income to cover negative cashflow – I figured I’d get to breakeven cashflow within a few years

by 2001 it was obvious to me that prices had gotten out of control – there was no way to make the numbers work or even to pretend that they might work at any point in the near future – I started selling my properties in 2002 and was out of the rental market by 2006 – one of my properties sold at 18 GRM

[4plexowner]

I never took the time to understand cap rates – bought everything based on gross rent multiplier (GRM) where price = GRM x annual rents

when I started buying in 1998 GRMs for 2-4 units west of I-5 were still in the 10ish area – bought a Mission Beach 4plex in 1999 for 11.5 GRM and thought I was paying too much but rents were rising quickly at the time – by the time I stopped buying in 2001 GRMs were 14 and 15 even in areas like North Park – wasn’t uncommon to see properties listed as high as 21-22 GRM (dreamers!)

in 1998 and 1999 I could ALMOST but not quite make the numbers work (break even or positive cashflow) but rents were rising and I had the income to cover negative cashflow – I figured I’d get to breakeven cashflow within a few years

by 2001 it was obvious to me that prices had gotten out of control – there was no way to make the numbers work or even to pretend that they might work at any point in the near future – I started selling my properties in 2002 and was out of the rental market by 2006 – one of my properties sold at 18 GRM

[4plexowner]

I never took the time to understand cap rates – bought everything based on gross rent multiplier (GRM) where price = GRM x annual rents

when I started buying in 1998 GRMs for 2-4 units west of I-5 were still in the 10ish area – bought a Mission Beach 4plex in 1999 for 11.5 GRM and thought I was paying too much but rents were rising quickly at the time – by the time I stopped buying in 2001 GRMs were 14 and 15 even in areas like North Park – wasn’t uncommon to see properties listed as high as 21-22 GRM (dreamers!)

in 1998 and 1999 I could ALMOST but not quite make the numbers work (break even or positive cashflow) but rents were rising and I had the income to cover negative cashflow – I figured I’d get to breakeven cashflow within a few years

by 2001 it was obvious to me that prices had gotten out of control – there was no way to make the numbers work or even to pretend that they might work at any point in the near future – I started selling my properties in 2002 and was out of the rental market by 2006 – one of my properties sold at 18 GRM

[4plexowner]

I never took the time to understand cap rates – bought everything based on gross rent multiplier (GRM) where price = GRM x annual rents

when I started buying in 1998 GRMs for 2-4 units west of I-5 were still in the 10ish area – bought a Mission Beach 4plex in 1999 for 11.5 GRM and thought I was paying too much but rents were rising quickly at the time – by the time I stopped buying in 2001 GRMs were 14 and 15 even in areas like North Park – wasn’t uncommon to see properties listed as high as 21-22 GRM (dreamers!)

in 1998 and 1999 I could ALMOST but not quite make the numbers work (break even or positive cashflow) but rents were rising and I had the income to cover negative cashflow – I figured I’d get to breakeven cashflow within a few years

by 2001 it was obvious to me that prices had gotten out of control – there was no way to make the numbers work or even to pretend that they might work at any point in the near future – I started selling my properties in 2002 and was out of the rental market by 2006 – one of my properties sold at 18 GRM

[SmellsFeeshy]

[quote=sdnerd]I’m not sure what impact the UCSD schedule has on the area. Summer is coming up, so maybe it’s that time of the year or something. I have seen a lot of moving trucks the last few weeks, and younger people & their parents carrying furniture. [/quote]

I’m guessing that due to the UCSD schedule vacancies will continue to rise and prices will continue to fall through July (spring quarter ends late June IIRC). Students should start renting again in late August so maybe rent prices will stabilize a bit then.

I remember when I was looking on Craigslist I saw a 1BR at Verano renting for something like $950/month! First sub $1000 apartment I’ve seen in UTC for a long time.

[SmellsFeeshy]

[quote=sdnerd]I’m not sure what impact the UCSD schedule has on the area. Summer is coming up, so maybe it’s that time of the year or something. I have seen a lot of moving trucks the last few weeks, and younger people & their parents carrying furniture. [/quote]

I’m guessing that due to the UCSD schedule vacancies will continue to rise and prices will continue to fall through July (spring quarter ends late June IIRC). Students should start renting again in late August so maybe rent prices will stabilize a bit then.

I remember when I was looking on Craigslist I saw a 1BR at Verano renting for something like $950/month! First sub $1000 apartment I’ve seen in UTC for a long time.

[SmellsFeeshy]

[quote=sdnerd]I’m not sure what impact the UCSD schedule has on the area. Summer is coming up, so maybe it’s that time of the year or something. I have seen a lot of moving trucks the last few weeks, and younger people & their parents carrying furniture. [/quote]

I’m guessing that due to the UCSD schedule vacancies will continue to rise and prices will continue to fall through July (spring quarter ends late June IIRC). Students should start renting again in late August so maybe rent prices will stabilize a bit then.

I remember when I was looking on Craigslist I saw a 1BR at Verano renting for something like $950/month! First sub $1000 apartment I’ve seen in UTC for a long time.

[SmellsFeeshy]

[quote=sdnerd]I’m not sure what impact the UCSD schedule has on the area. Summer is coming up, so maybe it’s that time of the year or something. I have seen a lot of moving trucks the last few weeks, and younger people & their parents carrying furniture. [/quote]

I’m guessing that due to the UCSD schedule vacancies will continue to rise and prices will continue to fall through July (spring quarter ends late June IIRC). Students should start renting again in late August so maybe rent prices will stabilize a bit then.

I remember when I was looking on Craigslist I saw a 1BR at Verano renting for something like $950/month! First sub $1000 apartment I’ve seen in UTC for a long time.

[SmellsFeeshy]

[quote=sdnerd]I’m not sure what impact the UCSD schedule has on the area. Summer is coming up, so maybe it’s that time of the year or something. I have seen a lot of moving trucks the last few weeks, and younger people & their parents carrying furniture. [/quote]

I’m guessing that due to the UCSD schedule vacancies will continue to rise and prices will continue to fall through July (spring quarter ends late June IIRC). Students should start renting again in late August so maybe rent prices will stabilize a bit then.

I remember when I was looking on Craigslist I saw a 1BR at Verano renting for something like $950/month! First sub $1000 apartment I’ve seen in UTC for a long time.

[DWCAP]

[quote=SmellsFeeshy][quote=sdnerd]I’m not sure what impact the UCSD schedule has on the area. Summer is coming up, so maybe it’s that time of the year or something. I have seen a lot of moving trucks the last few weeks, and younger people & their parents carrying furniture. [/quote]

I’m guessing that due to the UCSD schedule vacancies will continue to rise and prices will continue to fall through July (spring quarter ends late June IIRC). Students should start renting again in late August so maybe rent prices will stabilize a bit then.

I remember when I was looking on Craigslist I saw a 1BR at Verano renting for something like $950/month! First sub $1000 apartment I’ve seen in UTC for a long time.
[/quote]

1/1’s in Mira Mesa have just started to hit around the higher $900’s. Most still try to go for more, and rents move slowly, but I know complexs (atleast 1)in the Southeastern area are loosing people quickly. It is only a matter of time. It will be hard for UTC to move up much on the backs of students when they can just move to MM and pay less.

[DWCAP]

[quote=SmellsFeeshy][quote=sdnerd]I’m not sure what impact the UCSD schedule has on the area. Summer is coming up, so maybe it’s that time of the year or something. I have seen a lot of moving trucks the last few weeks, and younger people & their parents carrying furniture. [/quote]

I’m guessing that due to the UCSD schedule vacancies will continue to rise and prices will continue to fall through July (spring quarter ends late June IIRC). Students should start renting again in late August so maybe rent prices will stabilize a bit then.

I remember when I was looking on Craigslist I saw a 1BR at Verano renting for something like $950/month! First sub $1000 apartment I’ve seen in UTC for a long time.
[/quote]

1/1’s in Mira Mesa have just started to hit around the higher $900’s. Most still try to go for more, and rents move slowly, but I know complexs (atleast 1)in the Southeastern area are loosing people quickly. It is only a matter of time. It will be hard for UTC to move up much on the backs of students when they can just move to MM and pay less.

[DWCAP]

[quote=SmellsFeeshy][quote=sdnerd]I’m not sure what impact the UCSD schedule has on the area. Summer is coming up, so maybe it’s that time of the year or something. I have seen a lot of moving trucks the last few weeks, and younger people & their parents carrying furniture. [/quote]

I’m guessing that due to the UCSD schedule vacancies will continue to rise and prices will continue to fall through July (spring quarter ends late June IIRC). Students should start renting again in late August so maybe rent prices will stabilize a bit then.

I remember when I was looking on Craigslist I saw a 1BR at Verano renting for something like $950/month! First sub $1000 apartment I’ve seen in UTC for a long time.
[/quote]

1/1’s in Mira Mesa have just started to hit around the higher $900’s. Most still try to go for more, and rents move slowly, but I know complexs (atleast 1)in the Southeastern area are loosing people quickly. It is only a matter of time. It will be hard for UTC to move up much on the backs of students when they can just move to MM and pay less.

[DWCAP]

[quote=SmellsFeeshy][quote=sdnerd]I’m not sure what impact the UCSD schedule has on the area. Summer is coming up, so maybe it’s that time of the year or something. I have seen a lot of moving trucks the last few weeks, and younger people & their parents carrying furniture. [/quote]

I’m guessing that due to the UCSD schedule vacancies will continue to rise and prices will continue to fall through July (spring quarter ends late June IIRC). Students should start renting again in late August so maybe rent prices will stabilize a bit then.

I remember when I was looking on Craigslist I saw a 1BR at Verano renting for something like $950/month! First sub $1000 apartment I’ve seen in UTC for a long time.
[/quote]

1/1’s in Mira Mesa have just started to hit around the higher $900’s. Most still try to go for more, and rents move slowly, but I know complexs (atleast 1)in the Southeastern area are loosing people quickly. It is only a matter of time. It will be hard for UTC to move up much on the backs of students when they can just move to MM and pay less.

[Author]

Posts