Condo Rents Upside-Down To Selling Prices in RB Area

[CricketOnTheHearth]

I have been watching the market closely in a radius around Rancho Bernardo for some time. A disjoint between asking rents and asking sale prices has appeared recently.

Tonight when I looked at the rental classifieds in the U-T for 2 bedroom condos, most of the places (a couple dozen) were asking around $1600/month, with a few outliers in the $1400’s, $1300’s, and one senior place at $1250.

However, looking at the same area on Realtor.com, there are literally dozens and dozens of 2BR condos being offered for sale for $200,000 or less. Even if you were paying the full asking price of these as a mortgage payment, your payment would be about $1200/month. (The rough rule of thumb– a 30-year fixed loan at 6% interest will be about $600/month for every $100,000 of the loan.)

This gap may already be closing or getting ready to close. I’ve noticed a couple of units have dropped their asking rents $100 or so in the past couple of weeks (yes, the same units, I recognized them from earlier postings).

[Eugene]

Median asking price for a 2/2 condo in RB is around 280k. Price/rent ratio 190. I see a total of 14 condos at or just below 200K in Rancho Bernardo East & West (two of them in a senior housing complex).

For comparison, 4-bedroom detached houses in the same area have median rents around $2400/month and median sales prices around 600k (price/rent ratio 250).

[Eugene]

Median asking price for a 2/2 condo in RB is around 280k. Price/rent ratio 190. I see a total of 14 condos at or just below 200K in Rancho Bernardo East & West (two of them in a senior housing complex).

For comparison, 4-bedroom detached houses in the same area have median rents around $2400/month and median sales prices around 600k (price/rent ratio 250).

[Eugene]

Median asking price for a 2/2 condo in RB is around 280k. Price/rent ratio 190. I see a total of 14 condos at or just below 200K in Rancho Bernardo East & West (two of them in a senior housing complex).

For comparison, 4-bedroom detached houses in the same area have median rents around $2400/month and median sales prices around 600k (price/rent ratio 250).

[Eugene]

Median asking price for a 2/2 condo in RB is around 280k. Price/rent ratio 190. I see a total of 14 condos at or just below 200K in Rancho Bernardo East & West (two of them in a senior housing complex).

For comparison, 4-bedroom detached houses in the same area have median rents around $2400/month and median sales prices around 600k (price/rent ratio 250).

[Eugene]

Median asking price for a 2/2 condo in RB is around 280k. Price/rent ratio 190. I see a total of 14 condos at or just below 200K in Rancho Bernardo East & West (two of them in a senior housing complex).

For comparison, 4-bedroom detached houses in the same area have median rents around $2400/month and median sales prices around 600k (price/rent ratio 250).

[temeculaguy]

First off, 6% isn’t today’s rate, secondly with all properties there are variances in taxes, mello roos, hoa, etc. Esmith points out medians are running about 190x rent, which is not a wise investment. Use the 100-150x rent multiplier as the “range.” Adjust within tha range after factoring the taxes, hoa, age of the property, vacancy rate and projected vacancy. This is what you should use evaluate as a rental property. To purchase, similar parameters can be used because investors will compete with you at those levels. Personally I think you should shoot for 2001 pricing as the ultimate goal for protection with 2003 as a worst case scenario. Keep in mind that r/e investors are few and far between right now, lenders are tightening so that buyers of investment properties have to qualify without counting rent as income as defense againt preforeclure downsizers.

A $1400 rental is still at the high end of the scale at 200k, keep in mind, investors can use pure math, they can invest anywhere in the country, seeking the best mathematical scenario, they don’t need to live there or go to the schools or commute, it’s far less personal for them and mom and pop investors are drying up.

I can buy a $1400/mo rental right now for $165k, not in RB, so why would I pay 200k for the same return, sub 125x rent multiplier can be found elsewhere, therefore, rb is still overpriced at 200k, 150-175 will come and it will be very compelling at those numbers.

[temeculaguy]

First off, 6% isn’t today’s rate, secondly with all properties there are variances in taxes, mello roos, hoa, etc. Esmith points out medians are running about 190x rent, which is not a wise investment. Use the 100-150x rent multiplier as the “range.” Adjust within tha range after factoring the taxes, hoa, age of the property, vacancy rate and projected vacancy. This is what you should use evaluate as a rental property. To purchase, similar parameters can be used because investors will compete with you at those levels. Personally I think you should shoot for 2001 pricing as the ultimate goal for protection with 2003 as a worst case scenario. Keep in mind that r/e investors are few and far between right now, lenders are tightening so that buyers of investment properties have to qualify without counting rent as income as defense againt preforeclure downsizers.

A $1400 rental is still at the high end of the scale at 200k, keep in mind, investors can use pure math, they can invest anywhere in the country, seeking the best mathematical scenario, they don’t need to live there or go to the schools or commute, it’s far less personal for them and mom and pop investors are drying up.

I can buy a $1400/mo rental right now for $165k, not in RB, so why would I pay 200k for the same return, sub 125x rent multiplier can be found elsewhere, therefore, rb is still overpriced at 200k, 150-175 will come and it will be very compelling at those numbers.

[temeculaguy]

First off, 6% isn’t today’s rate, secondly with all properties there are variances in taxes, mello roos, hoa, etc. Esmith points out medians are running about 190x rent, which is not a wise investment. Use the 100-150x rent multiplier as the “range.” Adjust within tha range after factoring the taxes, hoa, age of the property, vacancy rate and projected vacancy. This is what you should use evaluate as a rental property. To purchase, similar parameters can be used because investors will compete with you at those levels. Personally I think you should shoot for 2001 pricing as the ultimate goal for protection with 2003 as a worst case scenario. Keep in mind that r/e investors are few and far between right now, lenders are tightening so that buyers of investment properties have to qualify without counting rent as income as defense againt preforeclure downsizers.

A $1400 rental is still at the high end of the scale at 200k, keep in mind, investors can use pure math, they can invest anywhere in the country, seeking the best mathematical scenario, they don’t need to live there or go to the schools or commute, it’s far less personal for them and mom and pop investors are drying up.

I can buy a $1400/mo rental right now for $165k, not in RB, so why would I pay 200k for the same return, sub 125x rent multiplier can be found elsewhere, therefore, rb is still overpriced at 200k, 150-175 will come and it will be very compelling at those numbers.

[temeculaguy]

First off, 6% isn’t today’s rate, secondly with all properties there are variances in taxes, mello roos, hoa, etc. Esmith points out medians are running about 190x rent, which is not a wise investment. Use the 100-150x rent multiplier as the “range.” Adjust within tha range after factoring the taxes, hoa, age of the property, vacancy rate and projected vacancy. This is what you should use evaluate as a rental property. To purchase, similar parameters can be used because investors will compete with you at those levels. Personally I think you should shoot for 2001 pricing as the ultimate goal for protection with 2003 as a worst case scenario. Keep in mind that r/e investors are few and far between right now, lenders are tightening so that buyers of investment properties have to qualify without counting rent as income as defense againt preforeclure downsizers.

A $1400 rental is still at the high end of the scale at 200k, keep in mind, investors can use pure math, they can invest anywhere in the country, seeking the best mathematical scenario, they don’t need to live there or go to the schools or commute, it’s far less personal for them and mom and pop investors are drying up.

I can buy a $1400/mo rental right now for $165k, not in RB, so why would I pay 200k for the same return, sub 125x rent multiplier can be found elsewhere, therefore, rb is still overpriced at 200k, 150-175 will come and it will be very compelling at those numbers.

[temeculaguy]

First off, 6% isn’t today’s rate, secondly with all properties there are variances in taxes, mello roos, hoa, etc. Esmith points out medians are running about 190x rent, which is not a wise investment. Use the 100-150x rent multiplier as the “range.” Adjust within tha range after factoring the taxes, hoa, age of the property, vacancy rate and projected vacancy. This is what you should use evaluate as a rental property. To purchase, similar parameters can be used because investors will compete with you at those levels. Personally I think you should shoot for 2001 pricing as the ultimate goal for protection with 2003 as a worst case scenario. Keep in mind that r/e investors are few and far between right now, lenders are tightening so that buyers of investment properties have to qualify without counting rent as income as defense againt preforeclure downsizers.

A $1400 rental is still at the high end of the scale at 200k, keep in mind, investors can use pure math, they can invest anywhere in the country, seeking the best mathematical scenario, they don’t need to live there or go to the schools or commute, it’s far less personal for them and mom and pop investors are drying up.

I can buy a $1400/mo rental right now for $165k, not in RB, so why would I pay 200k for the same return, sub 125x rent multiplier can be found elsewhere, therefore, rb is still overpriced at 200k, 150-175 will come and it will be very compelling at those numbers.

[jpinpb]

Regarding the monthly payments, besides principle, interest, taxes, insurance, HOAs and Mello Roos, let’s not forget putting 20% down. That’s a lot of money to tie up. You’re not getting a second for 20% nowadays. If you don’t have the 20% down, some places will still give you a loan, like FHA. But anything less than 20% means PMI, so add that to your monthly payment.

[jpinpb]

Regarding the monthly payments, besides principle, interest, taxes, insurance, HOAs and Mello Roos, let’s not forget putting 20% down. That’s a lot of money to tie up. You’re not getting a second for 20% nowadays. If you don’t have the 20% down, some places will still give you a loan, like FHA. But anything less than 20% means PMI, so add that to your monthly payment.

[jpinpb]

Regarding the monthly payments, besides principle, interest, taxes, insurance, HOAs and Mello Roos, let’s not forget putting 20% down. That’s a lot of money to tie up. You’re not getting a second for 20% nowadays. If you don’t have the 20% down, some places will still give you a loan, like FHA. But anything less than 20% means PMI, so add that to your monthly payment.

[jpinpb]

Regarding the monthly payments, besides principle, interest, taxes, insurance, HOAs and Mello Roos, let’s not forget putting 20% down. That’s a lot of money to tie up. You’re not getting a second for 20% nowadays. If you don’t have the 20% down, some places will still give you a loan, like FHA. But anything less than 20% means PMI, so add that to your monthly payment.

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