How much to pay in rent

[ctlmdjb]

Looking for some insight to the rental market….we’re a married couple and soon we will both be working from home 50%+ of the time. We also have 2 kids.

So I want to rent a decent sized house – 4br + office minimum. Has to be in North County as one of us goes to Irvine once or twice a week.

I want to rent for 3 years as we know we want to move to Colorado at that point.

Checking out rentals on Craig’s list, it seems you need to pay $2500 – 3500 for something reasonable (we have a dog as well).

I looked at some new homes just for a data point – $650 – 750K could buy something equivalent. That suggests rents and house prices are close to equivalent, unless I have something completely upside down. (6% on $750K = $3750 a month, lets assume the tax break is about equivalent to the extra in HOA and taxes, I’m ignoring paying down the principle as I am comparing it to renting).

So what am I missing? Can I get a $2500 sq. ft nice modern house for significantly less than $3500 rent? I’d be prepared to offer a 3 year lease.

I can see why new homes are selling – I don’t think the price differential is as big as some others on this site claim. (Sit back and wait for flames).

[ibjames]

In some areas I would say that maybe you are correct. In other areas rent and prices are way off. I pay 1650 and my place would sell for probably a million. I don’t live in North County though.

Some people really specialize in that area and I’m sure they can help you on that

[hipmatt]

2500-3500 for rent seems way too high!

[Borat]

I pay $1.2/sf per month in central SD. Very nice place, would probably sell for $800K+. I tried to get a longer lease but mgmt. co wouldn’t go for it — 1 yr. max.

[hipmatt]

In Escondido all under $2400 per month.

http://sandiego.craigslist.org/apa/315514313.html
http://sandiego.craigslist.org/apa/314895565.html
http://sandiego.craigslist.org/apa/314541345.html
http://sandiego.craigslist.org/apa/313514187.html

BTW.. isn’t a $750k mortgage closer to $5,000 per month with taxes and insurance.

[mrquoi]

I hear ya on the dogs, but $3500 seems really high. I have been looking for rentals too and realized that Craigslist is not a good place to look. Plus it just seems that landlords who post there are such wierdos and/or flaky and they want my SS number and bank account – no way. So I’ve been sticking with property management cos, but you have to check almost every day since the good houses seem to go really fast. You also should check how long ago the place sold so you don’t wind up in a FB’s palace.

Here’s a few with places in No. Co

http://www.spanglerrealty.com/Homes_20_for_20_Rent2.html

http://www.renthomes.com/homes/individual_listings.cfm

http://www.utopiamanagement.com/property-management/san-diego.htm

http://www.tguy.com/Nav.aspx/Page=%2fListNow%2fDefault.aspx%2flstFarmID%3d6836

Plus the SD Reader which is like another craigslist

http://sandiego.backpage.com/rentals/classifieds/Results?adLanguage=All&category=4416

[sdrealtor]

Anything decent in NC coastal starts around 2500. For about $3000 you should be able to get a nice 4/3 2800 sq ft home less than 10 years old in a very nice area close to all with great schools. I may know of one about to become available from an original owner. Very clean, never rented out and owners can afford to keep it as long term investment. What kind of dog?

[SD Realtor]

You are not missing on anything ctlmdjb. I am renting and paying 2500 a month for a 4/2.5. Anyways the only point you did not mention is, if you buy, are you buying a depreciating asset. So what is not in your calculations is the risk/reward of whether your home will depreciate or not in the next 3 years.

If you rent, all things being equal, you assume no risk.

SD Realtor

[Cow_tipping]

6% on 750K will not be 3750 a month unless you got some sorta neg am or IO option types. Those loans run closer to 9% if you can even find it, and that will be about 6K a month. Of course you are now an owner, you can deduct that in your taxes but you’d have to pay mello roos, property taxes maintenance, insurance, HOA dues and other BS. Count on 5K a month on average for buying.
Cool.
Cow_tipping.

[anxvariety]

Here’s an area in Oceansie with excellent access to the 5 and 76.. I’ve seen quite a really nice places up for rent in this area(near Oceanside airport)

Wala Dr., Oceanside, CA

Some of the houses in that area are near big power lines.. might want to keep an eye on if you’re not down with that..

[ctlmdjb]

I’m a little ways out from doing this yet, I pay $3150 / month at the moment for a farmhouse in Del Mar (1 acre lot so good for the dog). The dog is a $80lb mutt, but doesn’t chew or anything – she’s 6, but the size puts some people off.

I don’t need to move until later this year, but job changes have made this too small for both of us and my daughter is about to become a teenager and thus need a full time bathroom just for herself. So I need something bigger – $3000 for 2800 sq ft would be great. School district doesn’t matter so much, my kids are in private schools.

I guess I’m half tempted to buy, but knowing I will move in 3 years puts me off. Also MAYBE house prices will come down 20% (and MAYBE not). sdrealtor, if you are in the business perhaps I can contact you closer to the time?

[Anonymous]

The rent vs. buy calculation is a bit off. The $3,750 figure is just interest at 6%. Add to that property taxes, HOA fees and insurance plus any principal you expect to pay. This will add at least $1,000 a month to the payment. In addition, the huge factor is the DOWNSIDE. If the value stays the same for the next three years, very optimistic, then you will only have to pay 6% of $750,000 and thereby lose $45,000 which, on a monthly basis would add another $1,250 to your payment. Consequently, it is much less risky to rent unless you can survive the downturn.
PS I pay $2,000 a month rent for a 2,900 square foot home in RB with a yard for a dog.

[Borat]

Also don’t forget if you have a $100K downpayment saved then you can get $5K/yr from a CD just sitting there. Of course that’s taxable but still that’s probably a couple hundred bucks a month for doing nothing that you lose if you buy the house.

[ctlmdjb]

If you are comparing rent to mortgage, it’s appropriate to compare the rent to just the interest portion of the mortgage (you are not using your rent to buy the property, nor are you using the interest payment to buy the property).

The tax thing – agreed, but you ignore the tax break for a mortgage, I claim they cancel each other out. (You can never know for sure – I get a tax break anyway because I have a home office…maybe I’d run into AMT, maybe not).

Then there’s possible depreciation. Yes, if you know for sure that house prices are dropping this is a huge swinger, but you don’t – nobody does. They SHOULD, but we don’t know for sure they will.

I think 3 years is the clincher for me – I know the cost of moving in only too well, I don’t want to pay the cost of buying a house over only 3 years.

[avidsaver]

It sounds like you might be overreaching on the tax benefit especially if you’re already itemizing. Also, Chubby Rascal mentioned the $45K in commissions that you’d have to pay to sell the house. Let alone any repairs, etc. that your landlord would pick up instead of you in a house that you only plan to live in for 3 years.

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