Price/Rent Ratios

[sd_t2]

OK, I’m having some trouble with something. Namely, price/rent ratios.

I guess in the condo market, at least, say a $325,000 condo at 6% 30yr fixed. Even assuming no money down for the sake of argument, this pencils out to:

$1950 monthly mortgage payment
$300 monthly property tax (1.1%)
$250 montly HOA (assuming)

= $2500 total per month.

The total tax deduction (interest and property) is 23100, which is 17,750 above the standard deduction.

At the 25% tax bracket, that additional tax savings puts back $370/month, making the net:

$2130

Not cheap, but rents at the types of apartments that I’d actually live in (I’m sure there are some ‘deals’ out there) range from $1800 to $2100.

So… I guess I’m not seeing this huge discrepancy in price/rent ratio that everyone keeps claiming.

Either rents are poised for freefall, or things are pretty much in equilibrium at the condo vs. apartment level.

Educate me.

[sd_t2]

I forgot state tax savings, let’s call it $100/month blended.

[lendingbubblecontinues]

I think I’d need to see an example of a $325,000 condo that would rent for $2,100.

We currently live in a nice 4/2 bath house in one of the fire-affected communities of RB and our rent for the past five years has been approximately $2,200-$2,300 the whole time. I assure you the house we’re in has been bubbling around the 550-750K range the entire time we’ve been here too.

Rest assured…price/rent ratio is still whack for condos and single family.

[sd_t2]

>>
>> I think I’d need to see an example of a $325,000 condo that >> would rent for $2,100.

I’m thinking more apartments. Here’s a sampling, there are plenty of others.

http://www.equityapartments.com/market/brochure.aspx?page=overview&PropID=522

http://www.portofinoapthomes.com/

“You’ll find one bedroom apartments for rent from $1499, two bedroom apartments for rent from $1899 and three bedroom apartments for rent from $2599.”

http://www.eveningcreek.info/

“You’ll find two bedroom apartments for rent from $2040.”

[Bugs]

The newer 2bd/2ba condos in that size range in Mission Valley are currently selling between $425,000 – $465,000. Sooo, take another 25% off those prices and we’ll be getting near parity. FYI, it will take an $84,000 annual household income to qualify for that 2bd condo at $325,000. Such a deal.

Of course, this comparison is based on assumptions that there will such a thing as 100% financing program AND 6% interest rates available by the time these prices get there. Personally, I wouldn’t bet on either of those assumptions.

[blahblahblah]

You also forgot the opportunity cost of your down payment. If it’s 20% of 325K, that’s 65K which would get you 3250/yr at 5%. Of course you’ll pay tax on that, let’s say 27% leaving you 2372/yr income on your money, just under $200/mo for keeping your money safe in a money market account. So your $1800/mo rent (probably realistic rent for a $325K condo) is really only $1600/mo.

There is no way that a $325K condo rents for $2100/mo. Maybe people are TRYING to rent them for that, but it would be rare for them to get that. I rent a nice place that would sell for at least $750K for less than $2500/mo.

[Dukehorn]

A Bay Area example:

I have a friend that pays $2450/month for a 3/3 townhome. A 3/2 unit in the same complex went for $615k (with $300/month HOAs).

That’s definitely a price/rent ratio issue.

[lendingbubblecontinues]

removed original content of my post…in my opinion,this was actually a good question and I glad you asked it.

LBC

[(former)FormerSanDiegan]

Excellent topic. It is definitely getting closer to parity out there for buy/rent scenarios. Another 10-15% in some areas would do it. Two years ago you wouldn’t even have had to sharpen your pencil (or pop open a spreadsheet) to do these calculations.

[sdrealtor]

We are defintely getter closer. If you missed it on another thread: A duplex just sold in La Costa for $880K. It was in very nice shape and on a 13000 sq ft lot (all usuable). The backyards were both sizeable. Each side was 3BR plus a den that easily could have been a 4th BR. They were over 2300 sq ft each and had 2 car garages. Each side should rent for about 2500 and there are no fees at all associated with the property. It was probably the best deal I’ve seen in several years.

[kev374]

This is in South OC:

Cheapest 3 bedroom/1750sqft condo I could find in Mission Viejo (that doesn’t look like it was in a tornado) was $450k + $340 HOA + $150 maintainence
PITI+HOA+maintainence on that (with zero down if that is even possible) would be $3,558. I could rent that same unit for under $2000/mo. so we’re looking at a 40% decline 😉

And this is for the CHEAPEST Condo. If I were to rent I could find nicer units and have A LOT of choice for my money.

Plus what about the fact that if I buy I will be locking myself into a commitment and lose my flexibility to just get up and go? That is worth a lot as well.

So buying now may seem to equalize but when you factor in everything it just doesn’t pan out!!

Note about the tax savings…that doesn’t work in all cases since you have to itemize to deduct mortgage interest. If you’re a couple and get $11,000 for a standard deduction and if you’re deducting $11,000 in mortgage interest your effective “tax savings” from purchasing a home is ZERO! Now if you deduct State taxes while itemizing you may hit AMT. So have to check with tax advisor to truly determine how much savings you will have.

[(former)FormerSanDiegan]

kev374 – Orange County for the most part is a bit behind the cycle compared to SD.

Regarding tax savings. Most people will hit the standard deduction based on things other than mortgage if they are in a position to buy property in the 450K range. Therefore most of the benefit is above standard deduction. But, I agree it is wise to make the calculations for your particular case (esp. wrt the dreaded AMT).

[Eugene]

In UTC, 325k buys you a 1000 sq.ft. 2-bedroom condo that will rent for $1500-1600.

[Eugene]

In UTC, 325k buys you a 1000 sq.ft. 2-bedroom condo that will rent for $1500-1600.

[Eugene]

In UTC, 325k buys you a 1000 sq.ft. 2-bedroom condo that will rent for $1500-1600.

[Eugene]

In UTC, 325k buys you a 1000 sq.ft. 2-bedroom condo that will rent for $1500-1600.

[Eugene]

In UTC, 325k buys you a 1000 sq.ft. 2-bedroom condo that will rent for $1500-1600.

[(former)FormerSanDiegan]

kev374 – Orange County for the most part is a bit behind the cycle compared to SD.

Regarding tax savings. Most people will hit the standard deduction based on things other than mortgage if they are in a position to buy property in the 450K range. Therefore most of the benefit is above standard deduction. But, I agree it is wise to make the calculations for your particular case (esp. wrt the dreaded AMT).

[(former)FormerSanDiegan]

kev374 – Orange County for the most part is a bit behind the cycle compared to SD.

Regarding tax savings. Most people will hit the standard deduction based on things other than mortgage if they are in a position to buy property in the 450K range. Therefore most of the benefit is above standard deduction. But, I agree it is wise to make the calculations for your particular case (esp. wrt the dreaded AMT).

[(former)FormerSanDiegan]

kev374 – Orange County for the most part is a bit behind the cycle compared to SD.

Regarding tax savings. Most people will hit the standard deduction based on things other than mortgage if they are in a position to buy property in the 450K range. Therefore most of the benefit is above standard deduction. But, I agree it is wise to make the calculations for your particular case (esp. wrt the dreaded AMT).

[(former)FormerSanDiegan]

kev374 – Orange County for the most part is a bit behind the cycle compared to SD.

Regarding tax savings. Most people will hit the standard deduction based on things other than mortgage if they are in a position to buy property in the 450K range. Therefore most of the benefit is above standard deduction. But, I agree it is wise to make the calculations for your particular case (esp. wrt the dreaded AMT).

[kev374]

This is in South OC:

Cheapest 3 bedroom/1750sqft condo I could find in Mission Viejo (that doesn’t look like it was in a tornado) was $450k + $340 HOA + $150 maintainence
PITI+HOA+maintainence on that (with zero down if that is even possible) would be $3,558. I could rent that same unit for under $2000/mo. so we’re looking at a 40% decline 😉

And this is for the CHEAPEST Condo. If I were to rent I could find nicer units and have A LOT of choice for my money.

Plus what about the fact that if I buy I will be locking myself into a commitment and lose my flexibility to just get up and go? That is worth a lot as well.

So buying now may seem to equalize but when you factor in everything it just doesn’t pan out!!

Note about the tax savings…that doesn’t work in all cases since you have to itemize to deduct mortgage interest. If you’re a couple and get $11,000 for a standard deduction and if you’re deducting $11,000 in mortgage interest your effective “tax savings” from purchasing a home is ZERO! Now if you deduct State taxes while itemizing you may hit AMT. So have to check with tax advisor to truly determine how much savings you will have.

[kev374]

This is in South OC:

Cheapest 3 bedroom/1750sqft condo I could find in Mission Viejo (that doesn’t look like it was in a tornado) was $450k + $340 HOA + $150 maintainence
PITI+HOA+maintainence on that (with zero down if that is even possible) would be $3,558. I could rent that same unit for under $2000/mo. so we’re looking at a 40% decline 😉

And this is for the CHEAPEST Condo. If I were to rent I could find nicer units and have A LOT of choice for my money.

Plus what about the fact that if I buy I will be locking myself into a commitment and lose my flexibility to just get up and go? That is worth a lot as well.

So buying now may seem to equalize but when you factor in everything it just doesn’t pan out!!

Note about the tax savings…that doesn’t work in all cases since you have to itemize to deduct mortgage interest. If you’re a couple and get $11,000 for a standard deduction and if you’re deducting $11,000 in mortgage interest your effective “tax savings” from purchasing a home is ZERO! Now if you deduct State taxes while itemizing you may hit AMT. So have to check with tax advisor to truly determine how much savings you will have.

[kev374]

This is in South OC:

Cheapest 3 bedroom/1750sqft condo I could find in Mission Viejo (that doesn’t look like it was in a tornado) was $450k + $340 HOA + $150 maintainence
PITI+HOA+maintainence on that (with zero down if that is even possible) would be $3,558. I could rent that same unit for under $2000/mo. so we’re looking at a 40% decline 😉

And this is for the CHEAPEST Condo. If I were to rent I could find nicer units and have A LOT of choice for my money.

Plus what about the fact that if I buy I will be locking myself into a commitment and lose my flexibility to just get up and go? That is worth a lot as well.

So buying now may seem to equalize but when you factor in everything it just doesn’t pan out!!

Note about the tax savings…that doesn’t work in all cases since you have to itemize to deduct mortgage interest. If you’re a couple and get $11,000 for a standard deduction and if you’re deducting $11,000 in mortgage interest your effective “tax savings” from purchasing a home is ZERO! Now if you deduct State taxes while itemizing you may hit AMT. So have to check with tax advisor to truly determine how much savings you will have.

[kev374]

This is in South OC:

Cheapest 3 bedroom/1750sqft condo I could find in Mission Viejo (that doesn’t look like it was in a tornado) was $450k + $340 HOA + $150 maintainence
PITI+HOA+maintainence on that (with zero down if that is even possible) would be $3,558. I could rent that same unit for under $2000/mo. so we’re looking at a 40% decline 😉

And this is for the CHEAPEST Condo. If I were to rent I could find nicer units and have A LOT of choice for my money.

Plus what about the fact that if I buy I will be locking myself into a commitment and lose my flexibility to just get up and go? That is worth a lot as well.

So buying now may seem to equalize but when you factor in everything it just doesn’t pan out!!

Note about the tax savings…that doesn’t work in all cases since you have to itemize to deduct mortgage interest. If you’re a couple and get $11,000 for a standard deduction and if you’re deducting $11,000 in mortgage interest your effective “tax savings” from purchasing a home is ZERO! Now if you deduct State taxes while itemizing you may hit AMT. So have to check with tax advisor to truly determine how much savings you will have.

[sdrealtor]

We are defintely getter closer. If you missed it on another thread: A duplex just sold in La Costa for $880K. It was in very nice shape and on a 13000 sq ft lot (all usuable). The backyards were both sizeable. Each side was 3BR plus a den that easily could have been a 4th BR. They were over 2300 sq ft each and had 2 car garages. Each side should rent for about 2500 and there are no fees at all associated with the property. It was probably the best deal I’ve seen in several years.

[sdrealtor]

We are defintely getter closer. If you missed it on another thread: A duplex just sold in La Costa for $880K. It was in very nice shape and on a 13000 sq ft lot (all usuable). The backyards were both sizeable. Each side was 3BR plus a den that easily could have been a 4th BR. They were over 2300 sq ft each and had 2 car garages. Each side should rent for about 2500 and there are no fees at all associated with the property. It was probably the best deal I’ve seen in several years.

[sdrealtor]

We are defintely getter closer. If you missed it on another thread: A duplex just sold in La Costa for $880K. It was in very nice shape and on a 13000 sq ft lot (all usuable). The backyards were both sizeable. Each side was 3BR plus a den that easily could have been a 4th BR. They were over 2300 sq ft each and had 2 car garages. Each side should rent for about 2500 and there are no fees at all associated with the property. It was probably the best deal I’ve seen in several years.

[sdrealtor]

We are defintely getter closer. If you missed it on another thread: A duplex just sold in La Costa for $880K. It was in very nice shape and on a 13000 sq ft lot (all usuable). The backyards were both sizeable. Each side was 3BR plus a den that easily could have been a 4th BR. They were over 2300 sq ft each and had 2 car garages. Each side should rent for about 2500 and there are no fees at all associated with the property. It was probably the best deal I’ve seen in several years.

[(former)FormerSanDiegan]

Excellent topic. It is definitely getting closer to parity out there for buy/rent scenarios. Another 10-15% in some areas would do it. Two years ago you wouldn’t even have had to sharpen your pencil (or pop open a spreadsheet) to do these calculations.

[(former)FormerSanDiegan]

Excellent topic. It is definitely getting closer to parity out there for buy/rent scenarios. Another 10-15% in some areas would do it. Two years ago you wouldn’t even have had to sharpen your pencil (or pop open a spreadsheet) to do these calculations.

[(former)FormerSanDiegan]

Excellent topic. It is definitely getting closer to parity out there for buy/rent scenarios. Another 10-15% in some areas would do it. Two years ago you wouldn’t even have had to sharpen your pencil (or pop open a spreadsheet) to do these calculations.

[(former)FormerSanDiegan]

Excellent topic. It is definitely getting closer to parity out there for buy/rent scenarios. Another 10-15% in some areas would do it. Two years ago you wouldn’t even have had to sharpen your pencil (or pop open a spreadsheet) to do these calculations.

[lendingbubblecontinues]

removed original content of my post…in my opinion,this was actually a good question and I glad you asked it.

LBC

[lendingbubblecontinues]

removed original content of my post…in my opinion,this was actually a good question and I glad you asked it.

LBC

[lendingbubblecontinues]

removed original content of my post…in my opinion,this was actually a good question and I glad you asked it.

LBC

[lendingbubblecontinues]

removed original content of my post…in my opinion,this was actually a good question and I glad you asked it.

LBC

[Dukehorn]

A Bay Area example:

I have a friend that pays $2450/month for a 3/3 townhome. A 3/2 unit in the same complex went for $615k (with $300/month HOAs).

That’s definitely a price/rent ratio issue.

[Dukehorn]

A Bay Area example:

I have a friend that pays $2450/month for a 3/3 townhome. A 3/2 unit in the same complex went for $615k (with $300/month HOAs).

That’s definitely a price/rent ratio issue.

[Dukehorn]

A Bay Area example:

I have a friend that pays $2450/month for a 3/3 townhome. A 3/2 unit in the same complex went for $615k (with $300/month HOAs).

That’s definitely a price/rent ratio issue.

[Dukehorn]

A Bay Area example:

I have a friend that pays $2450/month for a 3/3 townhome. A 3/2 unit in the same complex went for $615k (with $300/month HOAs).

That’s definitely a price/rent ratio issue.

[blahblahblah]

You also forgot the opportunity cost of your down payment. If it’s 20% of 325K, that’s 65K which would get you 3250/yr at 5%. Of course you’ll pay tax on that, let’s say 27% leaving you 2372/yr income on your money, just under $200/mo for keeping your money safe in a money market account. So your $1800/mo rent (probably realistic rent for a $325K condo) is really only $1600/mo.

There is no way that a $325K condo rents for $2100/mo. Maybe people are TRYING to rent them for that, but it would be rare for them to get that. I rent a nice place that would sell for at least $750K for less than $2500/mo.

[blahblahblah]

You also forgot the opportunity cost of your down payment. If it’s 20% of 325K, that’s 65K which would get you 3250/yr at 5%. Of course you’ll pay tax on that, let’s say 27% leaving you 2372/yr income on your money, just under $200/mo for keeping your money safe in a money market account. So your $1800/mo rent (probably realistic rent for a $325K condo) is really only $1600/mo.

There is no way that a $325K condo rents for $2100/mo. Maybe people are TRYING to rent them for that, but it would be rare for them to get that. I rent a nice place that would sell for at least $750K for less than $2500/mo.

[blahblahblah]

You also forgot the opportunity cost of your down payment. If it’s 20% of 325K, that’s 65K which would get you 3250/yr at 5%. Of course you’ll pay tax on that, let’s say 27% leaving you 2372/yr income on your money, just under $200/mo for keeping your money safe in a money market account. So your $1800/mo rent (probably realistic rent for a $325K condo) is really only $1600/mo.

There is no way that a $325K condo rents for $2100/mo. Maybe people are TRYING to rent them for that, but it would be rare for them to get that. I rent a nice place that would sell for at least $750K for less than $2500/mo.

[blahblahblah]

You also forgot the opportunity cost of your down payment. If it’s 20% of 325K, that’s 65K which would get you 3250/yr at 5%. Of course you’ll pay tax on that, let’s say 27% leaving you 2372/yr income on your money, just under $200/mo for keeping your money safe in a money market account. So your $1800/mo rent (probably realistic rent for a $325K condo) is really only $1600/mo.

There is no way that a $325K condo rents for $2100/mo. Maybe people are TRYING to rent them for that, but it would be rare for them to get that. I rent a nice place that would sell for at least $750K for less than $2500/mo.

[Bugs]

The newer 2bd/2ba condos in that size range in Mission Valley are currently selling between $425,000 – $465,000. Sooo, take another 25% off those prices and we’ll be getting near parity. FYI, it will take an $84,000 annual household income to qualify for that 2bd condo at $325,000. Such a deal.

Of course, this comparison is based on assumptions that there will such a thing as 100% financing program AND 6% interest rates available by the time these prices get there. Personally, I wouldn’t bet on either of those assumptions.

[Bugs]

The newer 2bd/2ba condos in that size range in Mission Valley are currently selling between $425,000 – $465,000. Sooo, take another 25% off those prices and we’ll be getting near parity. FYI, it will take an $84,000 annual household income to qualify for that 2bd condo at $325,000. Such a deal.

Of course, this comparison is based on assumptions that there will such a thing as 100% financing program AND 6% interest rates available by the time these prices get there. Personally, I wouldn’t bet on either of those assumptions.

[Bugs]

The newer 2bd/2ba condos in that size range in Mission Valley are currently selling between $425,000 – $465,000. Sooo, take another 25% off those prices and we’ll be getting near parity. FYI, it will take an $84,000 annual household income to qualify for that 2bd condo at $325,000. Such a deal.

Of course, this comparison is based on assumptions that there will such a thing as 100% financing program AND 6% interest rates available by the time these prices get there. Personally, I wouldn’t bet on either of those assumptions.

[Bugs]

The newer 2bd/2ba condos in that size range in Mission Valley are currently selling between $425,000 – $465,000. Sooo, take another 25% off those prices and we’ll be getting near parity. FYI, it will take an $84,000 annual household income to qualify for that 2bd condo at $325,000. Such a deal.

Of course, this comparison is based on assumptions that there will such a thing as 100% financing program AND 6% interest rates available by the time these prices get there. Personally, I wouldn’t bet on either of those assumptions.

[sd_t2]

>>
>> I think I’d need to see an example of a $325,000 condo that >> would rent for $2,100.

I’m thinking more apartments. Here’s a sampling, there are plenty of others.

http://www.equityapartments.com/market/brochure.aspx?page=overview&PropID=522

http://www.portofinoapthomes.com/

“You’ll find one bedroom apartments for rent from $1499, two bedroom apartments for rent from $1899 and three bedroom apartments for rent from $2599.”

http://www.eveningcreek.info/

“You’ll find two bedroom apartments for rent from $2040.”

[sd_t2]

>>
>> I think I’d need to see an example of a $325,000 condo that >> would rent for $2,100.

I’m thinking more apartments. Here’s a sampling, there are plenty of others.

http://www.equityapartments.com/market/brochure.aspx?page=overview&PropID=522

http://www.portofinoapthomes.com/

“You’ll find one bedroom apartments for rent from $1499, two bedroom apartments for rent from $1899 and three bedroom apartments for rent from $2599.”

http://www.eveningcreek.info/

“You’ll find two bedroom apartments for rent from $2040.”

[sd_t2]

>>
>> I think I’d need to see an example of a $325,000 condo that >> would rent for $2,100.

I’m thinking more apartments. Here’s a sampling, there are plenty of others.

http://www.equityapartments.com/market/brochure.aspx?page=overview&PropID=522

http://www.portofinoapthomes.com/

“You’ll find one bedroom apartments for rent from $1499, two bedroom apartments for rent from $1899 and three bedroom apartments for rent from $2599.”

http://www.eveningcreek.info/

“You’ll find two bedroom apartments for rent from $2040.”

[sd_t2]

>>
>> I think I’d need to see an example of a $325,000 condo that >> would rent for $2,100.

I’m thinking more apartments. Here’s a sampling, there are plenty of others.

http://www.equityapartments.com/market/brochure.aspx?page=overview&PropID=522

http://www.portofinoapthomes.com/

“You’ll find one bedroom apartments for rent from $1499, two bedroom apartments for rent from $1899 and three bedroom apartments for rent from $2599.”

http://www.eveningcreek.info/

“You’ll find two bedroom apartments for rent from $2040.”

[lendingbubblecontinues]

I think I’d need to see an example of a $325,000 condo that would rent for $2,100.

We currently live in a nice 4/2 bath house in one of the fire-affected communities of RB and our rent for the past five years has been approximately $2,200-$2,300 the whole time. I assure you the house we’re in has been bubbling around the 550-750K range the entire time we’ve been here too.

Rest assured…price/rent ratio is still whack for condos and single family.

[lendingbubblecontinues]

I think I’d need to see an example of a $325,000 condo that would rent for $2,100.

We currently live in a nice 4/2 bath house in one of the fire-affected communities of RB and our rent for the past five years has been approximately $2,200-$2,300 the whole time. I assure you the house we’re in has been bubbling around the 550-750K range the entire time we’ve been here too.

Rest assured…price/rent ratio is still whack for condos and single family.

[lendingbubblecontinues]

I think I’d need to see an example of a $325,000 condo that would rent for $2,100.

We currently live in a nice 4/2 bath house in one of the fire-affected communities of RB and our rent for the past five years has been approximately $2,200-$2,300 the whole time. I assure you the house we’re in has been bubbling around the 550-750K range the entire time we’ve been here too.

Rest assured…price/rent ratio is still whack for condos and single family.

[lendingbubblecontinues]

I think I’d need to see an example of a $325,000 condo that would rent for $2,100.

We currently live in a nice 4/2 bath house in one of the fire-affected communities of RB and our rent for the past five years has been approximately $2,200-$2,300 the whole time. I assure you the house we’re in has been bubbling around the 550-750K range the entire time we’ve been here too.

Rest assured…price/rent ratio is still whack for condos and single family.

[markzuber]

You can’t find quality 2 bedroom condos for $325K in San Diego. However, for $1800-$2100 you can rent luxury 2 bedroom apartment. I live in La Mesa and I pay $1650 for luxury 2 bed rooms apartment. Some of the apartments have been converted, about 2 years ago, to 2 beds condos at the starting price of $359K. The sales are very slow and I think they may revert condos back to apartments.

[markzuber]

You can’t find quality 2 bedroom condos for $325K in San Diego. However, for $1800-$2100 you can rent luxury 2 bedroom apartment. I live in La Mesa and I pay $1650 for luxury 2 bed rooms apartment. Some of the apartments have been converted, about 2 years ago, to 2 beds condos at the starting price of $359K. The sales are very slow and I think they may revert condos back to apartments.

[markzuber]

You can’t find quality 2 bedroom condos for $325K in San Diego. However, for $1800-$2100 you can rent luxury 2 bedroom apartment. I live in La Mesa and I pay $1650 for luxury 2 bed rooms apartment. Some of the apartments have been converted, about 2 years ago, to 2 beds condos at the starting price of $359K. The sales are very slow and I think they may revert condos back to apartments.

[markzuber]

You can’t find quality 2 bedroom condos for $325K in San Diego. However, for $1800-$2100 you can rent luxury 2 bedroom apartment. I live in La Mesa and I pay $1650 for luxury 2 bed rooms apartment. Some of the apartments have been converted, about 2 years ago, to 2 beds condos at the starting price of $359K. The sales are very slow and I think they may revert condos back to apartments.

[markzuber]

You can’t find quality 2 bedroom condos for $325K in San Diego. However, for $1800-$2100 you can rent luxury 2 bedroom apartment. I live in La Mesa and I pay $1650 for luxury 2 bed rooms apartment. Some of the apartments have been converted, about 2 years ago, to 2 beds condos at the starting price of $359K. The sales are very slow and I think they may revert condos back to apartments.

[sd_t2]

I forgot state tax savings, let’s call it $100/month blended.

[sd_t2]

I forgot state tax savings, let’s call it $100/month blended.

[sd_t2]

I forgot state tax savings, let’s call it $100/month blended.

[sd_t2]

I forgot state tax savings, let’s call it $100/month blended.

[HLS]

I guess in the condo market, at least, say a $325,000 condo at 6% 30yr fixed. Even assuming no money down for the sake of argument, this pencils out to:
**************************************
Unfair comparison. Scenario isn’t accurate. The LTV is key.
Any loan above 80% is going to have MI added, making the effective rate much higher than 6%, probably higher than 7% (Add $200+ mo)
You are also going to pay a higher rate above 90.01%-95% LTV, and even higher at 95.01%-100%.

With 20% down, ($65,000) THEN you can get a loan for 6%, IF you qualify. Payment will be $1559 + $271 (Lost interest on the $65K)= $1830..+ 550 above= $2380

If you don’t have $65,000 down, credit above 680, reserves beyond the 65K, and stable income you may not qualify anyway for that rate.
If you do qualify, you will need at least $5,000 mo. income to qualify, assuming that you have no other monthly debts.

A lender will still qualify you for a loan that is a higher % of income than is wise.

Whether it’s home or condo, you will have extra costs for maintenance, and condos can become a worse investment.

[HLS]

I guess in the condo market, at least, say a $325,000 condo at 6% 30yr fixed. Even assuming no money down for the sake of argument, this pencils out to:
**************************************
Unfair comparison. Scenario isn’t accurate. The LTV is key.
Any loan above 80% is going to have MI added, making the effective rate much higher than 6%, probably higher than 7% (Add $200+ mo)
You are also going to pay a higher rate above 90.01%-95% LTV, and even higher at 95.01%-100%.

With 20% down, ($65,000) THEN you can get a loan for 6%, IF you qualify. Payment will be $1559 + $271 (Lost interest on the $65K)= $1830..+ 550 above= $2380

If you don’t have $65,000 down, credit above 680, reserves beyond the 65K, and stable income you may not qualify anyway for that rate.
If you do qualify, you will need at least $5,000 mo. income to qualify, assuming that you have no other monthly debts.

A lender will still qualify you for a loan that is a higher % of income than is wise.

Whether it’s home or condo, you will have extra costs for maintenance, and condos can become a worse investment.

[HLS]

I guess in the condo market, at least, say a $325,000 condo at 6% 30yr fixed. Even assuming no money down for the sake of argument, this pencils out to:
**************************************
Unfair comparison. Scenario isn’t accurate. The LTV is key.
Any loan above 80% is going to have MI added, making the effective rate much higher than 6%, probably higher than 7% (Add $200+ mo)
You are also going to pay a higher rate above 90.01%-95% LTV, and even higher at 95.01%-100%.

With 20% down, ($65,000) THEN you can get a loan for 6%, IF you qualify. Payment will be $1559 + $271 (Lost interest on the $65K)= $1830..+ 550 above= $2380

If you don’t have $65,000 down, credit above 680, reserves beyond the 65K, and stable income you may not qualify anyway for that rate.
If you do qualify, you will need at least $5,000 mo. income to qualify, assuming that you have no other monthly debts.

A lender will still qualify you for a loan that is a higher % of income than is wise.

Whether it’s home or condo, you will have extra costs for maintenance, and condos can become a worse investment.

[HLS]

I guess in the condo market, at least, say a $325,000 condo at 6% 30yr fixed. Even assuming no money down for the sake of argument, this pencils out to:
**************************************
Unfair comparison. Scenario isn’t accurate. The LTV is key.
Any loan above 80% is going to have MI added, making the effective rate much higher than 6%, probably higher than 7% (Add $200+ mo)
You are also going to pay a higher rate above 90.01%-95% LTV, and even higher at 95.01%-100%.

With 20% down, ($65,000) THEN you can get a loan for 6%, IF you qualify. Payment will be $1559 + $271 (Lost interest on the $65K)= $1830..+ 550 above= $2380

If you don’t have $65,000 down, credit above 680, reserves beyond the 65K, and stable income you may not qualify anyway for that rate.
If you do qualify, you will need at least $5,000 mo. income to qualify, assuming that you have no other monthly debts.

A lender will still qualify you for a loan that is a higher % of income than is wise.

Whether it’s home or condo, you will have extra costs for maintenance, and condos can become a worse investment.

[HLS]

I guess in the condo market, at least, say a $325,000 condo at 6% 30yr fixed. Even assuming no money down for the sake of argument, this pencils out to:
**************************************
Unfair comparison. Scenario isn’t accurate. The LTV is key.
Any loan above 80% is going to have MI added, making the effective rate much higher than 6%, probably higher than 7% (Add $200+ mo)
You are also going to pay a higher rate above 90.01%-95% LTV, and even higher at 95.01%-100%.

With 20% down, ($65,000) THEN you can get a loan for 6%, IF you qualify. Payment will be $1559 + $271 (Lost interest on the $65K)= $1830..+ 550 above= $2380

If you don’t have $65,000 down, credit above 680, reserves beyond the 65K, and stable income you may not qualify anyway for that rate.
If you do qualify, you will need at least $5,000 mo. income to qualify, assuming that you have no other monthly debts.

A lender will still qualify you for a loan that is a higher % of income than is wise.

Whether it’s home or condo, you will have extra costs for maintenance, and condos can become a worse investment.

[Author]

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