Shall we buy or never in San Diego or wait for more depreciation?

[Scarlett]

Townhouses in UTC, built in mid 80s, 3 bdr >1500 sf sell for ~550-600K and rent for low 2000s. 250x. I wish I could get $1500 rent!!! Or the townhouse for 400K! 300K??? No way, no how. I hear these multipliers of 150x, and I think those are totally wild dreams which I am going to ignore, otherwise I’ll go crazy with frustration.

It’s true the rents have decreased a little bit. School district is pretty good though not quite as good as Poway Unified or Del mar.

FWIW, I have seen houses in PUSD, 4 bdr ~2000sf that rent for mid 2000s but cost about 550-600K. So the multiplier seems to be around 200-225x.

I just don’t see a scenario in which either rents almost double or the current prices drop another 200K (30%) to get to 150x multiplier.

[BuyOrNot]

Even if we go for traditional loan, the net result will be similar as we have calculated before. The only difference is that we have to pay additional $25,480 over 60 months as principal which we will recoup on sale at 500K. We had used interest only to make calculation simpler.

As we said earlier there is an opportunity lost for down payment of 100K and 25,480 and in any case we are planning to keep down payment safely invested for this period.

AN, we use itemized deductions due to state taxes therefore standard deduction doesn’t effect the calculation. Let us know if you think it should effect otherwise and how.

We are not sure whether AMT effect the tax deductions for mortgage interest and property taxes. We probably hit it soon.

[quote=BuyOrNot]Thank you for your feedback. We got it that maintaining a rental property out of state is not easy and it will not be financially viable.

There was very legitimate question asked why we are thinking about buying at first place considering short time period of 5 years. The reasons (not in priority order)
(a)renting from last 10 years
(b)most of our friends have homes and it is putting some what pressure on us
(c)it is making sense financially somewhat as compared to 2006 lets look at the example numbers below

Prop bought for 500k with 100k Down
400k loan Closing cost = $4000
At 5% Interest only loan
Interest $1667
Prop tax $625 (at 1.5%)
Federal Tax rate of 28%
State Tax 9.55%
Effect Interest and Tax = ($1667 + $625) * 0.6245 = $1431
Add about $169 for insurance and hoa etc
Total monthly money out of our hand is $1600

Compare it with renting a property for $2000 we save $400 per month and over 5years (60 months) we are +$24000

Add 8000 federal tax credit and 10000 state tax credit then we are +$42000

Now assume we will able to sell the home for the same value of 500k after 5 years. Then after 5 years 6% commission + closing cost – $42000 = -30000 – 4000 + 42000
= +$8000

The positives assumptions if work out (most likely) then it can add to saving even more

(1) The one variable is that we may not able to get similar property for $2000 as rent if I look today the asking rent is about 2200$ plus for similar property.

(2) There is always an opportunity to get the property for less than 500k currently.

We are assuming to keep down payment conservatively invested so there is not much of a loss of opportunity for $100k down payment

These are the reasons we started thinking of buying property and planned to get feedback from “piggs”. Let us know if we are missing some thing in calculations above. What “piggs” recommend now?[/quote]

[BuyOrNot]

Even if we go for traditional loan, the net result will be similar as we have calculated before. The only difference is that we have to pay additional $25,480 over 60 months as principal which we will recoup on sale at 500K. We had used interest only to make calculation simpler.

As we said earlier there is an opportunity lost for down payment of 100K and 25,480 and in any case we are planning to keep down payment safely invested for this period.

AN, we use itemized deductions due to state taxes therefore standard deduction doesn’t effect the calculation. Let us know if you think it should effect otherwise and how.

We are not sure whether AMT effect the tax deductions for mortgage interest and property taxes. We probably hit it soon.

[quote=BuyOrNot]Thank you for your feedback. We got it that maintaining a rental property out of state is not easy and it will not be financially viable.

There was very legitimate question asked why we are thinking about buying at first place considering short time period of 5 years. The reasons (not in priority order)
(a)renting from last 10 years
(b)most of our friends have homes and it is putting some what pressure on us
(c)it is making sense financially somewhat as compared to 2006 lets look at the example numbers below

Prop bought for 500k with 100k Down
400k loan Closing cost = $4000
At 5% Interest only loan
Interest $1667
Prop tax $625 (at 1.5%)
Federal Tax rate of 28%
State Tax 9.55%
Effect Interest and Tax = ($1667 + $625) * 0.6245 = $1431
Add about $169 for insurance and hoa etc
Total monthly money out of our hand is $1600

Compare it with renting a property for $2000 we save $400 per month and over 5years (60 months) we are +$24000

Add 8000 federal tax credit and 10000 state tax credit then we are +$42000

Now assume we will able to sell the home for the same value of 500k after 5 years. Then after 5 years 6% commission + closing cost – $42000 = -30000 – 4000 + 42000
= +$8000

The positives assumptions if work out (most likely) then it can add to saving even more

(1) The one variable is that we may not able to get similar property for $2000 as rent if I look today the asking rent is about 2200$ plus for similar property.

(2) There is always an opportunity to get the property for less than 500k currently.

We are assuming to keep down payment conservatively invested so there is not much of a loss of opportunity for $100k down payment

These are the reasons we started thinking of buying property and planned to get feedback from “piggs”. Let us know if we are missing some thing in calculations above. What “piggs” recommend now?[/quote]

[BuyOrNot]

Even if we go for traditional loan, the net result will be similar as we have calculated before. The only difference is that we have to pay additional $25,480 over 60 months as principal which we will recoup on sale at 500K. We had used interest only to make calculation simpler.

As we said earlier there is an opportunity lost for down payment of 100K and 25,480 and in any case we are planning to keep down payment safely invested for this period.

AN, we use itemized deductions due to state taxes therefore standard deduction doesn’t effect the calculation. Let us know if you think it should effect otherwise and how.

We are not sure whether AMT effect the tax deductions for mortgage interest and property taxes. We probably hit it soon.

[quote=BuyOrNot]Thank you for your feedback. We got it that maintaining a rental property out of state is not easy and it will not be financially viable.

There was very legitimate question asked why we are thinking about buying at first place considering short time period of 5 years. The reasons (not in priority order)
(a)renting from last 10 years
(b)most of our friends have homes and it is putting some what pressure on us
(c)it is making sense financially somewhat as compared to 2006 lets look at the example numbers below

Prop bought for 500k with 100k Down
400k loan Closing cost = $4000
At 5% Interest only loan
Interest $1667
Prop tax $625 (at 1.5%)
Federal Tax rate of 28%
State Tax 9.55%
Effect Interest and Tax = ($1667 + $625) * 0.6245 = $1431
Add about $169 for insurance and hoa etc
Total monthly money out of our hand is $1600

Compare it with renting a property for $2000 we save $400 per month and over 5years (60 months) we are +$24000

Add 8000 federal tax credit and 10000 state tax credit then we are +$42000

Now assume we will able to sell the home for the same value of 500k after 5 years. Then after 5 years 6% commission + closing cost – $42000 = -30000 – 4000 + 42000
= +$8000

The positives assumptions if work out (most likely) then it can add to saving even more

(1) The one variable is that we may not able to get similar property for $2000 as rent if I look today the asking rent is about 2200$ plus for similar property.

(2) There is always an opportunity to get the property for less than 500k currently.

We are assuming to keep down payment conservatively invested so there is not much of a loss of opportunity for $100k down payment

These are the reasons we started thinking of buying property and planned to get feedback from “piggs”. Let us know if we are missing some thing in calculations above. What “piggs” recommend now?[/quote]

[BuyOrNot]

Even if we go for traditional loan, the net result will be similar as we have calculated before. The only difference is that we have to pay additional $25,480 over 60 months as principal which we will recoup on sale at 500K. We had used interest only to make calculation simpler.

As we said earlier there is an opportunity lost for down payment of 100K and 25,480 and in any case we are planning to keep down payment safely invested for this period.

AN, we use itemized deductions due to state taxes therefore standard deduction doesn’t effect the calculation. Let us know if you think it should effect otherwise and how.

We are not sure whether AMT effect the tax deductions for mortgage interest and property taxes. We probably hit it soon.

[quote=BuyOrNot]Thank you for your feedback. We got it that maintaining a rental property out of state is not easy and it will not be financially viable.

There was very legitimate question asked why we are thinking about buying at first place considering short time period of 5 years. The reasons (not in priority order)
(a)renting from last 10 years
(b)most of our friends have homes and it is putting some what pressure on us
(c)it is making sense financially somewhat as compared to 2006 lets look at the example numbers below

Prop bought for 500k with 100k Down
400k loan Closing cost = $4000
At 5% Interest only loan
Interest $1667
Prop tax $625 (at 1.5%)
Federal Tax rate of 28%
State Tax 9.55%
Effect Interest and Tax = ($1667 + $625) * 0.6245 = $1431
Add about $169 for insurance and hoa etc
Total monthly money out of our hand is $1600

Compare it with renting a property for $2000 we save $400 per month and over 5years (60 months) we are +$24000

Add 8000 federal tax credit and 10000 state tax credit then we are +$42000

Now assume we will able to sell the home for the same value of 500k after 5 years. Then after 5 years 6% commission + closing cost – $42000 = -30000 – 4000 + 42000
= +$8000

The positives assumptions if work out (most likely) then it can add to saving even more

(1) The one variable is that we may not able to get similar property for $2000 as rent if I look today the asking rent is about 2200$ plus for similar property.

(2) There is always an opportunity to get the property for less than 500k currently.

We are assuming to keep down payment conservatively invested so there is not much of a loss of opportunity for $100k down payment

These are the reasons we started thinking of buying property and planned to get feedback from “piggs”. Let us know if we are missing some thing in calculations above. What “piggs” recommend now?[/quote]

[BuyOrNot]

Even if we go for traditional loan, the net result will be similar as we have calculated before. The only difference is that we have to pay additional $25,480 over 60 months as principal which we will recoup on sale at 500K. We had used interest only to make calculation simpler.

As we said earlier there is an opportunity lost for down payment of 100K and 25,480 and in any case we are planning to keep down payment safely invested for this period.

AN, we use itemized deductions due to state taxes therefore standard deduction doesn’t effect the calculation. Let us know if you think it should effect otherwise and how.

We are not sure whether AMT effect the tax deductions for mortgage interest and property taxes. We probably hit it soon.

[quote=BuyOrNot]Thank you for your feedback. We got it that maintaining a rental property out of state is not easy and it will not be financially viable.

There was very legitimate question asked why we are thinking about buying at first place considering short time period of 5 years. The reasons (not in priority order)
(a)renting from last 10 years
(b)most of our friends have homes and it is putting some what pressure on us
(c)it is making sense financially somewhat as compared to 2006 lets look at the example numbers below

Prop bought for 500k with 100k Down
400k loan Closing cost = $4000
At 5% Interest only loan
Interest $1667
Prop tax $625 (at 1.5%)
Federal Tax rate of 28%
State Tax 9.55%
Effect Interest and Tax = ($1667 + $625) * 0.6245 = $1431
Add about $169 for insurance and hoa etc
Total monthly money out of our hand is $1600

Compare it with renting a property for $2000 we save $400 per month and over 5years (60 months) we are +$24000

Add 8000 federal tax credit and 10000 state tax credit then we are +$42000

Now assume we will able to sell the home for the same value of 500k after 5 years. Then after 5 years 6% commission + closing cost – $42000 = -30000 – 4000 + 42000
= +$8000

The positives assumptions if work out (most likely) then it can add to saving even more

(1) The one variable is that we may not able to get similar property for $2000 as rent if I look today the asking rent is about 2200$ plus for similar property.

(2) There is always an opportunity to get the property for less than 500k currently.

We are assuming to keep down payment conservatively invested so there is not much of a loss of opportunity for $100k down payment

These are the reasons we started thinking of buying property and planned to get feedback from “piggs”. Let us know if we are missing some thing in calculations above. What “piggs” recommend now?[/quote]

[temeculaguy]

If you were going to stay 20 years and could easily afford it, I’d say “what the hell, do what makes you happy.” But your reasoning reminds me of a particular poster, he went by the name of “23109.”

We all know how that turned out. Search older threads, he was the first person I told to not to buy a house, you are second. I’m not being egocentric, just trying to give you some perspective, I don’t usually tell people they are making a mistake, but I think you are and i think my opinion, nor anyone else’s really matters. Without prying too much, is it you, or is it the wife that wants to buy and you are rationalizing it. Sometimes telling them “no” causes a few nights on the couch but ends up with years in the bed, always succumbing to their wishes can cause the opposite.

If you want affirmation, you aren’t likely to get it, not because of the purchase but because of your length of stay. The posters here couldn’t agree on how to pick up hundred dollar bills off the ground, what does it tell you that all of them think you shouldn’t implement your plan?

We tried, do us a favor, in two years, when you come back asking about how long you should be able to stay before they forclose, or why you shouldn’t still keep paying because the bank fooled you into an interest only loan that has reset to a higher rate, make up a new screen name. It’s better for everyone.

[temeculaguy]

If you were going to stay 20 years and could easily afford it, I’d say “what the hell, do what makes you happy.” But your reasoning reminds me of a particular poster, he went by the name of “23109.”

We all know how that turned out. Search older threads, he was the first person I told to not to buy a house, you are second. I’m not being egocentric, just trying to give you some perspective, I don’t usually tell people they are making a mistake, but I think you are and i think my opinion, nor anyone else’s really matters. Without prying too much, is it you, or is it the wife that wants to buy and you are rationalizing it. Sometimes telling them “no” causes a few nights on the couch but ends up with years in the bed, always succumbing to their wishes can cause the opposite.

If you want affirmation, you aren’t likely to get it, not because of the purchase but because of your length of stay. The posters here couldn’t agree on how to pick up hundred dollar bills off the ground, what does it tell you that all of them think you shouldn’t implement your plan?

We tried, do us a favor, in two years, when you come back asking about how long you should be able to stay before they forclose, or why you shouldn’t still keep paying because the bank fooled you into an interest only loan that has reset to a higher rate, make up a new screen name. It’s better for everyone.

[temeculaguy]

If you were going to stay 20 years and could easily afford it, I’d say “what the hell, do what makes you happy.” But your reasoning reminds me of a particular poster, he went by the name of “23109.”

We all know how that turned out. Search older threads, he was the first person I told to not to buy a house, you are second. I’m not being egocentric, just trying to give you some perspective, I don’t usually tell people they are making a mistake, but I think you are and i think my opinion, nor anyone else’s really matters. Without prying too much, is it you, or is it the wife that wants to buy and you are rationalizing it. Sometimes telling them “no” causes a few nights on the couch but ends up with years in the bed, always succumbing to their wishes can cause the opposite.

If you want affirmation, you aren’t likely to get it, not because of the purchase but because of your length of stay. The posters here couldn’t agree on how to pick up hundred dollar bills off the ground, what does it tell you that all of them think you shouldn’t implement your plan?

We tried, do us a favor, in two years, when you come back asking about how long you should be able to stay before they forclose, or why you shouldn’t still keep paying because the bank fooled you into an interest only loan that has reset to a higher rate, make up a new screen name. It’s better for everyone.

[temeculaguy]

If you were going to stay 20 years and could easily afford it, I’d say “what the hell, do what makes you happy.” But your reasoning reminds me of a particular poster, he went by the name of “23109.”

We all know how that turned out. Search older threads, he was the first person I told to not to buy a house, you are second. I’m not being egocentric, just trying to give you some perspective, I don’t usually tell people they are making a mistake, but I think you are and i think my opinion, nor anyone else’s really matters. Without prying too much, is it you, or is it the wife that wants to buy and you are rationalizing it. Sometimes telling them “no” causes a few nights on the couch but ends up with years in the bed, always succumbing to their wishes can cause the opposite.

If you want affirmation, you aren’t likely to get it, not because of the purchase but because of your length of stay. The posters here couldn’t agree on how to pick up hundred dollar bills off the ground, what does it tell you that all of them think you shouldn’t implement your plan?

We tried, do us a favor, in two years, when you come back asking about how long you should be able to stay before they forclose, or why you shouldn’t still keep paying because the bank fooled you into an interest only loan that has reset to a higher rate, make up a new screen name. It’s better for everyone.

[temeculaguy]

If you were going to stay 20 years and could easily afford it, I’d say “what the hell, do what makes you happy.” But your reasoning reminds me of a particular poster, he went by the name of “23109.”

We all know how that turned out. Search older threads, he was the first person I told to not to buy a house, you are second. I’m not being egocentric, just trying to give you some perspective, I don’t usually tell people they are making a mistake, but I think you are and i think my opinion, nor anyone else’s really matters. Without prying too much, is it you, or is it the wife that wants to buy and you are rationalizing it. Sometimes telling them “no” causes a few nights on the couch but ends up with years in the bed, always succumbing to their wishes can cause the opposite.

If you want affirmation, you aren’t likely to get it, not because of the purchase but because of your length of stay. The posters here couldn’t agree on how to pick up hundred dollar bills off the ground, what does it tell you that all of them think you shouldn’t implement your plan?

We tried, do us a favor, in two years, when you come back asking about how long you should be able to stay before they forclose, or why you shouldn’t still keep paying because the bank fooled you into an interest only loan that has reset to a higher rate, make up a new screen name. It’s better for everyone.

[(former)FormerSanDiegan]

Thanks TG!

I have had TV in the back of my mind for a while, but hadn’t realized it could be this favorable.

[(former)FormerSanDiegan]

Thanks TG!

I have had TV in the back of my mind for a while, but hadn’t realized it could be this favorable.

[(former)FormerSanDiegan]

Thanks TG!

I have had TV in the back of my mind for a while, but hadn’t realized it could be this favorable.

[(former)FormerSanDiegan]

Thanks TG!

I have had TV in the back of my mind for a while, but hadn’t realized it could be this favorable.

[Author]

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