Forum Replies Created
-
AuthorPosts
-
carlsbadworker
Participant[quote=danthedart]Historically the cost of operating a rental unit is 45%. So in order to rent out a home for a profit each month, 55% of rent needs to cover your mortgage plus taxes.
In otherwords, its very difficult for a SFR to be cash flow positive. [/quote]
I, for one, believe in the 45% operating costs number. However, I think it includes the tax payment since that is also part of your cost basis (the mortgage however is not a necessary part since you can always pay cash).
And you don’t compare the 55% rental income directly with mortgage because you need to factor in vacancy, which could easily be 5-10%.
Also, while it is the average, there are many ways to lower it just like in any other properly managed business. So it would be no surprise some people here have a lower number. But I use that figure to judge whether a property is attractive or not as a rental as well.
It is not easy for SFR to be cashflow positive at the beginning (if a major maintenance event showed up), but it would be easy after years for high inflation.
Participant[quote=danthedart]Historically the cost of operating a rental unit is 45%. So in order to rent out a home for a profit each month, 55% of rent needs to cover your mortgage plus taxes.
In otherwords, its very difficult for a SFR to be cash flow positive. [/quote]
I, for one, believe in the 45% operating costs number. However, I think it includes the tax payment since that is also part of your cost basis (the mortgage however is not a necessary part since you can always pay cash).
And you don’t compare the 55% rental income directly with mortgage because you need to factor in vacancy, which could easily be 5-10%.
Also, while it is the average, there are many ways to lower it just like in any other properly managed business. So it would be no surprise some people here have a lower number. But I use that figure to judge whether a property is attractive or not as a rental as well.
It is not easy for SFR to be cashflow positive at the beginning (if a major maintenance event showed up), but it would be easy after years for high inflation.
Participant[quote=danthedart]Historically the cost of operating a rental unit is 45%. So in order to rent out a home for a profit each month, 55% of rent needs to cover your mortgage plus taxes.
In otherwords, its very difficult for a SFR to be cash flow positive. [/quote]
I, for one, believe in the 45% operating costs number. However, I think it includes the tax payment since that is also part of your cost basis (the mortgage however is not a necessary part since you can always pay cash).
And you don’t compare the 55% rental income directly with mortgage because you need to factor in vacancy, which could easily be 5-10%.
Also, while it is the average, there are many ways to lower it just like in any other properly managed business. So it would be no surprise some people here have a lower number. But I use that figure to judge whether a property is attractive or not as a rental as well.
It is not easy for SFR to be cashflow positive at the beginning (if a major maintenance event showed up), but it would be easy after years for high inflation.
Participant[quote=danthedart]Historically the cost of operating a rental unit is 45%. So in order to rent out a home for a profit each month, 55% of rent needs to cover your mortgage plus taxes.
In otherwords, its very difficult for a SFR to be cash flow positive. [/quote]
I, for one, believe in the 45% operating costs number. However, I think it includes the tax payment since that is also part of your cost basis (the mortgage however is not a necessary part since you can always pay cash).
And you don’t compare the 55% rental income directly with mortgage because you need to factor in vacancy, which could easily be 5-10%.
Also, while it is the average, there are many ways to lower it just like in any other properly managed business. So it would be no surprise some people here have a lower number. But I use that figure to judge whether a property is attractive or not as a rental as well.
It is not easy for SFR to be cashflow positive at the beginning (if a major maintenance event showed up), but it would be easy after years for high inflation.
Participant[quote=peterb]I just did a quick scan of 3 bedroom homes for rent in Temecula for $2000 and under on Craiglist. There were 443 of them available. I did the same thing for the city of SD. SD had 645 of them. SD has 1.1M people and is an employment center. What is Temecula’s population and employment capabilities? Does it warrent being 2/3 of the city of SD?
I dont know, just asking. Seems high to me. But I dont honestly know. Maybe Temecula is just a lot cheaper place to live? Probably. For people who live there, does 443 sound like a lot?[/quote]While I agree with most of your points, I don’t agree with the number here. You have a flawed research method in your study.
First, the absolute total number, everybody knows that some people posted very frequently on craigslist for the same property because it doesn’t cost them anything to post a new one. As a result, I bet there’re tons of duplicates in the listings that you mentioned. The Temecula city has over 20K housing unit, and 8K rental units. So the number is definitely not surprisingly high.
Second, the comparison between TV and SD, you do know that Temecula valley is a cheaper place to live, do you? By limiting the price to $2K, you are distorting the experiment. I bet if you try it in Irvine, you will find even less 3B houses renting for less than $2K, what does it prove? Your research method doesn’t prove that TV has more vacant properties, only it has more cheaper rentals.Participant[quote=peterb]I just did a quick scan of 3 bedroom homes for rent in Temecula for $2000 and under on Craiglist. There were 443 of them available. I did the same thing for the city of SD. SD had 645 of them. SD has 1.1M people and is an employment center. What is Temecula’s population and employment capabilities? Does it warrent being 2/3 of the city of SD?
I dont know, just asking. Seems high to me. But I dont honestly know. Maybe Temecula is just a lot cheaper place to live? Probably. For people who live there, does 443 sound like a lot?[/quote]While I agree with most of your points, I don’t agree with the number here. You have a flawed research method in your study.
First, the absolute total number, everybody knows that some people posted very frequently on craigslist for the same property because it doesn’t cost them anything to post a new one. As a result, I bet there’re tons of duplicates in the listings that you mentioned. The Temecula city has over 20K housing unit, and 8K rental units. So the number is definitely not surprisingly high.
Second, the comparison between TV and SD, you do know that Temecula valley is a cheaper place to live, do you? By limiting the price to $2K, you are distorting the experiment. I bet if you try it in Irvine, you will find even less 3B houses renting for less than $2K, what does it prove? Your research method doesn’t prove that TV has more vacant properties, only it has more cheaper rentals.Participant[quote=peterb]I just did a quick scan of 3 bedroom homes for rent in Temecula for $2000 and under on Craiglist. There were 443 of them available. I did the same thing for the city of SD. SD had 645 of them. SD has 1.1M people and is an employment center. What is Temecula’s population and employment capabilities? Does it warrent being 2/3 of the city of SD?
I dont know, just asking. Seems high to me. But I dont honestly know. Maybe Temecula is just a lot cheaper place to live? Probably. For people who live there, does 443 sound like a lot?[/quote]While I agree with most of your points, I don’t agree with the number here. You have a flawed research method in your study.
First, the absolute total number, everybody knows that some people posted very frequently on craigslist for the same property because it doesn’t cost them anything to post a new one. As a result, I bet there’re tons of duplicates in the listings that you mentioned. The Temecula city has over 20K housing unit, and 8K rental units. So the number is definitely not surprisingly high.
Second, the comparison between TV and SD, you do know that Temecula valley is a cheaper place to live, do you? By limiting the price to $2K, you are distorting the experiment. I bet if you try it in Irvine, you will find even less 3B houses renting for less than $2K, what does it prove? Your research method doesn’t prove that TV has more vacant properties, only it has more cheaper rentals.Participant[quote=peterb]I just did a quick scan of 3 bedroom homes for rent in Temecula for $2000 and under on Craiglist. There were 443 of them available. I did the same thing for the city of SD. SD had 645 of them. SD has 1.1M people and is an employment center. What is Temecula’s population and employment capabilities? Does it warrent being 2/3 of the city of SD?
I dont know, just asking. Seems high to me. But I dont honestly know. Maybe Temecula is just a lot cheaper place to live? Probably. For people who live there, does 443 sound like a lot?[/quote]While I agree with most of your points, I don’t agree with the number here. You have a flawed research method in your study.
First, the absolute total number, everybody knows that some people posted very frequently on craigslist for the same property because it doesn’t cost them anything to post a new one. As a result, I bet there’re tons of duplicates in the listings that you mentioned. The Temecula city has over 20K housing unit, and 8K rental units. So the number is definitely not surprisingly high.
Second, the comparison between TV and SD, you do know that Temecula valley is a cheaper place to live, do you? By limiting the price to $2K, you are distorting the experiment. I bet if you try it in Irvine, you will find even less 3B houses renting for less than $2K, what does it prove? Your research method doesn’t prove that TV has more vacant properties, only it has more cheaper rentals.Participant[quote=peterb]I just did a quick scan of 3 bedroom homes for rent in Temecula for $2000 and under on Craiglist. There were 443 of them available. I did the same thing for the city of SD. SD had 645 of them. SD has 1.1M people and is an employment center. What is Temecula’s population and employment capabilities? Does it warrent being 2/3 of the city of SD?
I dont know, just asking. Seems high to me. But I dont honestly know. Maybe Temecula is just a lot cheaper place to live? Probably. For people who live there, does 443 sound like a lot?[/quote]While I agree with most of your points, I don’t agree with the number here. You have a flawed research method in your study.
First, the absolute total number, everybody knows that some people posted very frequently on craigslist for the same property because it doesn’t cost them anything to post a new one. As a result, I bet there’re tons of duplicates in the listings that you mentioned. The Temecula city has over 20K housing unit, and 8K rental units. So the number is definitely not surprisingly high.
Second, the comparison between TV and SD, you do know that Temecula valley is a cheaper place to live, do you? By limiting the price to $2K, you are distorting the experiment. I bet if you try it in Irvine, you will find even less 3B houses renting for less than $2K, what does it prove? Your research method doesn’t prove that TV has more vacant properties, only it has more cheaper rentals.Participant[quote=Scarlet]FIRE economy is dead, on this we all agree? What is on the horizon to replace those jobs? The average household income in Temecula WAS around $50k, what is it now that unemployment is a rose colored glasses, 10%? The FIRE economy allowed people without degrees to make really good money.
[/quote]Where is your source of the income data? (In God we trust, everyone else brings data) I posted mine from census bereau earlier in the thread which shows that the current price is justified:
In addition, the price to income ratio is always above 3 here in San Diego in all previous recessions. In addition, such kind of calculation conveniently ignore the impact of low mortgage rate.
However, I agree with peterb’s point of view that this is not a normal recession. So the previous yardsticks may not hold. So just like in other thread TG posted about 1985 pricing, I think most piggs (even all the “cheer-leaders”) still agree that it may not be a good time to invest yet, but buying a primary residence has a lot of emotional factors invovled so one has to decide for his own family. It definitely has much less downside risk now comparing to even just one year ago.
Participant[quote=Scarlet]FIRE economy is dead, on this we all agree? What is on the horizon to replace those jobs? The average household income in Temecula WAS around $50k, what is it now that unemployment is a rose colored glasses, 10%? The FIRE economy allowed people without degrees to make really good money.
[/quote]Where is your source of the income data? (In God we trust, everyone else brings data) I posted mine from census bereau earlier in the thread which shows that the current price is justified:
In addition, the price to income ratio is always above 3 here in San Diego in all previous recessions. In addition, such kind of calculation conveniently ignore the impact of low mortgage rate.
However, I agree with peterb’s point of view that this is not a normal recession. So the previous yardsticks may not hold. So just like in other thread TG posted about 1985 pricing, I think most piggs (even all the “cheer-leaders”) still agree that it may not be a good time to invest yet, but buying a primary residence has a lot of emotional factors invovled so one has to decide for his own family. It definitely has much less downside risk now comparing to even just one year ago.
Participant[quote=Scarlet]FIRE economy is dead, on this we all agree? What is on the horizon to replace those jobs? The average household income in Temecula WAS around $50k, what is it now that unemployment is a rose colored glasses, 10%? The FIRE economy allowed people without degrees to make really good money.
[/quote]Where is your source of the income data? (In God we trust, everyone else brings data) I posted mine from census bereau earlier in the thread which shows that the current price is justified:
In addition, the price to income ratio is always above 3 here in San Diego in all previous recessions. In addition, such kind of calculation conveniently ignore the impact of low mortgage rate.
However, I agree with peterb’s point of view that this is not a normal recession. So the previous yardsticks may not hold. So just like in other thread TG posted about 1985 pricing, I think most piggs (even all the “cheer-leaders”) still agree that it may not be a good time to invest yet, but buying a primary residence has a lot of emotional factors invovled so one has to decide for his own family. It definitely has much less downside risk now comparing to even just one year ago.
Participant[quote=Scarlet]FIRE economy is dead, on this we all agree? What is on the horizon to replace those jobs? The average household income in Temecula WAS around $50k, what is it now that unemployment is a rose colored glasses, 10%? The FIRE economy allowed people without degrees to make really good money.
[/quote]Where is your source of the income data? (In God we trust, everyone else brings data) I posted mine from census bereau earlier in the thread which shows that the current price is justified:
In addition, the price to income ratio is always above 3 here in San Diego in all previous recessions. In addition, such kind of calculation conveniently ignore the impact of low mortgage rate.
However, I agree with peterb’s point of view that this is not a normal recession. So the previous yardsticks may not hold. So just like in other thread TG posted about 1985 pricing, I think most piggs (even all the “cheer-leaders”) still agree that it may not be a good time to invest yet, but buying a primary residence has a lot of emotional factors invovled so one has to decide for his own family. It definitely has much less downside risk now comparing to even just one year ago.
Participant[quote=Scarlet]FIRE economy is dead, on this we all agree? What is on the horizon to replace those jobs? The average household income in Temecula WAS around $50k, what is it now that unemployment is a rose colored glasses, 10%? The FIRE economy allowed people without degrees to make really good money.
[/quote]Where is your source of the income data? (In God we trust, everyone else brings data) I posted mine from census bereau earlier in the thread which shows that the current price is justified:
In addition, the price to income ratio is always above 3 here in San Diego in all previous recessions. In addition, such kind of calculation conveniently ignore the impact of low mortgage rate.
However, I agree with peterb’s point of view that this is not a normal recession. So the previous yardsticks may not hold. So just like in other thread TG posted about 1985 pricing, I think most piggs (even all the “cheer-leaders”) still agree that it may not be a good time to invest yet, but buying a primary residence has a lot of emotional factors invovled so one has to decide for his own family. It definitely has much less downside risk now comparing to even just one year ago.
-
AuthorPosts
