[EconProf]

SDR: All true. It boils down to one’s philosophy on insurance. Given that insurance companies take a good share of each premium to cover their probable losses, I like to calculate the odds and “self-insure” as much as possible. Maximum deductibles, no collision insurance (save up and pay cash for the car), never buy extended warranties (where claim costs average over half of premiums), and keep a stash for those rare accidents. Get a $1m umbrella coverage for all misc. claims not covered by the above minimum coverage, which will likely protect the landlord for all other claims in our condo example.

[EconProf]

SDR: All true. It boils down to one’s philosophy on insurance. Given that insurance companies take a good share of each premium to cover their probable losses, I like to calculate the odds and “self-insure” as much as possible. Maximum deductibles, no collision insurance (save up and pay cash for the car), never buy extended warranties (where claim costs average over half of premiums), and keep a stash for those rare accidents. Get a $1m umbrella coverage for all misc. claims not covered by the above minimum coverage, which will likely protect the landlord for all other claims in our condo example.

[EconProf]

SDR: All true. It boils down to one’s philosophy on insurance. Given that insurance companies take a good share of each premium to cover their probable losses, I like to calculate the odds and “self-insure” as much as possible. Maximum deductibles, no collision insurance (save up and pay cash for the car), never buy extended warranties (where claim costs average over half of premiums), and keep a stash for those rare accidents. Get a $1m umbrella coverage for all misc. claims not covered by the above minimum coverage, which will likely protect the landlord for all other claims in our condo example.

[EconProf]

SDR: All true. It boils down to one’s philosophy on insurance. Given that insurance companies take a good share of each premium to cover their probable losses, I like to calculate the odds and “self-insure” as much as possible. Maximum deductibles, no collision insurance (save up and pay cash for the car), never buy extended warranties (where claim costs average over half of premiums), and keep a stash for those rare accidents. Get a $1m umbrella coverage for all misc. claims not covered by the above minimum coverage, which will likely protect the landlord for all other claims in our condo example.

[EconProf]

Your P & I is about 1250/mo., assume 10% off your rent for vacancy, fixup to make rent-ready, etc., HOA of $300 and you have a negative cash flow, not even considering the opportunity cost of the $65k down and the transaction costs. Why would you do this?
OTOH, you plugged in 1% for insurance–way high. Why even get ins. on a condo since the HOA covers it?

[EconProf]

Your P & I is about 1250/mo., assume 10% off your rent for vacancy, fixup to make rent-ready, etc., HOA of $300 and you have a negative cash flow, not even considering the opportunity cost of the $65k down and the transaction costs. Why would you do this?
OTOH, you plugged in 1% for insurance–way high. Why even get ins. on a condo since the HOA covers it?

[EconProf]

Your P & I is about 1250/mo., assume 10% off your rent for vacancy, fixup to make rent-ready, etc., HOA of $300 and you have a negative cash flow, not even considering the opportunity cost of the $65k down and the transaction costs. Why would you do this?
OTOH, you plugged in 1% for insurance–way high. Why even get ins. on a condo since the HOA covers it?

[EconProf]

Your P & I is about 1250/mo., assume 10% off your rent for vacancy, fixup to make rent-ready, etc., HOA of $300 and you have a negative cash flow, not even considering the opportunity cost of the $65k down and the transaction costs. Why would you do this?
OTOH, you plugged in 1% for insurance–way high. Why even get ins. on a condo since the HOA covers it?

[EconProf]

Your P & I is about 1250/mo., assume 10% off your rent for vacancy, fixup to make rent-ready, etc., HOA of $300 and you have a negative cash flow, not even considering the opportunity cost of the $65k down and the transaction costs. Why would you do this?
OTOH, you plugged in 1% for insurance–way high. Why even get ins. on a condo since the HOA covers it?

[EconProf]

I really don’t see your reasoning for this condo purchase.
Rental condos make little if any cash flow as investments even at their now deeply discounted values. Besides, if you are going to buy, only 6 months from now, a dwelling to occupy yourself, the lender is going to look at your liquidity and your cash flow. He will make conservative assumptions about your new condo investment–high expenses, low rent (big vacancy factor). And you’ve just drained your liquidity to buy the condo so you look less safe.
I don’t get it…maybe you need to give us more info

[EconProf]

I really don’t see your reasoning for this condo purchase.
Rental condos make little if any cash flow as investments even at their now deeply discounted values. Besides, if you are going to buy, only 6 months from now, a dwelling to occupy yourself, the lender is going to look at your liquidity and your cash flow. He will make conservative assumptions about your new condo investment–high expenses, low rent (big vacancy factor). And you’ve just drained your liquidity to buy the condo so you look less safe.
I don’t get it…maybe you need to give us more info

[EconProf]

I really don’t see your reasoning for this condo purchase.
Rental condos make little if any cash flow as investments even at their now deeply discounted values. Besides, if you are going to buy, only 6 months from now, a dwelling to occupy yourself, the lender is going to look at your liquidity and your cash flow. He will make conservative assumptions about your new condo investment–high expenses, low rent (big vacancy factor). And you’ve just drained your liquidity to buy the condo so you look less safe.
I don’t get it…maybe you need to give us more info

[EconProf]

I really don’t see your reasoning for this condo purchase.
Rental condos make little if any cash flow as investments even at their now deeply discounted values. Besides, if you are going to buy, only 6 months from now, a dwelling to occupy yourself, the lender is going to look at your liquidity and your cash flow. He will make conservative assumptions about your new condo investment–high expenses, low rent (big vacancy factor). And you’ve just drained your liquidity to buy the condo so you look less safe.
I don’t get it…maybe you need to give us more info

[EconProf]

I really don’t see your reasoning for this condo purchase.
Rental condos make little if any cash flow as investments even at their now deeply discounted values. Besides, if you are going to buy, only 6 months from now, a dwelling to occupy yourself, the lender is going to look at your liquidity and your cash flow. He will make conservative assumptions about your new condo investment–high expenses, low rent (big vacancy factor). And you’ve just drained your liquidity to buy the condo so you look less safe.
I don’t get it…maybe you need to give us more info

[EconProf]

I am about to sell a 5-year old Normal Heights/University Heights house. I see rents falling, little future in investments in this state, and a brief window of opportunity to sell during the subsidy-hyped winter months before buyer’s credit ends.
Rental houses only make sense in San Diego in the rare periods of strong appreciation. We won’t be there for quite a long time.

[Author]

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