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(former)FormerSanDiegan
Participant[quote=az4ronpaul]Based on historical financial crisis this bailout will eventuall cost the taxpapyers of the US about 21% of GDP or about $3 trillion. I’d estimate the next package is going to be a monster. Over $1 trillion. It will happen before inauguration of President McCain.[/quote]
Does that mean it will never happen ?
Participant[quote=BGinRB][quote=FormerSanDiegan] So, the unit in question ‘cash flows’ at about 260 x rent with 20% down. Does that make sense to you?
Why use a rule of thumb (price as a multiple of rent) when the numbers are all laid out already.
[/quote]The numbers laid out are not inclusive. We would need to consider additional inputs if we want to come up with some actionable analysis.
That is why I pulled a “rule of thumb”, as a product of a reality-tested analysis.
[/quote]
The issue regarding this particular rule-of-thumb is that the break-even point might be at 200x rent for folks at the 150K income level, but 140x rent for folks at the 50K income level. The impact of taxes is non-linear, plus there is a large offset from zero to deal with (standard deduction).
Using a ratio implies a linear relationship and zero offset. So a scale factor of rent to property value is inherently flawed.One must run the numbers for the particular income and home price range.
Participant[quote=BGinRB][quote=FormerSanDiegan] So, the unit in question ‘cash flows’ at about 260 x rent with 20% down. Does that make sense to you?
Why use a rule of thumb (price as a multiple of rent) when the numbers are all laid out already.
[/quote]The numbers laid out are not inclusive. We would need to consider additional inputs if we want to come up with some actionable analysis.
That is why I pulled a “rule of thumb”, as a product of a reality-tested analysis.
[/quote]
The issue regarding this particular rule-of-thumb is that the break-even point might be at 200x rent for folks at the 150K income level, but 140x rent for folks at the 50K income level. The impact of taxes is non-linear, plus there is a large offset from zero to deal with (standard deduction).
Using a ratio implies a linear relationship and zero offset. So a scale factor of rent to property value is inherently flawed.One must run the numbers for the particular income and home price range.
Participant[quote=BGinRB][quote=FormerSanDiegan] So, the unit in question ‘cash flows’ at about 260 x rent with 20% down. Does that make sense to you?
Why use a rule of thumb (price as a multiple of rent) when the numbers are all laid out already.
[/quote]The numbers laid out are not inclusive. We would need to consider additional inputs if we want to come up with some actionable analysis.
That is why I pulled a “rule of thumb”, as a product of a reality-tested analysis.
[/quote]
The issue regarding this particular rule-of-thumb is that the break-even point might be at 200x rent for folks at the 150K income level, but 140x rent for folks at the 50K income level. The impact of taxes is non-linear, plus there is a large offset from zero to deal with (standard deduction).
Using a ratio implies a linear relationship and zero offset. So a scale factor of rent to property value is inherently flawed.One must run the numbers for the particular income and home price range.
Participant[quote=BGinRB][quote=FormerSanDiegan] So, the unit in question ‘cash flows’ at about 260 x rent with 20% down. Does that make sense to you?
Why use a rule of thumb (price as a multiple of rent) when the numbers are all laid out already.
[/quote]The numbers laid out are not inclusive. We would need to consider additional inputs if we want to come up with some actionable analysis.
That is why I pulled a “rule of thumb”, as a product of a reality-tested analysis.
[/quote]
The issue regarding this particular rule-of-thumb is that the break-even point might be at 200x rent for folks at the 150K income level, but 140x rent for folks at the 50K income level. The impact of taxes is non-linear, plus there is a large offset from zero to deal with (standard deduction).
Using a ratio implies a linear relationship and zero offset. So a scale factor of rent to property value is inherently flawed.One must run the numbers for the particular income and home price range.
Participant[quote=BGinRB][quote=FormerSanDiegan] So, the unit in question ‘cash flows’ at about 260 x rent with 20% down. Does that make sense to you?
Why use a rule of thumb (price as a multiple of rent) when the numbers are all laid out already.
[/quote]The numbers laid out are not inclusive. We would need to consider additional inputs if we want to come up with some actionable analysis.
That is why I pulled a “rule of thumb”, as a product of a reality-tested analysis.
[/quote]
The issue regarding this particular rule-of-thumb is that the break-even point might be at 200x rent for folks at the 150K income level, but 140x rent for folks at the 50K income level. The impact of taxes is non-linear, plus there is a large offset from zero to deal with (standard deduction).
Using a ratio implies a linear relationship and zero offset. So a scale factor of rent to property value is inherently flawed.One must run the numbers for the particular income and home price range.
Participant[quote=DWCAP]
Maybe I am way out on a limb here, but does anyone else notice that under the buying scenario the family who just bought is dedicating 50% of their income to morgage payement? The renters are using ~38% of income to rent. The only reason the total cash flow is similar to one another is due to the decreased taxes a homeowner has to pay compared to a renter.
Perhaps I need to change my expectations of risk and aversion to it, but isnt 50% of income going to houseing rather excessive? [/quote]
If they are roughly equivalent, how can one be 50% of income and the other 38% ?
The problem is you compared the pre-tax numbers when computing the percentages.
Participant[quote=DWCAP]
Maybe I am way out on a limb here, but does anyone else notice that under the buying scenario the family who just bought is dedicating 50% of their income to morgage payement? The renters are using ~38% of income to rent. The only reason the total cash flow is similar to one another is due to the decreased taxes a homeowner has to pay compared to a renter.
Perhaps I need to change my expectations of risk and aversion to it, but isnt 50% of income going to houseing rather excessive? [/quote]
If they are roughly equivalent, how can one be 50% of income and the other 38% ?
The problem is you compared the pre-tax numbers when computing the percentages.
Participant[quote=DWCAP]
Maybe I am way out on a limb here, but does anyone else notice that under the buying scenario the family who just bought is dedicating 50% of their income to morgage payement? The renters are using ~38% of income to rent. The only reason the total cash flow is similar to one another is due to the decreased taxes a homeowner has to pay compared to a renter.
Perhaps I need to change my expectations of risk and aversion to it, but isnt 50% of income going to houseing rather excessive? [/quote]
If they are roughly equivalent, how can one be 50% of income and the other 38% ?
The problem is you compared the pre-tax numbers when computing the percentages.
Participant[quote=DWCAP]
Maybe I am way out on a limb here, but does anyone else notice that under the buying scenario the family who just bought is dedicating 50% of their income to morgage payement? The renters are using ~38% of income to rent. The only reason the total cash flow is similar to one another is due to the decreased taxes a homeowner has to pay compared to a renter.
Perhaps I need to change my expectations of risk and aversion to it, but isnt 50% of income going to houseing rather excessive? [/quote]
If they are roughly equivalent, how can one be 50% of income and the other 38% ?
The problem is you compared the pre-tax numbers when computing the percentages.
Participant[quote=DWCAP]
Maybe I am way out on a limb here, but does anyone else notice that under the buying scenario the family who just bought is dedicating 50% of their income to morgage payement? The renters are using ~38% of income to rent. The only reason the total cash flow is similar to one another is due to the decreased taxes a homeowner has to pay compared to a renter.
Perhaps I need to change my expectations of risk and aversion to it, but isnt 50% of income going to houseing rather excessive? [/quote]
If they are roughly equivalent, how can one be 50% of income and the other 38% ?
The problem is you compared the pre-tax numbers when computing the percentages.
Participant[quote=Dunerookie]Isn’t there a limit on how much rent can be raised in a given year? I thought it was 10%. Could be wrong.[/quote]
The limits on rent increases apply only to month-to-month leases. For longer-term leases (either 11 months or 12 months is the cuttoff I believe) there is no legal restriction.Where is someone paying only $750 for a 3/2 ? Is this in El Centro ?
Participant[quote=Dunerookie]Isn’t there a limit on how much rent can be raised in a given year? I thought it was 10%. Could be wrong.[/quote]
The limits on rent increases apply only to month-to-month leases. For longer-term leases (either 11 months or 12 months is the cuttoff I believe) there is no legal restriction.Where is someone paying only $750 for a 3/2 ? Is this in El Centro ?
Participant[quote=Dunerookie]Isn’t there a limit on how much rent can be raised in a given year? I thought it was 10%. Could be wrong.[/quote]
The limits on rent increases apply only to month-to-month leases. For longer-term leases (either 11 months or 12 months is the cuttoff I believe) there is no legal restriction.Where is someone paying only $750 for a 3/2 ? Is this in El Centro ?
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