[Scarlett]

[quote=temeculaguy]I think the tax benefit is being underplayed here. Rent neutral is a good time to buy because it is a sound fundamental and it also means others can buy because they are successfully renting. I use a formula that doesn’t factor in the downpayment, it is more simple to figure out (…)
When rent equals the P&I of the purchase price, then I rate it as a “buy.” (…)
You can wash out the taxes, insurance, hoa, mello roos, maintenance, etc. with the tax deduction (…)Since you pay 2500 for rent. 450k at 5.5% P&I is $2555, if you were to pay 450k for a house that rents for 2500 (I know you still have to overcome the fair rent since you are moving areas and housing size/style) is where you should buy it. If you were to find a 2500 rental for 450k and you have been successfully paying the 2500 rent you will be paying a fair price as well as setting yourself up for success. (…)others pay $2500 rent and are waiting for the same house to be 300k, it may get there but it will make sense to the other guy before it gets there.
[/quote]

Thanks, TG, that is true, tax benefit is often underplayed, but if you don’t think about it, and do take into consideration all the other fees & taxes, it’s a nice surprise 🙂 I usually wash out only the property taxes with the tax benefit; MeloRoos can be quite substantial in certain newer parts of PQ (e.g. Del Sur). Sometimes the HOAs can be in the couple hundred range. BTW, congrats for your new home!

Hmmm… You know, TG, with your formula, we can sort of predict what the “minimum” bottom will be for the PQ SFH market (for a given rate)! The 4 BR SFH in PQ that rent for $2500 are fairly large & nice, newer, upgraded houses, which are selling now for 550K-600K…Will they ever reach $450K though? That will mean at least 20% more from the current prices. It’s possible, but it’s a pretty steep decline. (Or are the rents going up in PQ? I doubt that. Maybe down.). If the rates get even lower (e.g. 4%), AND the prices go down another 10-15%, and rents stay about where they are (or higher), then the house price treshhold will become close to 500K.

500K is actually in line with the old formula of home price = 3 x household income for me, so I am now more confident than ever that 500K should be my goal for a decent 4 br SFH in PQ.

I actually wanted, long before this, to buy such a house for only 500K; but it was just a nice round figure and maybe a gut feeling; now I feel much better that all the wise advice and smart tips I received from you guys points towards the same ballpark figure.

Thanks a lot, everybody, and Happy Holidays to all of you and your families!

-Scarlett

[Scarlett]

[quote=peterb]Perhaps you could try running an ad on Craigslist saying what you’re looking for and how much you’re willing to spend? See what kind of responses you get. No reason to be passive here when the data is so important to your analysis. Search for other ways as well, like property management companies, etc….
I think you may discover an interesting trend as well as pick-up some data that’s not easily attainable. I’ve often wanted to see a correlation of rental prices for a given unemployment level. Or occupancy rates of residential units and homes correlated to rental price trends. A study well worth making these days since so many are utilizing the “rent vs. buy” calculation as their logic for purchasing right now.[/quote]

Those seem like good ways to find out more data about the rental prices for homes; I will look into those. Especially property management companies; I just won’t trust much the replies I’ll get with an ad – but it can’t hurt either!

Thanks, peterb!

Scarlett

[Scarlett]

[quote=peterb]Perhaps you could try running an ad on Craigslist saying what you’re looking for and how much you’re willing to spend? See what kind of responses you get. No reason to be passive here when the data is so important to your analysis. Search for other ways as well, like property management companies, etc….
I think you may discover an interesting trend as well as pick-up some data that’s not easily attainable. I’ve often wanted to see a correlation of rental prices for a given unemployment level. Or occupancy rates of residential units and homes correlated to rental price trends. A study well worth making these days since so many are utilizing the “rent vs. buy” calculation as their logic for purchasing right now.[/quote]

Those seem like good ways to find out more data about the rental prices for homes; I will look into those. Especially property management companies; I just won’t trust much the replies I’ll get with an ad – but it can’t hurt either!

Thanks, peterb!

Scarlett

[Scarlett]

[quote=peterb]Perhaps you could try running an ad on Craigslist saying what you’re looking for and how much you’re willing to spend? See what kind of responses you get. No reason to be passive here when the data is so important to your analysis. Search for other ways as well, like property management companies, etc….
I think you may discover an interesting trend as well as pick-up some data that’s not easily attainable. I’ve often wanted to see a correlation of rental prices for a given unemployment level. Or occupancy rates of residential units and homes correlated to rental price trends. A study well worth making these days since so many are utilizing the “rent vs. buy” calculation as their logic for purchasing right now.[/quote]

Those seem like good ways to find out more data about the rental prices for homes; I will look into those. Especially property management companies; I just won’t trust much the replies I’ll get with an ad – but it can’t hurt either!

Thanks, peterb!

Scarlett

[Scarlett]

[quote=peterb]Perhaps you could try running an ad on Craigslist saying what you’re looking for and how much you’re willing to spend? See what kind of responses you get. No reason to be passive here when the data is so important to your analysis. Search for other ways as well, like property management companies, etc….
I think you may discover an interesting trend as well as pick-up some data that’s not easily attainable. I’ve often wanted to see a correlation of rental prices for a given unemployment level. Or occupancy rates of residential units and homes correlated to rental price trends. A study well worth making these days since so many are utilizing the “rent vs. buy” calculation as their logic for purchasing right now.[/quote]

Those seem like good ways to find out more data about the rental prices for homes; I will look into those. Especially property management companies; I just won’t trust much the replies I’ll get with an ad – but it can’t hurt either!

Thanks, peterb!

Scarlett

[Scarlett]

[quote=peterb]Perhaps you could try running an ad on Craigslist saying what you’re looking for and how much you’re willing to spend? See what kind of responses you get. No reason to be passive here when the data is so important to your analysis. Search for other ways as well, like property management companies, etc….
I think you may discover an interesting trend as well as pick-up some data that’s not easily attainable. I’ve often wanted to see a correlation of rental prices for a given unemployment level. Or occupancy rates of residential units and homes correlated to rental price trends. A study well worth making these days since so many are utilizing the “rent vs. buy” calculation as their logic for purchasing right now.[/quote]

Those seem like good ways to find out more data about the rental prices for homes; I will look into those. Especially property management companies; I just won’t trust much the replies I’ll get with an ad – but it can’t hurt either!

Thanks, peterb!

Scarlett

[Scarlett]

[quote=peterb]Do your home work and find out what rents are going for so that you can decide what to do. If it’s your key component for decision-making, you need to get a good handle on it. Then decide if rents may be going down….[/quote]

Thanks, peterb. Rent vs mortgage cost is one of the components for the decision-making. The other is, for me, that the mortgage+HOA+MR+insurance should not be more than 1/3 of the NET household income (we have to save for college and retirement, afterall).

I did look at some rents on a couple websites. For larger 3 bdr apt/townhomes, and 4 bd houses for rent, that would be ~2200-2500. So now my target is something like this: a 4 BR SFH, >2000 sf, in CMR or PQ for purchase at 500-550K, 10% down… at 4% rate 500K loan is about $2500 P&I… And with little or no MeloRoos & HOAs…I believe I will be able to get that within a year or two… keeping my fingers crossed. $2500 is currently my rent in UTC, so I’d like that the P&I to not be more than that…

Scarlett

[Scarlett]

[quote=peterb]Do your home work and find out what rents are going for so that you can decide what to do. If it’s your key component for decision-making, you need to get a good handle on it. Then decide if rents may be going down….[/quote]

Thanks, peterb. Rent vs mortgage cost is one of the components for the decision-making. The other is, for me, that the mortgage+HOA+MR+insurance should not be more than 1/3 of the NET household income (we have to save for college and retirement, afterall).

I did look at some rents on a couple websites. For larger 3 bdr apt/townhomes, and 4 bd houses for rent, that would be ~2200-2500. So now my target is something like this: a 4 BR SFH, >2000 sf, in CMR or PQ for purchase at 500-550K, 10% down… at 4% rate 500K loan is about $2500 P&I… And with little or no MeloRoos & HOAs…I believe I will be able to get that within a year or two… keeping my fingers crossed. $2500 is currently my rent in UTC, so I’d like that the P&I to not be more than that…

Scarlett

[Scarlett]

[quote=peterb]Do your home work and find out what rents are going for so that you can decide what to do. If it’s your key component for decision-making, you need to get a good handle on it. Then decide if rents may be going down….[/quote]

Thanks, peterb. Rent vs mortgage cost is one of the components for the decision-making. The other is, for me, that the mortgage+HOA+MR+insurance should not be more than 1/3 of the NET household income (we have to save for college and retirement, afterall).

I did look at some rents on a couple websites. For larger 3 bdr apt/townhomes, and 4 bd houses for rent, that would be ~2200-2500. So now my target is something like this: a 4 BR SFH, >2000 sf, in CMR or PQ for purchase at 500-550K, 10% down… at 4% rate 500K loan is about $2500 P&I… And with little or no MeloRoos & HOAs…I believe I will be able to get that within a year or two… keeping my fingers crossed. $2500 is currently my rent in UTC, so I’d like that the P&I to not be more than that…

Scarlett

[Scarlett]

[quote=peterb]Do your home work and find out what rents are going for so that you can decide what to do. If it’s your key component for decision-making, you need to get a good handle on it. Then decide if rents may be going down….[/quote]

Thanks, peterb. Rent vs mortgage cost is one of the components for the decision-making. The other is, for me, that the mortgage+HOA+MR+insurance should not be more than 1/3 of the NET household income (we have to save for college and retirement, afterall).

I did look at some rents on a couple websites. For larger 3 bdr apt/townhomes, and 4 bd houses for rent, that would be ~2200-2500. So now my target is something like this: a 4 BR SFH, >2000 sf, in CMR or PQ for purchase at 500-550K, 10% down… at 4% rate 500K loan is about $2500 P&I… And with little or no MeloRoos & HOAs…I believe I will be able to get that within a year or two… keeping my fingers crossed. $2500 is currently my rent in UTC, so I’d like that the P&I to not be more than that…

Scarlett

[Scarlett]

[quote=peterb]Do your home work and find out what rents are going for so that you can decide what to do. If it’s your key component for decision-making, you need to get a good handle on it. Then decide if rents may be going down….[/quote]

Thanks, peterb. Rent vs mortgage cost is one of the components for the decision-making. The other is, for me, that the mortgage+HOA+MR+insurance should not be more than 1/3 of the NET household income (we have to save for college and retirement, afterall).

I did look at some rents on a couple websites. For larger 3 bdr apt/townhomes, and 4 bd houses for rent, that would be ~2200-2500. So now my target is something like this: a 4 BR SFH, >2000 sf, in CMR or PQ for purchase at 500-550K, 10% down… at 4% rate 500K loan is about $2500 P&I… And with little or no MeloRoos & HOAs…I believe I will be able to get that within a year or two… keeping my fingers crossed. $2500 is currently my rent in UTC, so I’d like that the P&I to not be more than that…

Scarlett

[Scarlett]

[quote=carlsbadworker]Assume if you are buying 4B house, the formula that I uses is the local decent-shape 3B apartment rent (maybe with one garage rental as well). There should be plenty of data from the apartment ads. I figure that’s the bottom of the housing rental price.
(…)
Then you calculate mortgage, HOA, MeloRoos, property tax and insurance. If those two prices are close, then I think it is time to buy. Sure, you will be out the downpayment, but you also get some tax benefits on the interest. I call it a wash.
(…)
In the end, however, I think it is OK to overpay a little as long as you like the house. The difference in investment return is going to be small as long as you are paying attention to the buy/rent tradeoff.
[/quote]

Thanks, Carlsbadworker! 3 BR apt rent – that’s a very good idea! Sure, the apartments rents are more reliable as a market indicator…. I am sure there are some 3 bdr in PQ area. Congrats for you, btw!

Owning a house has its benefits for your lifestyle – extra room/storage/garage, yard/patio, freedom of decorating/customizing, etc. For us it means also longer commute, but it’s not very bad.

[Scarlett]

[quote=carlsbadworker]Assume if you are buying 4B house, the formula that I uses is the local decent-shape 3B apartment rent (maybe with one garage rental as well). There should be plenty of data from the apartment ads. I figure that’s the bottom of the housing rental price.
(…)
Then you calculate mortgage, HOA, MeloRoos, property tax and insurance. If those two prices are close, then I think it is time to buy. Sure, you will be out the downpayment, but you also get some tax benefits on the interest. I call it a wash.
(…)
In the end, however, I think it is OK to overpay a little as long as you like the house. The difference in investment return is going to be small as long as you are paying attention to the buy/rent tradeoff.
[/quote]

Thanks, Carlsbadworker! 3 BR apt rent – that’s a very good idea! Sure, the apartments rents are more reliable as a market indicator…. I am sure there are some 3 bdr in PQ area. Congrats for you, btw!

Owning a house has its benefits for your lifestyle – extra room/storage/garage, yard/patio, freedom of decorating/customizing, etc. For us it means also longer commute, but it’s not very bad.

[Scarlett]

[quote=carlsbadworker]Assume if you are buying 4B house, the formula that I uses is the local decent-shape 3B apartment rent (maybe with one garage rental as well). There should be plenty of data from the apartment ads. I figure that’s the bottom of the housing rental price.
(…)
Then you calculate mortgage, HOA, MeloRoos, property tax and insurance. If those two prices are close, then I think it is time to buy. Sure, you will be out the downpayment, but you also get some tax benefits on the interest. I call it a wash.
(…)
In the end, however, I think it is OK to overpay a little as long as you like the house. The difference in investment return is going to be small as long as you are paying attention to the buy/rent tradeoff.
[/quote]

Thanks, Carlsbadworker! 3 BR apt rent – that’s a very good idea! Sure, the apartments rents are more reliable as a market indicator…. I am sure there are some 3 bdr in PQ area. Congrats for you, btw!

Owning a house has its benefits for your lifestyle – extra room/storage/garage, yard/patio, freedom of decorating/customizing, etc. For us it means also longer commute, but it’s not very bad.

[Scarlett]

[quote=carlsbadworker]Assume if you are buying 4B house, the formula that I uses is the local decent-shape 3B apartment rent (maybe with one garage rental as well). There should be plenty of data from the apartment ads. I figure that’s the bottom of the housing rental price.
(…)
Then you calculate mortgage, HOA, MeloRoos, property tax and insurance. If those two prices are close, then I think it is time to buy. Sure, you will be out the downpayment, but you also get some tax benefits on the interest. I call it a wash.
(…)
In the end, however, I think it is OK to overpay a little as long as you like the house. The difference in investment return is going to be small as long as you are paying attention to the buy/rent tradeoff.
[/quote]

Thanks, Carlsbadworker! 3 BR apt rent – that’s a very good idea! Sure, the apartments rents are more reliable as a market indicator…. I am sure there are some 3 bdr in PQ area. Congrats for you, btw!

Owning a house has its benefits for your lifestyle – extra room/storage/garage, yard/patio, freedom of decorating/customizing, etc. For us it means also longer commute, but it’s not very bad.

[Author]

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