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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Wyätt Gwyön who wrote (69310)12/24/2006 6:03:32 PM
From: Lizzie TudorRead Replies (1) of 306849
 
well, there are many million dollar houses in the bay area that rent for $2250, but that is usually because they are smallish homes on large lots (where the value is), and that relationship of land to market value in a house doesn't translate well to rentals.

I think you can get about $2250 for a 3br/2ba rancher pretty easily in the bay area in a moderately desirable area. If its a really desirable area, closer to $2700. So the trick is to buy a cheaper house.

If you buy a house in willow glen for 700K no down, your mortgage P&I is about $4400. You can rent it for $2600, or thereabouts. The only million dollar houses here that rent for $2250 are really small exceptions.

the numbers may not have "worked", but there are degrees of nonworking. i am trying to figure out the average rental ratio in the bay area. it sounds like 1mm house rents for 2000-2500. take the midpoint, 2250, and that is a 2.7% return. even by Clownifornia standards that is ridiculous. maybe the Bay Area average is more like 6-8%. if so, then the 1mm house has to fall to 415K rents have to rise, or some combination of the two. maybe the avg is 5%, in which case you still need the 1mm house to fall to 540K.
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