Renters Paradise - Price to Rent
Wow, what a weekend; Carlyle , Bear Stearns , a Sunday evening emergency rate cut to the prime rate of 25 bps (which is 0.25%) and I'm beginning to look for a new pad to rent. My lease is not up till August, but my I'm anxious to find a rental on the cheap; getting easier each day.I took a tour of High View up in Hunt Valley again to see the condos since I've seen quite a few for rent with the best deal here . Its a 2/2 that use to sell for $340,000 base price without any upgrades and now it sells for $340,000 with $20,000 of greasing, I mean upgrade/closing cost help/off the top incentive.
So to buy this place today would cost $340,000 (I'm assuming the $20K would be spent on needed upgrades as the place looked pretty low-end and closing costs/moving expense) and to rent it costs $1550. I forgot to mention the month condo association fee (COA) is $320 or something close to that which the owner would play in addition to their mortgage while the renter only pays $1550 (the association fee is already included in this rent price).
$340,000 at 6.5% for 30 years is $2,149.03 a month plus $320 COA = $2,469.03 per month
Your choice $2,469.03 or $1,550 per month? One has considerable downside risk to a price correction while the other costs about $900 less per month without the risk of a home value correction. And after you add in taxes and upkeep your probably at an extra $300 - 400 extra per month.
One thing to note on these condos and townhouses at High View in Hunt Valley is they are built like crap! The glue is already bleeding out of the cheap counter top joints. The tile grout already looks worn, and the general craftsmanship left something to be desired; and this was the model condo.
My next example of a good rental deal is very high end, but such a good deal I had to show. If you can afford $4,500 per month (and the associated utilities) then I found a great deal. This house ( click here ) was for sale at $1,325,000 and is the Montjoy model house from the 2005 development off Rt. 100 just east of Rt. 29.
$1,325,000 at 6.5% for 30 years is $8,374.90 per month and it probably has a home owners associations. You can rent this for almost half the mortgage cost. Now thats a good Price to rent ratio. What a deal you say, well wait a second, this house is probably only worth $850,000 considering how close it is built to condos, apartments, and townhouses. It also has very little land.
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