|Purchased Price||$285,000||:::||Lot Size||(Condo Complex)|
|Days on Redfin||46||:::||Baths||1.75|
|Income Required||$102,000/yr||:::||Type||Attached Condo|
*Estimated monthly payment assume 20% down, 30-yr fixed @ 6.50%
This property is located on Huntington Dr. along with a whole block’s row of other condominiums and apartment complexes. Take a quick look at this Craigslist search and you will find no shortage of units being advertised for rent. Rents range from $1,000 for a 1br/studio up to $1,695 for a “large” 2 bed/2 bath unit.
If you were to purchase this unit today with a 20% down payment, your mortgage will end up costing you $300 more than a comparable rental. This is on top of property taxes, maintenance and the ridiculous $140 HOA dues.
This property didn’t always carry such a large premium though. Take a look at the following sales history:
Apr 01, 1994 $95,000 —
Oct 18, 2001 $138,000 5.1%/yr
Oct 29, 2004 $285,000 27.0%/yr
Although the housing bubble had started well before 2004, let’s use the $285,000 as our base price and apply the standard appreciation over it:
Currently listing for $408,000, this condo is at least $69,930 overpriced.
The monthly mortgage would actually be $1,709 if you bought it for $338,070; therefore breaking even as a rental unit. Personally, I believe this property is still overpriced and it’s realistic to consider its 2001 sales price of $138,000 to be the base price.
You have two types of buyers who will consider this property. Someone using it as a primary residence and perhaps rent out a room or a cash flow investor. With today’s lending standards and the way the market is heading, would you put $81,600 to pick up this condo?