Well, well, well. WTF?!
Remember when I wrote about 605 Sheldon? A great rental going for $4850? Well it’s now for sale at $1.47 million. I guess they didn’t pick up a renter but here’s where you can really see the gross disparity on how fucking stupid real estate prices are right now.
Let’s play it simple. First it takes a buyer that makes ~$270k/year to qualify for this house. That person also needs a nice nest-egg for a down payment. It will take roughly $300k to put 20% down and cover some closing costs.
You now have a $1.18 mil note. at 3.875% for 30 years you are writing a check for PMIT of ~$7350.
A person with half a brain and any semblance of common sense would say to them self, even at a 5% return I can earn $15K/year if I invest my $300K. plus I am saving at least $2450/month by renting this house. That’s cost savings equals another $29K/year. So by renting I have $3750/month in extra cash flow PLUS I still have $300K in the bank.
If you buy this house you are an idiot and get what you deserve.