I can’t say it enough. The economics of buying a home in El Segundo are all wrong. Yes, renting sucks. Yes, there is the feeling that your money is going down the drain. Yes, there is risk in the home getting sold or having a crappy landlord. BUT….with decent single family homes in El Segundo selling for $1.3 million+ the smart financial decision, if one has the down payment, is to protect that capital. Why drop A QUARTER OF A MILLION DOLLARS just so you can get a tax write-off and feel like you “own” a home?
Let’s face it, most people do not OWN their home, they are simply renting it from the bank.
The above mentioned $1.3 mil home example will take a down payment of $260k and a monthly cash outlay of around $7,000. First, let’s be real, if we look at the current listings under $1.3 mil, none of them are decent homes. They all suck.
So if we look at the current single family home rental listings we see that there are options and even at the high end of $5.5k/month you are getting almost twice the amount of home you can get for your $7k/month mortgage.
Let that sink in…You drop your life savings…You spend $7k/month…and you live in a shitty house. Sounds like the american nightmare, not the american dream.
Let’s look at the rental at 1546 E Mariposa Ave . 4 bedrooms, 3 baths, 2297 sqft, “gourmet kitchen”, granite, walk-in closets all for $5000/month.
OK, So it may not be your “style” but let’s look at your $1.3mil POS at 403 Loma Vista. Two bedrooms, ONE BATH! 1164 sqft. It’s a tiny spanish home with what I can only imagine is OLD everything. They didn’t even bother to list many photos because it’s a piece of shit. Let’s assume you are a family with one child and 1164 is plenty for you. Should we pencil in $20k for electric and plumbing? $20K for landscaping and making the back yard usable? There is no logical reason why someone should spend $7k/month on that home. A similarly sized home rents for $3k.
Low/no maintenance costs
No property taxes
Better/bigger home for the same cash flow
YOU STILL HAVE YOUR QUARTER OF A MILLION IN THE BANK!
Don’t be stupid. Real Estate can not go up forever. You’ll get your chance.