Took a look at the flyer on this house:
I admit, it is not the best picture of the place, but I was shocked at the price -
$499,950. Here's why...
Classic rule of thumb #1: Mortgages should be in the range of 2 - 2.5X yearly income with a 20% down payment. Even with a 100K down payment, leaving 400K to mortgage, would you know of anyone who has 100K in a savings account and a salary of 150K who would want this place? Especially since even a decent lick of paint on the fence would cost about 50$...putting you at exactly 500K.
Okay, okay, you say...the flyer said that it would be a decent rental property. 3 bedrooms, 1.5 baths, on a very busy arterial. It leads me to --
Classic rule of thumb #2: Price shouldn't exceed 100x the monthly rent. To make money on this property if you paid 500K, it would mean you would have to charge 5K/month to break even. You could rent out all the bedrooms each for $1.67K/month. Know of three people stable enough, dumb enough, and willing enough to each rent a room for 1.67K/month?
I'll be the first to admit that I've taken a none-too-flattering picture and know nothing about the inside of the place. Any bets that the inside would be the Taj Mahal? But applying some misty dusty rules nothing pencils in.
the housing bubble, in a nutshell
February 23rd, 2008 at 03:30 am
February 23rd, 2008 at 04:07 am 1203739671
February 23rd, 2008 at 05:52 am 1203745968
More frequently I've seen the rule that the house price shouldn't be more than 120x rent, maybe 150x tops.
You want to see a list of people dumb enough to buy overpriced real estate? Check the Notice of Trustee Sales on the County Website. This past week, 2/15 - 2/22, saw over 150 Notices posted. For the same period last year there were closer to 67.
I like how the board with the agent's name and number dangles.
February 23rd, 2008 at 03:23 pm 1203780231
Then again, even in the most expensive region of the U.S. the most I ever paid was $450/month for a ROOM! I don't know people in San Francisco who would pay the 1.67k for a ROOM! LOL. So you sure got a point there. Yeesh.
As far as the $150k salary who would want that place? YEah I know a lot. They must be marketing to California. LOL. Obviously makes no sense for the region though. You'll have to tell us what it eventually sells for...
February 23rd, 2008 at 04:19 pm 1203783556
But seriously, when I see that price I think "teardown with fantastic view." Is it possibly a dump on a lot with a view of the sound in Magnolia. If I had the money, I'd pay that much for a view lot on Magnolia!
February 23rd, 2008 at 04:52 pm 1203785538
February 23rd, 2008 at 06:27 pm 1203791228
February 23rd, 2008 at 11:25 pm 1203809140
February 24th, 2008 at 02:10 am 1203819027
Paul Allen's trying to buy up the entire block for his latest pet project and the owners figured they'd shoot for the moon?
Someone was required to list the property as part of a divorce settlement, but price was not specified, and current resident is thinking "They'll sell this over my dead body"?
Loony bird who lives there believes it sits atop a diamond mine?
February 24th, 2008 at 02:46 am 1203821184
I do know that fresh paint and a non-falling down RE sign and fence is the least I can expect for anything at 500K. Unless I get a couple of busted cars in the back. That is a 1/2 a million, you know! Show some pride!