…interesting. What does this mean for the consumer? I’m torn. Competition is good for an industry; Zillow taking out a competitor could be negative in this aspect. However, super crunching (the analysis of insane amounts of data, which Zillow will now dominate) has some really cool applications. Implemented correctly, this could empower a consumer.
Good question! Short answer: property and mortgage values and cash flow.
Longer answer: it’s a function of the dymanics of the city. As someone looking to buy rental property myself, here’s the analysis I use in looking at this. If you want to buy a $150,000 home, as an investment, you need 20% down. Let’s assume $1000 a year in insurance and another in taxes.
For investment purposes then, this home is going to cost a $30,000 down payment and at a 4.5% APR, cost a landlord $777 a month to pay principal, interest, taxes and insurance.
A landlord is going to need cash flow, too, to be prepared for emergencies and have a return on their investment. In this case, that $150,000 3 Bed, 2 bath home may rent for $1000 or $1050. This isn’t profit for the landlord, necessarily, as there are taxes and maintenance of the home involved, too.
It scales from there…a $175K home requires a 35K down payment (as an investment property) and costs $878 a month to carry in this scenario.
LARGE CAVEAT: This is for a 20% conventional loan, investment property. An owner occupied home will require much less down but have a higher overall mortgage as a result.
Looking to buy or sell a home in Colorado Springs? Please call Rob at 719-440-6626 or email me at firstname.lastname@example.org.
*Reprinted with the permission of the party whom asked.
Looking for a beautiful home in the Fountain area? Look no further than 7820 Clymer Way! Interested? Call Rob at 719-440-6626 and ask about my military buyer credit!
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The answer to this one isn’t cut and dry. Generally speaking, it’s more advantageous for a homebuyer to purchase a home “traditionally.” Rent to own (a.k.a. lease options) often require a large downpayment that may be lost to the seller should you the buyer choose not to execute a sale.
That said, they have their place in a market. If a person would like to buy a home but needs time to work on their credit, it’s an option. However, always consult with a lender, Realtor and attorney prior to signing or drafting a lease purchase option contract.
Looking to buy or sell a home in Colorado Springs? Call Rob at 719-440-6626!
I had a lunch meeting with a “numbers guy” today…was told that he expects rental prices to raise on average 10-26% in the next year. I have not yet verified this information independently, so take it as an unconfirmed data point. Anecdotally, this doesn’t actually surprise me, though, having watched the rental market here climb for the last 14 months.
Looking to buy? Low interest rates…HIGH demand (especially for a 3 bedroom, 2 bath home that rents for ~1100ish)…this is the market to do so!
Rob – 719-440-6626
Looking for a great priced, well maintained home? This 3 bed, 3 bath room is ready for you! Use me as your agent and receive a military buyer credit!