[Mr. Jeeves]

Let's look at the economics of a "poster property" in San Diego called Park Place. The New York Times reported recently that a one bedroom condo is being offered for $719,000. A prospective buyer would expect to pay about $3,775 a month for a mortgage, plus maintenance fees, taxes and insurance. These additional costs can bring the monthly out-of -pocket total to well over $5,000 a month, or $60,000 a year. However, a renter, who would benefit from the same granite countertops, hardwood floors and fantastic views, can rent a nearly identical unit for only $2,400 a month, or $28,800 a year. At these price levels, the speculator who bought in could run an annual negative cash flow of close to $31,000 if they were forced to rent because no buyers could be found.

This exact scenario played out for both the people who bought my mom's house and for the property I am currently renting. The owners in both cases didn't care about the rental income, as long as they were getting that $10,000/month appreciation. They are about to learn a hard lesson...

[general_re]

I'm in the same position here in NoVA - it's amazing how soft the rental market is right now. There are some absolutely incredible rental properties at fire-sale prices, because the people owning them figure they're going to retire on the sale of the property, and therefore don't care if they lose money for a while. Or they've got some wacky interest-only mortgage, and figure they can flip it before the principal starts biting. Or something - frankly, I don't care what they're thinking, because it all fits in with my plan to wait for a downturn before buying myself (laughs diabolically)....