bellebottomblues wrote:
Hi all,

Thank you all for your feedback. We are leaning towards selling as we have a baby under a year old and are rather overwhelmed at the thought of renting.
Since my initial post I feel things are finally on the upswing. Just curious if you all think that potential buyers who are priced out of downtown would consider JSQ at this point? Our house would be at least double the price down there, it really is adorable and in a great location.
Thanks again!

dtjcview wrote:
I suspect Brewster is a fan of Rich Dad, Poor Dad. The big advantage of going the real estate route is that it's a great way of building assets and generating income at low to no cost - and at less risk than most other forms of investment.

brewster wrote:
Quote:

dtjcview wrote:
So a GRM of 12 translates to $2500/month on a $365k property. Think that's a reasonable benchmark for the OP to base a decision.

Just remember I'm talking about a "new" purchase. You're quoting a 7 year old bubble price that may be irrelevant at this point. My 2004 purchase for $385k appraised for $275k in 2012. jcmee said it in post #2, they should get an appraisal to see what actual equity they have. Hopefully a private appraiser will be more competent than the criminally bad bank appraisers I've had.

dtjcview wrote:
So a GRM of 12 translates to $2500/month on a $365k property. Think that's a reasonable benchmark for the OP to base a decision.

dtjcview wrote:
Doesn't that point to a better answer to the OPs original question? If their property is still worth $365k, a GRM of 7 would require $4,345/month rent. A GRM of 10 would require $3,042/month. What's the highest GRM (and lowest rent) they should accept before investing elsewhere?

brewster wrote:
Quote:

dtjcview wrote:

http://www.realtor.com/mortgage/tools/rent-or-buy-calculator/

Plug in 07306 and 07302 to this. You'll find a bigger negative cashflow in JSQ than downtown - 30-year vs 10-year breakeven. If these numbers are right, you're simply wrong.

As presented they're both hideous deals with awful GRM's. They state a $334,219 JS property should rent for $1,281. No investor would ever buy a JS property with a GRM of 21.75. I don't believe their data. My last purchase, in 07307 in 2012, was a 6.82 GRM.

dtjcview wrote:

http://www.realtor.com/mortgage/tools/rent-or-buy-calculator/

Plug in 07306 and 07302 to this. You'll find a bigger negative cashflow in JSQ than downtown - 30-year vs 10-year breakeven. If these numbers are right, you're simply wrong.

brewster wrote:
Quote:

dtjcview wrote:
No dispute in what you said - except for the fact that rents tend to rise in line with property value. Plus leverage will depend on how much current equity you have in the property. By leaving equity in JSQ there's a risk it doesn't appreciate faster than, say, using it as a downpayment on an investment property elsewhere.

The difference in our outlook is that I prioritize "investment" and you "speculation". I doubt any Downtown rental property today does not have negative cashflow, by definition that's a speculators market. There's always a chance there's a better investment somewhere, but you may not know if it was till the game is over.

In general, better returns entail more risk. Those guys I described upthread who invested in the 80's took a risk and lost. at least in that time frame. 97 was the bottom of the market.

dtjcview wrote:
No dispute in what you said - except for the fact that rents tend to rise in line with property value. Plus leverage will depend on how much current equity you have in the property. By leaving equity in JSQ there's a risk it doesn't appreciate faster than, say, using it as a downpayment on an investment property elsewhere.

brewster wrote:
Quote:

dtjcview wrote:
The counter-argument to most of the posts - a studio or 1 bedroom downtown is likely to appreciate in value faster than a JSQ townhouse. The demographics of people moving to JC doesn't favor townhouses - young professionals and empty nesters. Plus over time "hot" areas continue to stay hot.

By all means rent it out for a short period - but consider re-investing in a property more likely to appreciate. And if the area you are moving to is hotter than JSQ - you might consider selling and investing your capital there.

Sorry, but if you heard someone describe the above as they're stock market strategy, you'd assume they would soon be broke. And rental has different numbers than owner occupied.


My stock speech is this:

The main difference between rental RE and any other form of investing for us mere mortals who aren't hedge funders is that this is the only market we can take serious advantage of borrowing leverage. If you buy a rental with 25% down on a 15 year note that pays all it's expenses and mortgage the whole time, and nothing more, at the end of the mortgage you've made 9.4% on your 25% down. That's considered great in most investments over that long. Had you bought a stock that didn't go up, at the end of that time you'd have lost a significant chunk to inflation. Now consider that rents usually go up over 15 years, as do values. Even if you have no cashflow at the start of the mortgage you likely will by the end.

dtjcview wrote:
The counter-argument to most of the posts - a studio or 1 bedroom downtown is likely to appreciate in value faster than a JSQ townhouse. The demographics of people moving to JC doesn't favor townhouses - young professionals and empty nesters. Plus over time "hot" areas continue to stay hot.

By all means rent it out for a short period - but consider re-investing in a property more likely to appreciate. And if the area you are moving to is hotter than JSQ - you might consider selling and investing your capital there.

I was shown around JC for the 1st time in 97 by a guy who was trying to unload a small portfolio of properties he and a group of friends had invested in during the bubble of the late 80's. One was a condoed 6 unit on 8th st for $190k. Not per unit, for the whole thing. I think they should have held on, don't you?