comp question

marco, depends quite a bit on location, building and apt type/quality, amenities, layout, etc. Depending on those variables, both rent and purchase price may be "out of line." But if you're strictly comparing one vs the other, renting is a bit cheaper here (monthly outlay if you'd buy would be just over $2000). You should factor which floor each is on (with higher floors usually being valued more).

from my calculations, with 20% down and 5.5% 30 yr fixed, you will pay approx $1750 after realizing the tax benefit if you were to buy.

given that maintenance is 800 and the other apartment is renting for 1700, does that put the monthly pv of the apartment at 900? maybe back out the taxes from the maintenance.

my estimate included that the maintenance is 50% tax deductable and the tax rate is 28%.

Re: given that maintenance is 800 and the other apartment is renting for 1700, does that put the monthly pv of the apartment at 900? maybe back out the taxes from the maintenance.

I've read your question 7 times now and still cant figure out what the hell you're asking.

lol...sorry Im kinda all over the place. basically im splitting the value of the apartment into 2 componenets. apartment = mortgage + maintenace. then assuming that rent = maintenace + mortgage. that gives
apartment = rent - maintenance. excluding taxes for now, I need to get a mortgage that = 900/ month. assuming a 6.5% rate for 30 years, that gives me roughly a 145k mortgage. the mortgage would obviusoly be less given 20% down. does this make any sense at all ?? im probably just crazy

marco, not sure I totally follow. You want a mortgage that'll cost you $900/mo? I think you can do far better than 6.5% on a conforming loan right now, no? Aren't rates around 5.0%? And you can certainly buy down the rate if you choose to (probably a good idea at this point). If you're putting that much money down on a $300k apartment, then yeah, your monthly outlay would be equal to the rent, without adjusting for the tax deductions and transaction fees. I'm not opposed to putting a lot more money down, so long as you have enough liquidity to cover at least a year's worth of payments and other basic living costs.

A place that ACTUALLY rents for 1700 with a mtc of 800 and an net income of 900 per month or 10,800 per year, and assuming a 5% cap rate should cost $216,000.

Motley Fool has a great rent vs buy calculator:

http://partners.leadfusion.com/tools/motleyfool/home10/tool.fcs

With the numbers you provided, I think you'd come out a little ahead after 5 years.

I think you're going about this backwards. For example, I own an apartment outright, so all it costs me is $590/mo for maintenance. I'm thinking about renting it out, so how much rent do I charge? The answer is -- whatever the market will bear! Or maybe I'll charge less to keep a good tenant in their for a few years. Whatever.

That $1700 rent doesnt necessarily have anything to do with the owner's net carrying costs.

Marco -- sounds to me that what you really need is a good mortgage pricing spreadsheet!

After many years of looking at commercial and residential ads that had a property both for sale and rent. I noticed the ask for sale was very often 200 times the monthly rent ask.
There must be something to this formula for some reason of which I don't have the answer.
It works out to about 14/15 times rent roll.

In this case, 1700 x 200 = $340,000
It's not far off as a comp to each other.
Of course, the rental amount may be negotiable (month(s)free) as well as the ask.

And who's giving 20% down mortgages these days?
You may have to put 30% plus.

So let's figure on 20% anyway.....
300,000 times 80% is 240,000.
240,000 with 6.5% over 30 years is $1517 per month mortgage payment plus 800 per month maintenance.

And according to the corcoran purchase cost analysis field and plugging in your numbers,it assumes the 38.5% tax bracket showing $2316.97 out of pocket and net monthly cost after tax deduction $1816.47

These notes were also posted in the calculator

COOPS

FOR THE PURCHASER
Own Attorney $1,600 + up*
Managing Agent
(Recognition Agreement Fee) $250 + up
Credit Report Fee $50 - $100 per applicant
Lead Based Paint Disclosure Fee $0 - $50
Mansion Tax 1% of purchase price when over $1 million
Move-In Deposit $500 - $1,000
(Usually refundable if no damage)
Lien Search $350

--------------------------------------------------------------------------------

MORTGAGE ASSOCIATED FEES
Origination Costs - Points 0 - 3% value of loan
Application, Credit Check, etc. $500 + up
Appraisal $275 + up
Bank Attorney $500 + up
UCC-1 Filing $75 + up
Maintenance Adjustment Prorated for month of closing

CONDO

FOR THE PURCHASER
Own Attorney $2,000 - $2,500
Managing Agent Fee $250 - $500
Credit Report Fee $50 - $100 per applicant
Lead Based Paint Disclosure Fee $0 - $50
Mansion Tax 1% of total purchase price where $1 million and over
Move-In Deposit $500 - $1000
(Usually refundable if no damage)
Common charges, real estate taxes and insurance premium Adjustments pro rated as of closing

--------------------------------------------------------------------------------

MORTGAGE ASSOCIATED FEES
Origination Costs - Points 0 - 3% of value loan
Application, Credit Check, etc. $500 + up
Appraisal $275 + up
Bank Attorney $500 + up
UCC-1 Filing $75 + up
Mortgage Recording Tax Up to $500,000 is 1.8% of mortgae less $30
Over $500,000 is 1.925% of mortgage less $30
Title Insurance, Title Search & Recording Fees Approximately 0.5% - 0.8% of purchase price
Building Searches $200 - $400
Recording Charge $17 per document plus $5 per page
Real Estate Tax Escrow 2 - 6 months

Im not saying the 1700 is the owners cost, Im just using it as a comp to value the apartment which is for sale. I love the input on here from people. time to run to the bar for now.

How much should the apartment that is for sale cost? That's easy! Just post a link to it here (or list the details) and you'll get 50 expert appraisals in about 2 hours!

Neither is enough "out of line" to make a definitive statement. And they are both asking prices: the amount of negotiability on either places is probably greater than the amount either is "out of line".