Investor · Valley Glen, CA · Member since 2013 · 247 posts · 111 votes
I have been renting a house for the past 7 years in LA and now sadly the family wants to move back in. I figured it's time to buy my own place, especially with rents so high, but timing couldn't be worse. Every home has 15 offers and I have gone $30 to $40k over asking yet still have lost 6 so far.
So Matt, you are saying you save in mortgage taxes so mat as well buy.
Mike,
Quick and dirty calculations. $36k/yr in PITI (Principal, Interest, Tax and Insurance) on a $600k purchase w/ 20% down. Less $8k in principal pay down, your allowable deduction is $28k. Plus you claim yourself and some other stuff. Your total deductions are closer to $34k.
At a conservative 25% tax bracket for Fed & State combined, you're getting $8,500 in refunds each year. The refunds should cover your annual property tax and insurance.
$36k gross annual PITI less $8k/yr in principal pay down (aka forced savings) less $8,500 in Fed & State refunds, your net carrying cost is $1,625/mo. Buying is cheaper than renting $2,500/mo.
The delta between renting and owning is $875/mo, or $10,500/yr. So your $120k down payment is earning you about about 8% annually. Not all is lost with the down payment. I would buy if I were you.
As you have witnessed, you're exposed to the ravages of inflation when you rent. Once you bought, you have essentially fixed your living cost. It's a short-term pain for long-term gain.
Hey, Mike, I have also been looking in LA (LAX south to PV). I'm having the same trouble. For now, hanging out in DEN and flying to LAX to look at properties. I can help you with flightpath stuff. I fly out of LAX- pilot. Bid on something last week and I was the higher offer, but the sellers went with the guy with $4M in his bank account (not that he was using it to buy...they're getting a loan like me) ?!
If you are still looking, you may want to reach out to a company I used to sell my home in Sherman Oaks a few years back. Check out Ron Smith at Partners Trust, he is one of the owners, and they have a number of offices around the WLA area. Good luck!
Thanks! I moved into this townhome I'm renting last night, paper thin walls and floors. I can hear everything and even though no one is above me as it's a townhome- It sounds like there is- as I guess it's all shared floor boards. This is a nightmare. I was planning to wait a year to buy- I don't think I'll last that long.
Thanks! I moved into this townhome I'm renting last night, paper thin walls and floors. I can hear everything and even though no one is above me as it's a townhome- It sounds like there is- as I guess it's all shared floor boards. This is a nightmare. I was planning to wait a year to buy- I don't think I'll last that long.
Mike you were right. Here is the latest multi family 2017 forecast by Marcus Millicap.
Good luck!
Multifamily Investment Forecast
National Report, 2017
National Multifamily Index (NMI)
Several markets with favorable supply-and-demand balances and momentum in hiring made large moves to ascend to the top spots in the 2017 National Multifamily Index (NMI).
Los Angeles advanced 11 places in the Index from one year ago to take the highest position in 2017 behind a forecast for further tightening in vacancy and minimal supply growth. Robust job growth propelled the seven-rung rise of Seattle-Tacoma (#2) and Boston (#3) also executed an advance of seven places on its strong job market.
Minneapolis-St. Paul (#4) is the highest-ranked Midwest metro this year. San Francisco (#7) and San Jose (#8) were downgraded from the top of last year's NMI as their growth cycles mature, and New York City also declined to the last spot in the top 10.