We ended up renting in the mid/upper peninsula for less than 3% based on Zillow’s last sale price. House was sold about 6 months ago to a new buyer abroad. Asking rent price had been significantly reduced. Huge lot (>20,000 sq ft), pool maintenance and gardening included. Beautiful area…
For those of us that have arrived late to the party, you can get A LOT on the upper end of the rental market. Certainly the buyer is counting on nothing but further appreciation at this point.
Yes, i am paying their mortgage (or their small interest if they paid cash), but at least I am getting a lot for it!
I am also a landlord (own in a different state)… so I see it from both ends. Honestly we are taking a “wait and see” attitude. We are in the school district we want for our kids all the way to college, so we will stay in this area for at least 6 more years. Depending on conditions we may just rent all the way or buy if there is a correction.
I just get a feeling things are a bit “bubbly”
What’s the range of rent? I think for high end homes, rent is always low compared to its price. But now 2M houses are everywhere and they only rent for 5k a month.
If I am a foreigner with a 2M house in Cupertino, I think I’ll rent the house at market rent of 5k a month. That’s basically find a family to take care of the property and they even pay 5k a month for the right to maintain the house!
If the house stays vacant, you’ll need to pay someone to check on the house from time to time. If there’s roof leak, nobody would know and it can cause 500k damage.
Why would anyone rent out a $5m house for only $7k
That is a negative cap considering the taxes would be $70k plus other expenses would mean the cost of ownership is at least $100k/year plus the mortgage and loss of opportunity costs…A $5m apartment building could net $300k easy…
because they think it will be worth 7M in 4 years? and that is my point… it’s not a buyers market, but it seems like it is a renter’s market! at least on the top end
How much do you think your rental is worth?
I know some overseas owners would rather let a house stay empty than collect a negative return…A $5m house should rent for at least $30k/m or why bother?
Are you saying you got a $4m house for $10k/m, or maybe a $2m house for $5k/m … If so rent, don’t buy…
I think @elt1 is just talking about a special case just to make people envious. No it would be very hard for you to find a $30k/month renter even if you are trying to rent out a 1 acre manor in Los Altos Hills
Gross cap means nothing…Net is all that matters…But if you can get something like I described, rent for sure…But don’t be surprised if the seller wants to sell…negative returns are not sustainable
