Buy or rent in East Bay, Austin or similar places

Frankly too generic for me. Why don’t just randomly select a house and do the figure. I don’t find generic numbers useful. In any case, we are diverting. I just want to look from the perspective of a tenant, why is ok to rent and not try to buy. Not from a land lord.

Btw, hard to believe can get cap rate of 7% from a $300k house charging $2k rent.

If it doesn’t sense to pay $2000 for rent for a house that is worth only $316k, won’t it even more surprising that there are people who is willing to pay higher rent like in South Lake Tahoe, Phoenix and Las Vegas? Can anyone explain why? In Austin, PITI + HOA (+ maintenance & repairs + accrued asset replacement) is higher than rent, so it makes sense that some would rent. But in SLT, Phoenix and LV, it is claimed that PITI + HOA is much less than rent, why would anyone rent?

Fantastic Hanera. I need to visit Austin. I like Dallas/Plano area ok.

I’m heading out to Phoenix in 2 wks to check around the area. Socal migrations there happening.

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In Phoenix there are fair number of part-time homes for rent (snow birds own?). Very hard to find homes to rent via airbnb or vrbo Nov-Apr. They charge high. I’m renting a 1200sq house for $205 (incl all the various fees, taxes, etc) per night. All the better homes were all booked up through April.

Sorry, this was actually 1000 sq ft home. 2 bedroom 2 baths. I needed a house since my father and his wife are traveling with us.

Why is there no love for Tampa and Orlando? For multifam cap rates are 7 to 9% last time I checked.

Manch - where are you getting the “tons of listings” in Phoenix? Thanks.

Those are multi family listings on loopnet.

Places like Florida look good from far but a far from good.
You really need to know the neighborhoods. High caps often mean high expenses and high crime.
I found a gold mine in South Lake Tahoe. Plenty of renters, low inventory, hardly any new construction allowed, its renters are low income with no cash, have to get roommates. They don’t have the option to buy. So most of the competition I have when buying is BA people looking for vacation homes. But they look for turnkey move in ready. I buy fixers that need time and money… Vacation home buyers don’t want to be bothered, don’t have the time… Rents are going up at 10% annually and values too. 6-12 Caps

I did invest in Phoenix, Gilbert actually, large multi family development. We will sell when fully rented.
Have done the same thing in Texas and Florida. Build then sell or fix and flip… in our case projected 28% IRR.
Much better than buying and holding.

You are forgetting the tax savings the person would have should he/she own a house vs. rent. Also $295 for homeowners’ insurance for a $316K house is too much.

Cap rate is 5% now.
Thought experiment.
Have I bought the SFH as fixer upper, could get 20% discount.
Then rent to a group of low income un-related guys, could get 30% extra rent.
Then my yield would be 2250*12 * 1.3/ (325k * 0.8) = 13.5% which gives 10% cap rate, magic!!!
For those who doesn’t aware of the cheating maths, I didn’t add back the cost of fixing up the house for rental to the purchase price :rofl: and assume that the running cost of rental is the same as for good quality tenants.

Wasn’t in your original statement :grin:

Your above statement seem accurate based on response:

So what’s with all these buy vs. rent posts and negativity on rental yields in Cupertino - are you trying to sell your fortress and buy more in TX? :face_with_raised_eyebrow:

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Do I need to? Just straightening out some facts. Some bloggers post BS stuff. Can’t stand up to the test of data analysis and logic. Slowly I know who I can believe :grinning:, who I can’t :angry:

Why do you need to believe in anyone? Just believe in yourself. If someone you believe in on this forum tells you to sell your AAPL shares, are you going to sell? Of course not. Are you the Jedi master or not?

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Only you think that I’m a Master. I am always a Padawan.

A Padawan that is the top 3 of the net worth list…

Yoda: Old and senile
Padawan: Young and full of vitality

Of course he wants to be the Padawan… :wink:


I don’t think you’re going to find great cap rates paying market price for homes and immediately converting them to rentals. Everyone can do the same math. You need to buy fixer uppers, and spend as little as possible to get them up to median rent. That’ll get you a better cap rate.

Also, you need to buy in areas with population growth and land restriction (water, mountains, etc). Those will create the best appreciation.


Like Wuqijunsays the uglier the better and maybe even with foundation issues…
Renters just care about the price. Not that concerned about the condition. Just need to have fresh paint and newer carpets or laminate. Even kitchens and baths don’t need updating, just be clean and functional.