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 
and assume that the running cost of rental is the same as for good quality tenants.
Wasn’t in your original statement 
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? 
1 Like
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 
, who I can’t 
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?
1 Like
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… 
2 Likes
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.
2 Likes
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.
2 Likes
@hanera Why’s your home owner insurance so high? My 250K house home owner insurance is about $1250 / year and as far as I know it has top of the line coverage.
Which area was that house? Avery ranch? However your interest was better than mine, which bank do you use there? And I don’t see PM expense, how much do you have to pay?
You’re the third person to ask, took directly from Redfin. The real figure is $1034 p.a. = $86 per month 
All figures are extracted from Redfin.
Got it, I thought it was your actual numbers.
One of the thing people are missing about why those people rent is, they might be migrating to the area for job. They are well qualified to buy their own house, but they don’t want to commit it since they are still testing water in Austin and still researching on where to buy. But downside is they might stay only at your place a year or two.
1 Like
Surprisingly, no turnover yet. My guess they are too busy working no time for house touring.
Doing the computation from the perspective of a person deciding to buy or rent. Not from a land lord perspective.
1 Like
So some people decide not to buy a home since Redfin’s home insurance is super high. No wonder. Redfin stock is not doing well 
2 Likes
Okay so the first illustration that the rent is less than PITI is actually bogus. Got it.
