A recent trend is starting to emerge for single family homes for lease in the San Fernando Valley area. The starting rate for a 3 bedroom 2 bath in Van Nuys and Lake Balboa has come up to about $2000. The reasonably priced rentals that are tidy and not pending foreclosure pitfalls are going quick.
The price to rent ratios are improving for investors looking to buy and hold single family homes. Renting vs. buying poses a serious analysis. A recent couple I sat down with the other day has been living in the same apartment complex for nearly six years. Along the way they have been growing their family. They have two sons, ages 5 and 2. They moved into a 2 bedroom apartment in the same complex and have been patiently saving and paying off debt to qualify for a home. Currently they are paying $1800 on their lease.
After running their numbers on an property we are considering submitting an offer for, the estimated mortgage payment with a 5% down, 30 year fixed conventional mortgage is going to be nearly $60 more than their current rent including principal, interest, taxes and insurance. The house is modest but in very good condition, however it has a huge backyard with room to expand, privacy and a that no apartment complex can ever give a growing family. Granted, there are some true additional costs to homeownership, but the numbers have never been so favorable in nearly a decade.
I am writing this to tell everyone who has never owned a home or is currently renting and thinking about buying or "sitting on the fence". You can never time the exact bottom of real estate, nor the top. But should your payments on a 30 year fixed with 5% down is comparable to rent for the same size place or better, that signals a great opportunity to get into a home and build equity through principal reduction, the good old fashioned way, maybe when the dust settles with the media and the housing crisis, you may look back and pat yourself on the back. Or kick yourself!
An old wise man once told me, when it makes sense to buy...don't wait...you buy and then wait.
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