I live in southern california and I am looking at the prices of some of this residential real estate (single family homes). I see average looking homes (not even new homes) going for 500k for a 3 bed/2 bath. Looking at rental comps on craigslist I see similar homes renting for $2,250/month. So that's 27k per year cash flow which gives you 5.4% cash flow BEFORE ANY EXPENSES. How is this a sound investment at all? I don't even want to know what the ROI is after factoring in expenses, probably negative at this point? Even if you have real estate that you bought from many years ago you still have to look at the opportunity cost of keeping the equity in real estate.
At this point it seems like people are just speculating on the real estate hoping that it will just increase in value. The people buying seem to be buying without any real focus on actual investment. The foreigners are buying just to have a savings account. The average joes buying before they get "priced out".
The math simply does not make sense to me. Hell you would be better off just putting your money in the stock market.
Thoughts?
Submitted October 19, 2017 at 01:43AM by JasonMckennan5425234 http://ift.tt/2gmJuZG
