Thursday, August 26, 2010

52 Sidney Bay Price Analysis - Makes sense to Rent, not to Own

I have completed a rent versus buy analysis on 52 Sidney Bay Drive in Crystal Cove. Listed for sale at $2,895,000, this home recently rented for $6,000 per month.

The result? Renting wins hands down, costing $5,103 per month. Buying is a real disaster - it could cost $20,478 PER MONTH.

And this is a conservative estimate because it assumes only a 4.1% drop in the home's value over the next 12 months. If this drop in home value turns out to be in my opinion a more realistic 8%, then the cost of owning in the next year becomes a whopping $30,000 PER MONTH.

Of course, one interpretation of this analysis is that this home is hopelessly overpriced. And I agree with that.

Here's the backup data:


Rent Payment -$6,000 Mortgage Payment (20% down) -$12,433
Monthly Return on Unspent Downpayment $897 Principle $2,800
Total Monthly Cost -$5,103 Mort Tax Benefit $2,040

Insurance -$200

Maintenance -$200

Association Dues -$615

Property Taxes -$3,016

Prop Tax Tax Bene $1,146

Decline in home value -$10,000

Total Monthly Cost -$20,478

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