patrick.net

Sure there is. The first time buyer needs an APPRAISAL, and even though he/she may be wiling to pay more, the loan won't get approved.

Get another appraisal, or wait for this one to close then go after the next one citing this sale. In any case, appraisal getting in the way is not exactly the successful buyer's fault; whoever wins such a price at significantly above appraisal is taking a huge risk. In any case, we are talking about getting good deals here (and allegedly stealing good deals), not about competing to be the latest sucker. If one can't even get an appraisal higher than the bid price, the bid is probably already too high.

Also, the 1st-time home borrower only needs to put up the difference between the appraisal and bid price to get the loan approved.

So, a cash offer doesn't have to even match what a first time buyer offers. You can be lower, and convince the selling agent you will close with no headaches.

Is such a time advantage worth tens of thousands of dollars? especially in a rising market? Like the numbers I gave, the 1st time homebuyer can literally outbid the investor by a factor of 2x!

I even do my inspections up front, and wave the inspection period to make my offer stronger than all the others, except for price.

I do that for every bid as well, yet I still got routinely outbid by 1st time homebuyers. It was when the house came back due to non-mortgageability that I got a second chance. I have pretty much given up on houses that can be mortgaged. There's no point bidding against first time home borrowers.

34 Reality 2013 Feb 28, 12:56pm

I have seen worse bathrooms, and bought and fixed worse ones. Some were missing all copper pipes throughout the house. It would cost the home borrowers a bloody fortune to get FHA home repair loans in order to get the same repairs done after bouncing between several contractors and estimates. Heck, some houses needed $20-50k repairs even when I was paying all cash and calling the shots and doing part of the work myself.

That's why I was pointing out to the Prof, the investors are actually bringing uninhabitable houses onto the for-sale and rental market. It's ridiculous to think just because it's the same address, it must be the same house unchanged.

35 Philistine 2013 Feb 28, 1:13pm

It's ridiculous to think just because it's the same address, it must be the same house unchanged.

Yes, but it's interesting that most of the flips I have seen are sold 6 months prior for $200k less. You can't tell me that a $50k trip to Lowe's = $200k on the open market (maybe it does? maybe home buyers are this stupid?). The real joke is that the majority of these houses are still far in excess of comps on the street, even compared to other remodeled units.

These ass hats are not happy to gross 33% margin, they get all greedy and many of these buyers are more than happy to play footsie with them. OTOH, I have seen plenty of houses like this that are still sitting after 8 weeks or even pulled back off the market.

36

Eman 2013 Feb 28, 1:17pm

lotr1978 says

The question for me is post-FC seasoning. My credit never tanked after a FC in May 2011, it did take a hit but 6 months later FICO was in the 690 range. Now I imagine it must be over 700 though I haven't bothered paying the 20 bucks to find out. I know FHA is 3 years seasoning for FC (2 for BK, now that makes sense). The real estate Sunday talk show on the radio said you can actually do conventional is you have a large downpayment (40-50%). I have yet to verify this.

Yes. You can buy with 40% down. The interest rate is slightly higher, about 5.25%-5.5% for a 5/1 ARM. The lender is East West Bank. They don't sell their loans to Fannie & Freddie so they don't have to follow their guidelines.

I believe East West bank only lends to 3 counties in the Bay Area with Santa Clara County being one of them. Check them out.

37

Eman 2013 Feb 28, 1:20pm

LOL, somehow the $1M starter home doesn't quite fit the mental image of a starter home.

Well, starter or not that's not my problem. I'm reporting what's happening on the ground. It's amazing that everyone wants a SFH as a starter home instead of a condo or even a townhouse. Entitlement attitude????

38 Reality 2013 Feb 28, 1:36pm

Yes, but it's interesting that most of the flips I have seen are sold 6 months prior for $200k less. You can't tell me that a $50k trip to Lowe's = $200k on the open market (maybe it does? maybe home buyers are this stupid?). The real joke is that the majority of these houses are still far in excess of comps on the street, even compared to other remodeled units.

$50k cash now plus labor of 3-4 people over 6 months is probably worth more than $200k borrowed at 3.5% over 30 years. The payroll for 3-4 employees over 6months cost $60-80k. So we are already looking at $110k-130k outlay. The fair market borrowing cost is 7-12% for small businesses. Borrowing $130k at 7% actually cost more than $200k at 3.5%! That's why there is such a huge arbitrage between cash vs. borrowing. Cash is worth a lot more in the market place than the 3.5% government subsidized rate. Don't forget if the market is appreciating 20% a year, 10% gain over 6 months would be baseline. Of course, the investor is also taking the risk that if the market tanks, he'd lose his shirt. I didn't see any buyer offering to pay more because the house used to cost more when the market crashed.

RentingForHalfTheCost says

These ass hats are not happy to gross 33% margin, they get all greedy and many of these buyers are more than happy to play footsie with them. OTOH, I have seen plenty of houses like this that are still sitting after 8 weeks or even pulled back off the market.

There's nothing ass hat about grossing more than 33% over 6 months. I made more than 33% profit today on my option trades, in a matter of less than 2 hours! To the risk-taker the spoils (and the losses). It's only fair, and it's the only way that the price discovery process can proceed efficiently, and the consumers can get the best bang for their buck. I'm right now actually squeezing hard on a couple houses where the would-be flippers ran out of money and their projects went into hiatus. The cash burn (tax, insurance, interest) must be painful for them, so I'm negotiating and dragging my feet for as low a price as possible so that my future tenants can get a low rent price from me.

39 Reality 2013 Feb 28, 1:54pm

6 months is enough to tear a whole house down and build a new one. The replacement cost for a 3000sqft house in many parts of the country can cost more than $600k. It's entirely possible to build such a house from ground up, including tearing down the previous one, in 6 months. In fact most builders would take even less time, as every day cost them money in interest on the original purchase and the material plus labor.

During the boom, it was quite common to see a $500k house get torn down and a new house built for sale in the $1.5M-$2M range in 3-4 months.

40 Reality 2013 Feb 28, 2:08pm

The Professor says

Reality says

making a house that was previously not available to first-time homebuyers or renters due to defects in the house making it non-habitable, into something that is now available to the first-time home buyers and renters alike. Your complaint is about as silly as accusing the baker of ripping people off because he is not selling his bread at the price of the dry flour that went into it.

Thank goodness for the investers! Without them the first time house buyers would have nothing (nothing) to rent.

Or to buy, as the original house is not purchasable by the new first time home borrower in its broken state left behind by the previous home borrower. A house that is not habitable is not eligible for owner-occupant primary home mortgages.

The net effect of investors is driving down rent and purchase price for habitable houses, as their action increase supply of habitable houses.

41 Reality 2013 Feb 28, 10:09pm

The Professor says

A lot of people are hoping for that change. My research in Co Co and Alameda County has shown rental price going up and inventory going down.

San Francisco Bay area and NYC rents have gone up largely because companies in these areas are the primary beneficiaries of the loose money policy: tech and financial firms. Also REO sales did not out number foreclosures and new delinquincies until the 2nd half of 2012, approximating a change from net reduction of habitable houses to (soon to be) a net increase. It takes time for the late 2012 REO's to be fixed up and marketed properly.

Maybe as more of these "previously not available to first-time homebuyers or renters due to defects in the house making it non-habitable, into something that is now available to the first-time home buyers and renters alike" will make rents come down.

I'm counting on the increasing supply, and making appropriate provisions. Whether nominal rents actually come down despite government money printing, that depends on how much money they print. I'm guess a 60% chance of actually seeing a nominal rent decline for a couple years, to the tune of 10-25% depending on market segment, similar to what happened between 2001 and 2003.

42

RentingForHalfTheCost 2013 Feb 28, 10:17pm

SJ says

Yes those Chindians with suitcases full of cash are driving out new first time home buyers from the RBA. I would need to make 500k plus to buy a decent home in the RBA radius of 100 miles!

Mostly dirty money if you ask me. Either from illegal child manufacturing overseas, or from white collar crime. So much for the American dream. The real honest people are chumps.

43 Reality 2013 Feb 28, 10:38pm

Mostly dirty money if you ask me. Either from illegal child manufacturing overseas, or from white collar crime. So much for the American dream. The real honest people are chumps.

Most likely not. Depending on the market segment. The multi-million dollar single family market segment may involve some overseas official corruption money. The $500k range is attainable by the middle class over there working for American companies or even American embassies. A 1000 sqft condo in Shanghai or Shenzhen costs more than $500k USD. The typical new middle class there makes $20-30k USD a year but can save or pay $15-25k USD mortgage per person, more than double that for a working couple living together (i.e. as much as $50k a year in savings or mortgage payment, after needing only $10k a year to pay for everything else as a young couple living reasonably good middle class life), because they have very little taxes to pay and the cost of living besides mortgage there are very low; the house price to rent ratio there is somewhere between 500:1 to 1000:1. Obviously they expect double-digit annual salary increase to continue there, a belief that I think will be proven sadly mistaken. There are over 60 million people over there fitting that profile or making more. If the bilateral trade really can't balance in the years to come, selling houses, condos and timeshares as vacation homes to them may well help repatriating dollars . . . but for now sucking the even richer among foreigners into buying into the over-priced segment might burn the money faster.

44 Reality 2013 Feb 28, 10:55pm

thomaswong.1986 says

Reality says

IMHO, the Chinese buying in really expensive neighborhoods are making the same mistake that the Japanese made buying top CA and NYC properties in the late 80's and early 90's. Even 50% cash down can still be foreclosed, like how Mitsubishi lost every cent it spent on buying the Rockerfeller Center, and then some. Mercedes paid $80B for Chrysler, and a few years later had to pay to give it away!

Sorry R, no one every heard of it... i tried telling some the same 10 years ago..

all you get is blank faces.. they never heard of Japanese buying RE in NYC or

down in Monterey and getting taken to the cleaners...

LOL. Yup, most people have to learn their own lessons, the hard way, unfortunately . . . but very fortunate for Americans looking for a cushy retirement after consuming more than producing all life. It's a mystery why Mercedes still sells cars for dollars after giving what amounted to 2,000,000 brand new Mercedes cars to Americans for free! It's like their entire sales over two decades or more, not just profit but they had to pay for all the steel etc. out of their own pockets for the gift. Yet, the foreigners still do, both Europeans and Asians. We are just lucky, I guess.

45

David Losh 2013 Feb 28, 11:02pm

The net effect of investors is driving down rent and purchase price for habitable houses, as their action increase supply of habitable houses.

I have been in the business of fixing properties since I was in high school in 1968. I worked for one Real Estate company who owned tons of cheap stuff. Over the years i worked for some investors who only bought foreclosures, and our job was to make them bank financable. It was a pretty sweet gig.

We've done everything. Rot is one of my specialties. It's cheap, and easy to do, but people freak out at the sight of moisture ants.

I can attest that what you are saying is true. Many, many of these new investors are reaping profits today that are only adding to the housing supply. When you add in the new focus builders have for apartments it should add up to a ready supply of housing.

The other thing is that home buyers, or potential home buyers must be well aware that the job they have is tenious at best. Several people here in Seattle are on five year contracts for those high paying tech jobs. Many are willing to relocate if the price is right.

I kind of see renting as an alternative to buying if your job opportunities are greater when you are mobile.

46

RentingForHalfTheCost 2013 Mar 1, 12:40am

RentingForHalfTheCost says

The typical new middle class there makes $20-30k USD a year but can save or pay $15-25k USD mortgage per person, more than double that for a working couple living together

Hard to accumulate 500K at that salary. If you don't have 500k to put down in the RBA then you are stuck buying a sugar shack and fighting hard to keep the rodents from stealing your groceries. A million here doesn't get you squat.

47 Reality 2013 Mar 1, 12:55am

Reality says

The typical new middle class there makes $20-30k USD a year but can save or pay $15-25k USD mortgage per person, more than double that for a working couple living together

Hard to accumulate 500K at that salary. If you don't have 500k to put down in the RBA then you are stuck buying a sugar shack and fighting hard to keep the rodents from stealing your groceries. A million here doesn't get you squat.

Don't forget to double that for married couples. If there are 30 million or more families capable of saving $50k or more a year, it only stands to reason that tens of thousands, if not hundreds of thousands, can save $500k or more a year. A few thousands of them showing up here is enough to result in what you see.

Also, let's keep down the hyperboles. The house that you are living in probably is worth less than $1M, and would take less than $300k down payment to make a very strong bid. There's no point trying to convince people that you are living in a rodent-infested house that ain't squat.

48 Reality 2013 Mar 1, 6:39am

Forgot the more important source of legit cash among foreign buyers: when their own condos in Brazil, Russia, India and China are worth 1/4 to 1/2 million US Dollars each, having risen by 10 fold in the last decade, many of them can come up with half a mil, a mil or even a mil and half just by selling several of their own condos that they had bought for a total of $100k or so a decade ago.

49 Philistine 2013 Mar 1, 8:00am

$50k cash now plus labor of 3-4 people over 6 months is probably worth more than
$200k borrowed at 3.5% over 30 years

Sorry, but a bathroom remodel and new fake-wood flooring does not cost $200k. Not even if you repaint the walls and vacuum the indoor/outdoor carpet before I move in. There's a reason houses like this sit when other flips that are more reasonably priced go pending in 5 days.

it's the only way that the price discovery process can proceed efficiently

It's actually quite *inefficient*, since these house sit much longer. There's only one reason two flipper houses on my block have been sitting for 60+ days without selling, and it ain't because the thrice-a-week open houses weren't handing out enough popcorn and bouncy castle rides.

50 Reality 2013 Mar 1, 8:23am

Reality says

$50k cash now plus labor of 3-4 people over 6 months is probably worth more than

$200k borrowed at 3.5% over 30 years

Sorry, but a bathroom remodel and new fake-wood flooring does not cost $200k. Not even if you repaint the walls and vacuum the indoor/outdoor carpet before I move in. There's a reason houses like this sit when other flips that are more reasonably priced go pending in 5 days.

Goes to show that buyers having the right of choice among several sellers is a good thing. Sellers asks too much, it doesn't get sold, just like any other goods or service.

it's the only way that the price discovery process can proceed efficiently

It's actually quite *inefficient*, since these house sit much longer. There's only one reason two flipper houses on my block have been sitting for 60+ days without selling, and it ain't because the thrice-a-week open houses weren't handing out enough popcorn and bouncy castle rides.

So why didn't you buy the houses several months ago when they were non-habitable, put in mahogney floors and then try to sell them at the same prices that you bought them? The point you are making makes about as much sense as accusing the local grocery store of pricing too high causing their food sitting on the shelves unsold.

Personally I don't flip houses, but if someone else wants to take the risk for a short term gain, I don't mind buying them out at a low price if and when they fail. The house would be in better shape than how the previous home borrower left it and how the bank maintained the house.

51

David Losh 2013 Mar 1, 9:08am

For some reason I'm liking Realty today, he's making a lot of sense.

In Spain, if you bought in after 1998 and sold before 2007 you quadrupled your investment.

Brazil ditto only a little later, and still selling today, Peru ditto, Mexico even has a little housing boom. Many Asian markets are good, and look at Vancouver BC for God's sakes.

The other thing is about the amount of flips that aren't really turning, but do add to the supply of housing. A couple of years ago it was a joke at the foreclosure auctions the number of repeats coming through. People bought, fixed, couldn't sell so sent them back to the bank that was stupid enough to lend on them.

More often hard money lenders ended up reselling failed projects.

52 Reality 2013 Mar 1, 9:37am

;-) Thanks for the reminder to stay within the bounds of a friendly debate, 'cuz one never knows when two may agree on a different set of topics on a different day.

53

David Losh 2013 Mar 1, 10:34am

you just never know.

54

David Losh 2013 Mar 1, 2:41pm

so what do you have to point to this made up contention?

It was referred to as flopping, it was pretty big news in the last two years.

that isn't happening at all. EVER.

You should explore outside of the Phoenix market place.

I guess that explains why both rents and prices have been increasing nationwide for the past 1 to 2 years

You are a Real estate sales person without a doubt. The trend is called an equilibrium and you have noticed it in your own market place. It's coming to a reality near you, very soon.

Prices, and rents are increasing because of equalibrium. Six years ago was the Real estate market crash so when you compare to that everything looks like it is moving up, but it's actually equalizing.

Get some working knowledge about Real Estate before you spout off about how smart you are. You are in the same place now as millions of investors had been thousands of times before. There is nothing to see in you pontifications Charlatin Sheets.

55 Reality 2013 Mar 1, 3:00pm

Reality says

The net effect of investors is driving down rent and purchase price for habitable houses, as their action increase supply of habitable houses.

I guess that explains why both rents and prices have been increasing nationwide for the past 1 to 2 years...

I guess, if you don't like reality, name yourself reality and make up your own!!!!

Do you always confuse correlation with causality like this?

Do you think rent and purchase price higher now than a year ago is because this winter we had much more snow fall across the country than the previous winter?

Do you not realize your own action is making previously non-habitable houses into habitable houses?

Whether that new supply translate into nominal price decline depends on how demand change at the same. However, if investors like yourself have not made previously non-habitable houses into habitable ones, rents and purchase prices would certainly be higher.

56

SJ 2013 Mar 1, 11:22pm

Homes in bay area are still unaffordable to 90% of single folks who do not make 500k a year salaries. I've been here 2 years and make good income but cannot see paying 75% of my salary to a home. Still way cheaper to rent an apartment than buy a condo here in bay area.

57 Reality 2013 Mar 1, 11:56pm

Reality says

Do you think rent and purchase price higher now than a year ago is because this winter we had much more snow fall across the country than the previous winter?

So.... when rent and price don't due what you expect... it is because of snow? Hey we had one day of snow in Phoenix, I guess that is why our prices are up 30%!!!

You sure it wasn't the meteor over Russia that has caused the EXACT OPPOSITE of what you say should happen, to happen?

That's exactly what I was asking you! Are you so dumb as to think snow is the reason why price went up this year? Do you think firefighters showing up at the house is the reason why houses burn down? Fire truck showing up and house burning down are two well correlated events. That's exactly the sort of confusing correlation with causality that you were engaging in by claiming investors fixing up FHA UI properties causing price to increase.

dipstick, the homes I buy may have been ugly, but they absolutely were inhabited. So, you get one more home as a rental or for sale, and one more family looking for a place to live... It's a wash.

Were the houses previously borrowable for a first time home borrower with near-zero down payment? If it did not qualify to borrow for those zero-down loans, then it was not part of the supply available to the typical first time home borrowers nowadays. Were the houses previously occupied just before you bought them? Probably not, then it was not part of the rent supply either. Your fixing them up makes them available for rent or purchasing by first time home borrowers. That's turning non-qualfied supply into qualified supply.

Besides, rents have gone up, so your claim that this process is causing rents to drop, isn't even happening at all.
So how much energy do I need to expend to disprove the cause of something which isn't even happening?

Downward price pressure exerted by one party in the market does not mean immediate price drop. It's like during Hurricane Sandy, someone brings gasoline from Upstate NY to sell in NYC at even $10 a gallon has the effect of putting downward price pressure on the local gasoline price, simply because it is valid supply purchased by people otherwise would have to bid up gasoline price from some one else.

What do you teach? Wholesale Airheads? Do you not think home builders cause prices to be lower than otherwise would be even during the housing bubble before the crash? Do you not understand basic economic supply and demand?

58

David Losh 2013 Mar 2, 12:04am

And, you manage to not answer anything I actually said, since obviously real analysis is too difficult for you.

What didn't I answer for you there? What kind of further insight do you need?

59

David Losh 2013 Mar 2, 12:08am

So how much energy do I need to expend to disprove the cause of something which isn't even happening?

The point is you haven't proved any cause, at all.

All you are saying is that buying today is a worse decision than it was a year ago.

You claiming taking on $200K in debt to save some rent money makes no sense.

30%? Wow, let me get a plane ticket to Phoenix Arizona!

We better start buying, buying, buying in Phoenix or be priced out forever!

Can you recommend a good Real Estate agent, maybe somebody that works part time as a teacher?

60

evilmonkeyboy 2013 Mar 2, 3:10am

SJ says

Homes in bay area are still unaffordable to 90% of single folks who do not make 500k a year salaries. I've been here 2 years and make good income but cannot see paying 75% of my salary to a home. Still way cheaper to rent an apartment than buy a condo here in bay area.

Bingo! The only people buying in the Bay Area are investors or HOA 3.5% downers. The median household income in San Jose is about $78,000 but the average house is 500K plus. A 100K down payment is out of reach for most people that live here. If rent goes up so does the ability to save money and the instability of the market continues to rise without 20% down payments.

61

Oxygen 2013 Mar 2, 4:19am

"Good advice for first-timers carrying student debt: Check out FHA."

lolllllllllllllll

62

Bubbabeefcake 2013 Mar 2, 7:38am

The Professor says

I hope you only do that here on Patnet to vent your frustrations

...but not excluding nitwit , idiot , dipstick and so on ...mathmatical genius has proven to have unlimited human relationship skills beneficial to the goodness of humanity

63

Bubbabeefcake 2013 Mar 2, 2:10pm

http://www.youtube.com/embed/O4ne13Zft9Q&feature=youtube_gdata_player

64

David Losh 2013 Mar 2, 2:52pm

Screw it. I think I'll delete my profile. The A-holes on here should have to buy a book to learn what I think. I've been right all along, I've made over a million dollars being right, it has been ALL based on mathematical analysis of the market, and frankly, I've been ridiculously generous to share my ideas in this forum, with too many idiots biting at my ankles all along. Enjoy this post, it is my last on here. Those that care to read me know where my blog is.

That is the funniest thing I have ever read. Like you are the first one to discover market timing. I also have been right every step of the way, own property, and have owned a lot of property, but I know it's over for the rest of my economic viability.

You followed a simple business plan that has made you another millionaire in the world of many millionaires. Now what?

Will you devote your life to building your portfolio, or brag about how smart you were, way back when, like a high school football star?

You've got nothing that most of haven't seen, or done a hundred times.

You should try to learn something, because learning is the Real Estate business.

65

SJ 2013 Mar 2, 3:38pm

The way I look at it, my job could get sent to India tomorrow and if I dropped my cash on real estate here and had to move across the country, then I'd be screwed. One guy at work left because he was unable to sell his home in the midwest after trying to relocate to the bay area. I figure save and invest few million than buy property in cheaper area works for me.

66

JodyChunder 2013 Mar 2, 4:17pm

Enjoy this post, it is my last on here.

Don't be like that, Rob...

67 Reality 2013 Mar 2, 11:16pm

2. What argument do we have above? "prices and rents are dropping because of flippers adding supply." Prices aren't dropping, EVERY indicator shows this. So wtf? how polite does one have to be when faced with bizzarro world arguments?

That's not at all the debate that we are having in this particular thread. The debate is about whether first time home buyers are being outbid by investors (a hypothesis presented to explain why the percentage of first time home buyers are down, please read the thread title and the first few posts). My contention is that investors and first time home buyers are not likely competing for the same house (in the same condition) because the typical first time home buyer relies on zero-down government subsidized loans, which disqualify them from many houses with defects. If the investor were to compete against first-time home buyers for non-defect houses, the first-time home buyers are so well armed with government subsidized loans that the rational investor can not hope to win such a bidding war. The investors fixing up houses with defects actually increase supply of habitable housing and houses that the zero-down loans would qualify. That certainly puts a downward pressure on both rent and house prices. Whether that downward pressure translates into actual price drop depends on the demand situation, and was not part of the discussion. Whether that supply will bring down prices in the future is a prospective statement, and everyone has different opinions about the future, and mine was presented as a probabilistic forecast in one of my previous posts. 60:40 is not exactly a very strong bias one way or the other.

3. Homes that rent for TWICE a current mortgage are called "bad investment" by david and reality, and others. Just today I rented my last purchase for $86,000 (+8K in remodel) for $1100 a month, even though it isn't finished being fixes. taxes are 900 a year and insurance is 750, do your own damn math.... Sorry, if they wish to write things that stupid, they deserve to be called stupid.

Our shared investment sensibility also prevents us from offering bids on such a house to $150k or even $200k, like a typical first time home buyer would be able to do with government subsidized financing. So what's preventing the frist time home buyers snatching such houses ahead of us? Most likely:

1. The house, due to its condition, is considered "Uninsurable" under government loan insurance policies. i.e. the typical first time home buyers wouldn't be able to buy such a house without fixing it first. So in this case, you and I are not at all competing against the typical first time home buyers.

2. The local market is so full of people with broken credit records from the foreclosure wave a few years ago, there simply aren't enough first-time home buyers in the market. In that case, you as an investor is making vacant house into good livable houses that can offer a better value to prospect tenants than they can get from other landlords. If you offer the house at $1100/mo rent, it would have to be a better deal than their previous landlord and better than other landlords they are also looking at . . . in other words, you are providing a service to buyers of housing service, and putting a downward pressure on the rental price, which is highly beneficial to renters.

Yes, you are looking 10+% rental yield on capital, a percentage that is more than double the current borrowing cost. However, that is not at all "double the PITI on a comparable house" . . . because the PITI on a repaired house would be comparable to the rent; otherwise the renter is not likely to rent from you. The baker selling bread at 3x the cost of flour should not be mis-characterisized as making 200% profit in a few hours outbidding hungry people from buying flour!