patrick.net

annual rent / purchase price = 3% means do not buy
annual rent / purchase price = 6% means borderline
annual rent / purchase price = 9% means ok to buy

I'm about to purchases a shortsale 3bed/2bath for 200k. The monthly rent is 1500K. Does this mean it's "ok" to buy? These homes were 320k 2 years ago. There are certainly plenty of homes available and even a few homes that are even a little cheaper than when I started the short sale 6 months ago. I guess I could wait and time for a better deal, but according to the patrick equation, it's ok to buy and if prices go down even more, it'll even be better to buy maybe another one? The rental market is strong. It's near a massive army base(we are a war based economy after all), a major port, it's west coast. I don't see any crazy appreciation going on for the next decade or 2, but that's ok. It's my hedge against inflation over time.

#investing