tag:blogger.com,1999:blog-3294580951502585066.post1860430783807023764..comments2023-10-18T19:32:44.252-07:00Comments on It's just my opinion, I could be wrong: Price to rent comparison infoNickhttp://www.blogger.com/profile/05587036619182019599noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-3294580951502585066.post-10558458496806437082008-09-02T19:17:00.000-07:002008-09-02T19:17:00.000-07:00I think your initial formula is correct; my math s...I think your initial formula is correct; my math seems off. Which is funny, cause it makes the principle "value" even smaller than my approximation.<BR/><BR/>As for the "flyover" areas, I think the bubble probably affected everyone some, although certainly more in the more expensive areas (eg: LA, where I am). Every proclamation I have heard about some area being immune from the bubble has either been proven wrong, or I would expect to be proven wrong. To say otherwise would be to imply there were areas of the country where nobody was trying to make a quick buck, and that's one thing which seems to be ubiquitous in America.Nickhttps://www.blogger.com/profile/05587036619182019599noreply@blogger.comtag:blogger.com,1999:blog-3294580951502585066.post-74405695840192399952008-09-02T19:00:00.000-07:002008-09-02T19:00:00.000-07:00This is a great post. Something like it should be...This is a great post. Something like it should be required reading for anyone borrowing large amts of money. <BR/><BR/>I got a slightly different equation when I solve it:<BR/>p*(0.00632+0.00167-0.25*0.0632)+600 = r.<BR/><B>I don't get <I>p * 0.00578 + 600 = r</I></B><BR/>Instead I get p*0.00641600 + 600 = r.<BR/><B>p = (r-600)*156.</B><BR/><BR/>I'm inclined to model the problem just using 6.5% and not taking into account principal. The monthly payment includes some principal, and then you adjust for the by subtracting 25% of the 1st 10 years of payment. My inclination would be to say:<BR/>p*0.065/12+p*0.00167+600=r.<BR/>This gives me <B>p = (r-600)*141.</B> That's an even lower valuation.<BR/><BR/>There's no exact answer, as far as I know. Any of these formulas is a good rule of thumb. Most properties in my area in Madison, WI, which is supposedly flyover country free from speculative mania, are overvalued compared to any formula I can come up with.CJhttps://www.blogger.com/profile/05824987036580158137noreply@blogger.com