Hi Steve, Using your parameters, this is what we come up with:
Price $270,000 ... In today's market, in Rohnert Park, that would be a condo. Condo's, contrary to what some think, also make good rentals; that is how I started out. But in today's market, 3/27/2013, in Rohnert Park, the least expensive home listed on the MLS as available (active) is $315,000.
So back to the condos: In Rohnert Park, there are 6 between the prices of $175,000 and $248,500.
If you want the purchase price of $270,000, you have to wait, or go to another area.
But back to just purchasing a rental. We'll do some hypothetical numbers:
Purchase Price $270,000. So say a small single family dwelling with 3 bedrooms & 2 baths, about 1,300sqft. You can rent it for about $1,500 - 1,650 a month. (you can find this in Santa Rosa, so not just a 'made up price for a home').
If you put 20% down, your loan would be $270,000 x 20% =$54,000 down =$216,000 loan amount.
$216,000 at about 4.25 fixed rate 30 year loan = $1,094 for principal and interest a month.
Taxes and insurance would be another $270 + $50 a month = $320.
Total monthly Loan payment = $1,094.00 + $320.00 =$1,414.
Rentals have slightly higher interest rates than Owner Occupied homes, (and you can sometimes 'buy down' the interest rate); you should speak with a Real Estate Lender for interest rates today for an investment property.
So with 20% down, this scenario would work, as you would have a hundred dollars+ per month to put away for repairs, upgrades, and unrented months between tenants.
In today's market, rentals are rented quickly. Getting back to Rohnert Park: I found homes, both condos and single family, always rented quickly. I find that to be the case, in todayâ€™s market, throughout the Sonoma County area.
Rentals are a great way to prepare for retirement, but you need to have the right disposition to be able to put up with the 'downside' of rentals, OR use a property manager to help you manage your properties.
I would love to talk with you more about rentals. I have a number of them, and found them to be both rewarding and a times 'hair pulling' experiences! BUT, I would not be as prepared for retirement without them!
I do use a different scenario when I purchased most of my rentals, but I recommend that each person use what works best for them.
I hope this has helped answer your question. Please remember that I am using my experience to answer the question, and I am not giving you any legal advice. Attorneys, Tax experts, Lenders and Real Estate Agents work as a team, each with their own specialties.
Please give me an email or a call anytime,
SHER Miersemann 707-576-1234
All answers in this forum (by me) are deemed to be reliable, but not guaranteed... Real Estate law and rules change frequently.