Property Pricing in your area - gone up or down?

[videogamesrock]

Here is another conversation I often have with folks from California. Do not confuse a good buy with it being an investment or an asset. For example, if you come across a home that you can buy at $100,000 and live in, it would be better to own than to rent. You liability would be $550 in mortgage payments versus a rental liability of $1,000.00.

However, if you live in California, lets say you come across buying a home for $500,000 and you rent is $2,500, then I say it is better to rent. Here is why, let your rent (liability) go toward the $500,000 house and take the $500,000 an apply it to five (5) $100,000 properties that generate $1,000 a month in cash flow for a total of $5,000 a month.

Now you figure out your assets versus liability.

Rental Properties (Assets) - Your cost of living (Liability) = Net $2,500
$5,000 - $2500

In this case, it is cheaper to rent in California, while you use that same money towards assets in other markets. Also, you are now protected against inflation as your 5 assets will go up 3% or more a year.