Our question, though, is why buy when you can rent an amazing house for less per month than you’d be paying anyways? A comparable listing in the area has an estimated payment per month of $17,088 per month (assuming a 30 year fixed mortgage and 20% down).
So, should the Obamas rent or buy a place in Rancho Mirage? It depends on their goals for the property. Let’s dig into whether or not it would be a smart idea for the Obamas to buy.
Historical Rancho Mirage Stats
According to Zillow’s Rancho Mirage Home Values information, the market in Rancho Mirage is very cold. However, home values have increased 10.8% in the past year and Zillow projects that home values will rise 12.7% in the coming 12 months. At this rate, the house will be worth $4.789 million one year from now. Not a bad investment!
Part of the decision for the Obamas and whether or not they should rent or buy this place rests on what they plan for the house.
If the Obamas want a home in Rancho Mirage as a second home to visit now and again when they are not at their home in Chicago, buying seems to make sense (and their supposed property is a beautiful choice)! However, if the Obamas desire to live in this abode less than a few months a year and want to avoid the part-time resident trap of California, they may be better off renting.
The Obamas are likely doing very well monetarily (POTUS makes $400,000 per year plus a $100,000 travel fund and a $50,000 spending account annually), so during Obama’s 8 years in office he’ll purportedly earn $3.2M (before taxes, we assume). A home like the one they are reported to be buying will require an $850k down payment (assuming they put down 20%). If they don’t have that much cash outstanding, they should probably rent as opposed to buying.
Buy vs Rent Expenses
Finally, the decision to buy or rent comes down to:
- How long you plan to stay at the residence
- Whether or not you need tax breaks
- Expenses that come with owning vs renting a home, like HOA fees
According to the HotPads Rent vs Buy calculator, if the Obamas plan to a) stay for 6+ years, b) have a 30 year mortgage, and c) would otherwise pay $16k/mo for rent, they should buy. Otherwise, renting may be smarter!
Here are a few Rancho Mirage homes for rent they might be interested in:
|50445 El Dorado Drive
La Quinta, CA 92253
|57960 Troon Way
La Quinta, CA 92253
|70777 Tamarisk Lane
Rancho Mirage, CA 92270
Hero image via LA Times