Possible Relocation to LA (Thousand Oaks, Santa Monica: real estate, rent, homeowners insurance)

[HookTheBrotherUp]

Hello all... I've read this forum and found good information, but not direct answers to my questions, so I am posting some here, please excuse any redundancy. Also, for those who read the OIrange County forum, I will be posting this exact post.

I have an opportunity to be relocated with my company to LA from Houston. My wife also has an opportunity for employment with the same company.

Our combined income will be 200K sans bonuses, about 230-250K with bonuses. We currently live in a 3K sq. ft. single story home with a large lot that we paid 159K six years ago. Unfortunately, our real estate does not appreciate as quickly as it does in CA, but we can sell for ~200K, even in today's housing market and pocket over 100K.

No debts. We have three kids, aged 5 and under, the oldest starts Kindergarten this year.

My company is located in the Westwood, UCLA Medical Center area.

Now the questions, I don't know where to start, or what to ask, so I'll just throw some out....

Where do most people live who work in this area? I know I will have to commute to afford a home in the area. We don't have state taxes, or high real estate costs here in Houston, so I know I can't live in the area where my company is without spending a fortune.

I know this is a hard question to answer, but what are good options for me and my family in regards to owning a home in a nice, safe neighborhood?

How much home can we afford on 200K and still live within our means, and save money?

With regards to homes, what area would be good to have a nice home (knowing I can't get what I can in Texas for the same price), with good schools, and be safe?

What area would be best to keep commute times to a minimum (wife and I can carpool).

I don't think that what I see on TV actually represents LA; I've been there, in certain areas it looks like Mexico to me. Spanish is not a problem, I speak it fluently, and my wife is from Spain, and our children are bi-lingual (although they speak the Castillan version of Spanish). But I know there are nice areas around LA too, I just don't know where they are.

I could ask fellow employees, however, I must keep this to myself for now and cannot mention this potential move just yet.

If I think of more I'll post again, but thank you in advance for any advice.

Regards

[Charles]

Originally Posted by HookTheBrotherUp

Also, for those who read the OIrange County forum, I will be posting this exact post.



Our combined income will be 200K sans bonuses, about 230-250K with bonuses.

No debts. We have three kids, aged 5 and under, the oldest starts Kindergarten this year.

My company is located in the Westwood, UCLA Medical Center area.


Where do most people live who work in this area?

what are good options for me and my family in regards to owning a home in a nice, safe neighborhood?

How much home can we afford on 200K and still live within our means, and save money?

With regards to homes, what area would be good to have a nice home (knowing I can't get what I can in Texas for the same price), with good schools, and be safe?

What area would be best to keep commute times to a minimum (wife and I can carpool).

I don't think that what I see on TV actually represents LA; I've been there, in certain areas it looks like Mexico to me. Spanish is not a problem, I speak it fluently, and my wife is from Spain, and our children are bi-lingual (although they speak the Castillan version of Spanish). But I know there are nice areas around LA too, I just don't know where they are.

I could ask fellow employees,

Thank you for posting lots of pertinent information, it makes responding a lot easier and efficient.

Note: The mods might frown on posting identical threads on different forums.

I think the rule of thumb is income should be 1/3 house price, so a $600K-$750K (if you are sure on the bonuses) home is realistic and this is qualified as you do have retirement (401k and Roth), college savings, property taxes (about 1.25%), multiple automobile insurance, life insurance, homeowners insurance, disability insurance, and probably daycare expenses). I wouldn't push it. I have four kids myself.

How about renting for a while so you can take your time and get a feel for the communities? Also, this would allow you to ask your new fellow employees and others questions about housing. A lot of people still feel housing prices haven't bottomed out yet either.

I think if you search the threads you will find an 80% answer to your questions about where to live.

Check out this for useful graphical information on school test scores:

California School Performance Maps

[HookTheBrotherUp]

Thank you, Charles. I understand about the multiple postings; I would not be offended it the moderators closed the others. I have only a couple of weeks to give an answer, and so I chose the shotgun approach and posted in multiple forums to reach as many people in the area as possible. I figured some people in each forum may stick to their forum only.

The suggestion of renting sounds good, but only if it's a residence. Thanks for the advice.

[EscapeCalifornia]

I agree with MissionHome's post in the OC thread. Forget anywhere in OC unless you want to spend your lives on the freeways and be 50 miles from the kids and their schools.

I'd look in the beach cities on LA's west side. Just don't go too far south due to the hellish commute on the 405. Sadly, $200k income (and Charles' wise $600k purchase price limit) doesn't buy much but you're better off renting a house at first anyway and that's much more affordable.

[JTGJR]

Hi HookTheBrotherUp. One of the first things I'd ask, is how much $$ do you have to put down? What's the mortgage balance that you think you can comfortably afford and how secure are your jobs?

Presumably, you're looking for good childcare/preschool, in addition to a good elementary school.

Are there any other amenities you're looking for?

[HookTheBrotherUp]

JTGJR,

On a 600K home, we can afford to put down 1/3, or 1/2 if we stretched it. Our jobs are very secure, thankfully.

One main concern is schools. We don't live in Houston exactly, but in the suburbs and my daughter starts in one of the best rated schools in Texas. I would be very concerned about the schools in the LA area, my wife thinks we would have to go private no matter where we live in CA, but I am hoping there are some great schools to be found.

[Charles]

Originally Posted by HookTheBrotherUp

there are some great schools to be found.

There are. Often, but not always, the good schools are in the high $/sqft neighborhoods. The link I provided above is a decent starting place.

[JTGJR]

With $200-300K to put down, you have a lot of options. Since your jobs are secure, I see now reason to put 50% down on a $600K home that might, barely, meet your needs for noww. You're right in the middle ground that requires a lot of number-crunching. Let's say you put $25% down on an $800K place which opens up some better areas for you. So, if you have, top end, $300K to put down on a place, here's what I'd try to calculate.

1. If you put down 20-25% ($200-240K) on an $800K property, would your combined salaries be able to handle, comfortably, the mortgage payment?

2. Assuming that the answer to #1 was Yes, would you both also be able to contribute maximum amounts into a company-sponsored 401K plan and still be able to comfortably handle the mortgage? Will you still be able to put a bit of cash in the bank each month?

3. If yes to both 1 & 2, would the monthly amount remaining allow you to do the things that you "need" do to (not want to do) each month, with your family?

If you can answer yes to all of the above, then I'd look for the higher mortgage payment. You'll still have a good bit of cash on hand ($60-100K) for emergencies and to cover preschool for the youngsters.

While I respect Charles and EscapeCalifornia's opinions on the forum, I can't conceive of a family of 5, with the cash that you have, renting. Cash is good, and you can't have enough of it. But, in your situation, I think renting is throwing good money away when you can afford a home, in a good location with a good school district, within a reasonable commute.

I'm not an accountant or financial adviser so, it's just my opinion. Really look hard at what you want for you family and realistically crunch the numbers. Don't hedge. Do a realistic number crunch. You're fortunate. You have a lot of options.

[EscapeCalifornia]

Originally Posted by JTGJR

While I respect Charles and EscapeCalifornia's opinions on the forum, I can't conceive of a family of 5, with the cash that you have, renting. Cash is good, and you can't have enough of it. But, in your situation, I think renting is throwing good money away when you can afford a home, in a good location with a good school district, within a reasonable commute.

So what happens when they sink $200k into a property right now so they can spend more each month on mortgage than renting the same house, then see their investment crater? This isn't 2001. Housing values are down and no one knows where the bottom is. I know the higher end zip codes haven't taken the hit that the bad ones have, but who's to say they're not going to get slaughtered just as bad over the next year or two? One thing's for sure: There's nothing propelling the market rapidly upward like there was over the past few years so I see little to lose by waiting and watching a bit but potentially a lot of gain the the market where he wants to buy does indeed tank.


Plus, being from out of state, it will no doubt take them a while to figure out exactly where they want to live long term. I say rent a nice house for a year, get your boots on the ground, watch the market, and then decide where and when to buy.

[BRinSM]

I think in your price range you have a lot of great options in some great neighborhoods. If you don't mind being an hour away from work, there are some great family oriented neighborhoods in the Thousand Oaks area. Getting closer to UCLA (not much closer, but closer nonetheless) are the neighborhoods of Calabasas, West Hills and Woodland Hills in the Valley which have good schools. Getting closer to UCLA, you're going to have much more expensive homes with weaker public schools (except for Santa Monica and Beverly Hills). You could probably afford a nice home in some of there areas, but it isn't going to be nearly as large as the home that you're currently living in.

The good news for you though is that home prices have dropped drastically in the distant neighborhoods and the effect is slowly making its way into the more desirable neighborhoods. You could rent a real nice place for $3000-$4000 and keep your eyes open for home to buy. The other thing going for you is that your kids are so young, that if they had to change schools because you move, it won't be to difficult of a transition.