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Where are you coming from? India (Have lived in US for years before)
Why are you moving? Relocation for work
Where will you be working ? Me - Basking Ridge, Spouse - WFH but travels to Boston very often via Amtrak
Will you buy or rent? - Buy
What is your budget ? $400K-$550K
What kind of place are you looking for ? 3bdrm, 2+ bath Townhome
Will anyone (spouse, children, pets) be moving with you ? Spouse and 2 kids (Age 6 and 2)
Do you need/want good public schools? - Yes!
Briefly describe the kind of neighborhood you'd like to live in - Families with young children, safe, diverse
Three important factors :
1. Good schools
2. Proximity to Newark penn and Basking ridge
3. Easy resell/renting
Kindly bear with my questions and excuse my ignorance, as we are first time home buyers.
1. Which areas seem most suitable keeping in mind above criteria?
2. What advice would you give to a first time home buyer?
3. How exactly do you choose a realtor? We are really confused since plenty of realtors have great reviews and we dont know how should we select one.
4. Our jobs are such that we are often relocated across the world. Hence, we would like to buy a property that can easily be sold or atleast rented out via a property management company. How reasonable is that expectation?
5. Like every buyer we wish to invest in a home that should give ROI and the value appreciates. How can a town's ROI be measured? Do we just pick uup recently sold homes that match our criteria and look at their price history?
4. Our jobs are such that we are often relocated across the world. Hence, we would like to buy a property that can easily be sold or atleast rented out via a property management company. How reasonable is that expectation?
Given this condition, you may be better off renting instead because of the risks involved.
- NJ is tenant friendly state. Get one tenant who knows their way in legal system somewhat and you can get seriously screwed. Which is much harder to deal with further away you are...every step of the way.
- Property management companies take a hefty cut so unless you'd need to have put down a large downpayment to make up for the difference. Please note, management is different from getting a broker to find you a tenant. Management as in they completely manage the property for you.
- Break even depends on location and your downpayment. If I had to pull a number out of my arse, I vaguely recall 7 years for our area. Obviously location location location is everything but considering how high the prices are and prices slowing down, its going to take longer for break even.
- Take into SALT change considerations.
All that said. This is your life choice and depends on how much $$ you got, how risk adverse or not you are. Run the math on budget, take a look at potential risk, look at the data (google & you can find them), and make your determination.
Agreeing with the previous comment, I wouldn't buy here with the intent of renting it out in the future. The property taxes are too high, maintenance is high. Everything is high. We looked into renting out our previous home and we would have lost money.
Personally I believe that people shouldn't buy here unless they are planning to live there for ten years minimum.
Save yourself the headache and rent yourselves a home while you are here. If you change your mind later, you can always buy then!
Thank you for replying.
We were in nj for 6 years and we were renting. It pains to pay rent which is approx 80% of our mortgage and not earn an asset. We have the $ to do a down payment and hence want to take the plunge.
If not renting it out, would you say selling in good school district is not all that tough?
Thank you for replying.
We were in nj for 6 years and we were renting. It pains to pay rent which is approx 80% of our mortgage and not earn an asset. We have the $ to do a down payment and hence want to take the plunge.
Based on that comment alone, I'd like to suggest that you to please consider revisiting your budget forecast and run your numbers again but against carry cost. Because that's the real number you want to see. Not the mortgage, not just PITI.
Let's assume, a house is 500k and you got 20% down, 30yr loan @4.5%, that's about 2k on mortgage + interest. Ballpark NJ avg prop tax is 2 to 2.5% so let's say 2.25%, about $1k a month on prop taxes. Tack on insurance and you got PITI. If you got HoA, tack that onto. Might as well calculate carry cost by doing further steps.
If rent coves 80% of mortgage, that's about 1600 (80%x2k) vs. 3k (PIT). You tack on insurance, possible hoa. You can see that it'll double that of your rent cost.
Obviously if you have much larger downpayment like 50% then your looking at ~2.2k without insurance. If rent is at 1600 then it looks to be much harder call until you look at carry cost by factoring in other expenses.
Quote:
Originally Posted by Seagreen10
If not renting it out, would you say selling in good school district is not all that tough?
First you absolutely must calculate carry cost. Without know carry cost, you won't even know when and what your break even point is. For example, you could sell at a loss even if house gained value due to carry cost such as commission.
Second. Real estate is location, location, location. Could have awesome school but area suck at something so days on market could be high even if you listed at good price. So just because it has good school doesn't mean it'll move quick.
Based on that comment alone, I'd like to suggest that you to please consider revisiting your budget forecast and run your numbers again but against carry cost. Because that's the real number you want to see. Not the mortgage, not just PITI.
Let's assume, a house is 500k and you got 20% down, 30yr loan @4.5%, that's about 2k on mortgage + interest. Ballpark NJ avg prop tax is 2 to 2.5% so let's say 2.25%, about $1k a month on prop taxes. Tack on insurance and you got PITI. If you got HoA, tack that onto. Might as well calculate carry cost by doing further steps.
If rent coves 80% of mortgage, that's about 1600 (80%x2k) vs. 3k (PIT). You tack on insurance, possible hoa. You can see that it'll double that of your rent cost.
Obviously if you have much larger downpayment like 50% then your looking at ~2.2k without insurance. If rent is at 1600 then it looks to be much harder call until you look at carry cost by factoring in other expenses.
First you absolutely must calculate carry cost. Without know carry cost, you won't even know when and what your break even point is. For example, you could sell at a loss even if house gained value due to carry cost such as commission.
Second. Real estate is location, location, location. Could have awesome school but area suck at something so days on market could be high even if you listed at good price. So just because it has good school doesn't mean it'll move quick.
Thank you. Those are some really helpful points.
We have factored in those costs. Ww are in morris county where a 2/3 bdrm rent avgs around $2.4k
Also we are unable to use mortgage to get a tax benefit. Our calculations indicate that buying might be a more sensible way currently, however we will think about it once again.
Don't forget repairs and replacements that pop up. If you buy a 20+ year old house, you're looking at a possible roof replacement, HVAC, water heater if these haven't already been done. If you're in an HOA (I noticed you said townhouse) you may be looking at significant assessments as well for these and other things in the community. I owned a $100,000 condo once that got hit with a $10,000 assessment from the association for roof and other replacements.
Thank you. Those are some really helpful points.
We have factored in those costs. Ww are in morris county where a 2/3 bdrm rent avgs around $2.4k
Also we are unable to use mortgage to get a tax benefit. Our calculations indicate that buying might be a more sensible way currently, however we will think about it once again.
If math makes sense and your appetite for risk is acceptable with future outlook, by all means do what you need to do. All of us are after all, faceless internet people but more than that. This is your family, your life so do what you feel is best at the moment for yourselves
Just don't do it. Run away from nj as fast as u can.
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