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Old 12-21-2018, 09:29 PM
Location: Formerly Pleasanton Ca, now in Marietta Ga
4,430 posts, read 3,568,259 times
Reputation: 6102


Well the smart thing is at least you are seeking answers rather than jumping in emotionally and being frustrated by Bay Area real estate.
At one time I owned 4 beach homes I rented out for vacationers. Things are a bit different now, but man was it a ton of work. After all the money I lost plus time I put into it, I realized that it was cheaper to just pay the higher rates from other vacation home owners. Now if you were there every weekend and some holidays, maybe its worth it. But keep in mind you will furnish it to your tastes and when you rent it out things will get damaged and scratched.
Research your location and home costs and talk to a mortgage broker about what you want to do. A good one will tell you how much it will cost and what you qualify for.
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Old 12-21-2018, 09:41 PM
9 posts, read 2,099 times
Reputation: 20
Yes, they do know my desire to rent it out and I do know the logistics, differences in down payment/interest, etc. One thing I know for sure is that I will not move into it right away. Should I then wait to buy until I will use it as a primary residence? I’m not sure what is the smartest way to go but it doesn’t seem that working in the Bay Area and paying astronomical rents is the smart way to go either. Also, the biggest rain on the parade has been that because my rent is so high in the Bay Area, the PNW pre-approved me for only 200k which as your probably know will buy not much and in Asheville, they are looking at 275k which would actually be doable but again, across the country.
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Old 12-22-2018, 05:26 AM
Location: The Triad (NC)
27,116 posts, read 58,929,345 times
Reputation: 29809
Originally Posted by KLC2018 View Post
Should I then wait to buy until I will use it as a primary residence?
Yes. Or will live within X miles of a rental property.

And after having actually LIVED in the new location a while (one year?)
and are CERTAIN it's where you want to commit yourself financially.
Having a partner to do it all with too...
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Old 12-22-2018, 08:41 AM
Location: Northern Maine
9,604 posts, read 14,473,387 times
Reputation: 9177
Don't lie on your mortgage application. This will NOT be your primary residence. The bank will find out when they try to bundle your mortgage for sale to Red China. That's were most American mortgages are held today.

(Pay no attention to the comment some spammer put by my handle up there. I have not been a sales agent for over a quarter century. I am a broker with 29 years experience.)
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Old 12-22-2018, 09:37 AM
7,648 posts, read 17,880,393 times
Reputation: 8202
What you may want to consider - purchase the home as an investment. This will allow the rental income to be used to offset the mortgage payment. And to offset the slightly higher rate, look at a 10/1 ARM. When you decide to move in, you can refi at an owner occupied rate. True, no one knows where rates will be but historically, they have been in a very narrow range. Remember for 10 years we were told the rates were going to rise, only to see them fall. Not for everyone, but without another mortgage, this would be manageable. (10/1's running ~4.50% on investment).
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Old 12-22-2018, 09:52 AM
Location: Loudon, TN
5,083 posts, read 4,370,089 times
Reputation: 16994
We moved from northern California to TN in retirement. So I understand fully what you are trying to accomplish, but I have a few questions...

Why North Carolina? Obviously you may have visited Asheville and liked what you saw. Do you realize that home prices in Asheville are much higher than much of the southeast, or even other parts of North Carolina? Do you realize that they have high property taxes and state income tax similar to California, and that other nearby states are much cheaper to buy in? Do you realize that much of the southeast looks exactly like Asheville? You can get the same environment, maybe not quite the boho vibe of Asheville, but the same physical environment (mountains, trees, green landscapes, rivers, lakes, etc) in states with lower taxes, or towns in North Carolina with lower home prices.

Since you've never owned a home, or been a landlord, you may not realize what owning a rental is like. There is the issue of finding a reliable renter, background checks, income verification, etc, every time you lose a renter and have to turn over the property. You could end up with having to turn over the property to new renters every year, or not. You also need to know the local rental laws in the state and abide by them. You have to clean, paint, and repair the property for every turnover. You also have to figure out solutions for yard care, maintenance work, and repairs while your tenants are there. Who're you going to call when a renter calls and says they found termites under the bathroom sink? Who's going to clean the rain gutters every year, etc? Being a LL is a lot of work and from across country it's a lot more complicated. I've done it. You need a good property manager in the area of the home to do all the legwork for you. The cost for mgmt, of course, will come out of the rent, as will the mortgage, property taxes, homeowners' insurance, umbrella insurance, water/sewer/garbage fees, which the LL usually pays, as well as lawn maintenance, repairs, pest control, and snow removal if necessary. You will need to pay for things like new carpet, and replacement of old or broken appliances, heat and cooling repairs and replacement, etc, out of the rents also. It's always good to have a neighbor in the area, someone you know who can call and tell you if anything suspicious is going on around the property too. Not really possible in a place you've never lived. I've seen properties turned into grow houses, I've seen properties turned into flop houses for all of the renter's friends, I've seen the home so damaged and destroyed by filthy tenants who don't clean, who bring in multiple pets, or even tenants who moved out and left other people in the home who aren't your tenants (happened to me). I wouldn't recommend being a long distance LL to a first time LL.

If you could purchase a home and move your mom into it and just rent to mom, that would be the best idea. If she's not ready, or doesn't want to do it, I suggest waiting. Or doing some serious research about the area and a bunch of number crunching to see if you will have a net positive cash flow, or if you are going to be feeding the beast until you retire.
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Old 12-22-2018, 05:52 PM
Location: Southern New Hampshire
6,832 posts, read 11,977,584 times
Reputation: 19926
Originally Posted by KLC2018 View Post
Hi, everyone!

I live in the Bay Area, work in education, have been a renter all my life and I certainly canít afford to buy here now but I also wouldnít want to. For the first time, I actually may very soon have the opportunity to buy but it will be out of state. I love Oregon and I love North Carolina. I am getting the best pre-qualification amount in North Carolina. I guess where Iím needing advice is, I wonít be able to live in that home just yet. I will rent it out for now. I donít know if Iím being smart or NOT smart with my money. I want a home to have 1) an investment, 2) a place for my mom to retire, 3) I want to have a home on land where I can eventually have rescue animal, etc. I just know that there is a better quality of life and more of what Iím looking for there. However, if I donít live in it now, I will have to manage it from across the county and so I just donít know if Iím being foolish. I donít want to miss my opportunity to buy a home. Iím almost 40 and I have not been able to buy until this point in my life and I just want to make sure Iím being smart.

Thank you for any advice!
OP, when you say you "may very soon have the opportunity to buy" -- what, exactly, does that mean? Do you have a property in mind that you and only you know about so you're getting a great deal? Sorry, but that wording is very odd. What exactly is the "opportunity" that is coming your way?

I live in New Hampshire and became what some call an "accidental landlord" 6-1/2 years ago when I bought my current house but did not sell my previous house. The HUGE points are that (a) my previous house is only about 10 minutes away from my current house, which takes away the "long-distance landlord" problem, and (b) I had renters with a signed lease BEFORE I bought my current house (actually, that was a requirement for buying my current house as it would have been difficult to qualify while having to pay for 2 mortgages). I have been VERY lucky in that I've had generally great tenants who pay their rent on time, don't cause damage, etc. Alas, that's not always the case.

I did not have to go through any special qualification in order to convert my previous house to a rental, but that was mostly because I had lived there for 9 years. Normally the down payment requirements, income requirements, and interest rates are different (i.e. much more stringent) for investment properties than for owner-occupied properties. It sounds like you know SOME of this, but I am a bit skeptical given that you are thinking about buying a property that is 3,000 miles away?

So can you please clarify exactly what you mean by your "opportunity" to buy something out of state? (I don't see anything in your later posts that cleared that up.) Honestly, I would NEVER be a long-distance landlord -- having to hire a property management company is (or can be) very expensive PLUS usually eliminates the possibility of tax benefits from being a LL (because you are not "active" any more -- you have hired someone to do the work for you). I DO understand the desire to own property -- honestly, owning my own house is one of the very few things in life that has been as good as I had hoped for (as opposed to all those things that SEEM like they are going to be great but turn out not to be!). But it's not for everyone. For a lot of people, renting makes more sense.
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Old 12-22-2018, 08:30 PM
9 posts, read 2,099 times
Reputation: 20
Hi everyone! Wow! Thank you for all of your kind and thoughtful responses! Just to clarify, I chose North Carolina because I have visited out there and I do realize that housing prices actually are quite high for the surrounding South East areas. I have friends there as well. I think after reading a lot of your responses however, I have decided to not to buy a home across the country. I think what I will do instead is save my money and continue to rent in California until I am able to move to another area and rent there first and then hopefully buy a home as a primary residence. For those of you that have lived in the bay area, I know you totally understand where I’m coming from. I’m trying to buy a home as a single woman. I am a college professor but don’t let that fool you, there is hardly any money in it but a great schedule. I love my job but I work at two different colleges in order to live well here. This thread has been life-changing for me and so for all of you that have taken the time to respond, I can’t honestly thank you enough from the bottom of my heart. I have been preapproved in California, North Carolina and Oregon/Washington and I have a lot stacked against me because as a second home, they count my incredibly high California rent of course and so that leaves me not much of a price point to buy elsewhere. And qualifying here, I qualify for nothing that I would ever want to buy. Homes here, even in the low income areas are 700k (low end) to millions and I don’t even like this area so why would I want to live in a crap home in it? That has been the most frustrating thing for me about living in the bay area. It’s too expensive to buy here but if you try to buy elsewhere, they use your Bay Area rent against you. That has been the single most maddening thing about this entire experience.

Today has been frustrating. I feel like this dream of wanting to own can finally happen and on my absolute own with no financial help from anyone but it feels wrong. Like, the situation doesn’t feel easy. Buying across the country is daunting. I think what I need to do as many of you have suggested is to rent somewhere and then decide. I don’t have any experience being a landlord but then again, how else do you get experience other than actually having a home? Then again, being a landlord from another state sounds just out of my league right now.

So again, THANK YOU ALL!! I have never been so clear after posting on a forum and I totally appreciate all of your expertise!!!
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Old 12-22-2018, 08:46 PM
Location: planet earth
3,503 posts, read 1,237,719 times
Reputation: 7718
Just take a vacation where you think you might want to buy and look at houses and then make a decision.

It seems like you are giving up.

It would make no sense to stay in the Bay Area and rent elsewhere - that is impractical. Just book a flight and go see some properties. Don't throw in the towel so soon.
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Old 12-22-2018, 09:12 PM
9 posts, read 2,099 times
Reputation: 20

Thank you. What I mean is that I will either have to stay in the Bay Area and keep doing what I’m doing or leave here and go rent someplace I think I might want to buy. The daunting thing is that I will have to find new work, etc. Also, my landlord here keeps my rent decent for this area. If he decides to sell this place, I will have to find a place for myself and my dogs with likely an exponential rent increase and be at the mercy of another landlord. I didn’t want that. I guess I wish I were just ready to make a move to a place but I guess I’m not. I just wanted to have the house as a place that is mine that I can move into if I need (if I buy as a second home) that will hopefully appreciate in the meantime and be a place I can move and where my mom can retire. You see, my mom hasn’t owned a home her entire life. I don’t want that to be my life too.
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