Questions regarding buying a home in Ventura/Camarillo/TO (San Jose: to rent, HOA fees)

[gav_sharma]

Here is my situation. I have been renting for 4 years in santa barbara.We have moved to Encino in LA since last year since my wife is going to CSU Northridge. I work in Santa Barbara. My company allows me to work from home 3 days a week so commute is not bad.There is no way I can buy a home in Santa Barbara. So I am thinking of buying a place somewhere near camarillo/ventura/TO since interest rates now are pretty low.

I already know I might have to move in 3 years once my wife finishes her graduate school. Most likely I will have to move to San Jose since both of us are in engineering field. But I was thinking with interest rates so low and lack of demand bcoz of 8000$ credit expiration it might be a good time to buy now.

Once I move to San Jose I will try to rent this property out and hopefully the rent will cover most of the cost of monthly payment. I have over $150k in savings but over half of it is invested in stocks. I am not sure how much to use for downpayment now.So I can afford a home upto 300k without stretching myself.

So from purely investment perspective
1) Where would you recommend buying TO/Oxnard/Ventura or Camarillow ?
2) What kind of property should I buy knowing that I will need to rent it out within 3-5 yrs ?
3) Do you think its good time to buy ?
4) Me and my wife personally would like a minimum 2 bedroom place and since I don't like HOA fees I am leaning towards Single family or town homes.

Please any advice regarding home ownership in Ventura area would be helpful since I am totally unfamiliar with the area as well as I am a first time homebuyer

[readymade]

I don't know, but you might want to add Carpenteria to that list since it's closer to Santa Barbara than any of the other places you mentioned. Ventura is the closest of the ones you DID mention. It can take over an hour to get to Santa Barbara from Ventura, fyi.

[Charles]

Originally Posted by gav_sharma

I already know I might have to move in 3 years once my wife finishes her graduate school. Most likely I will have to move to San Jose since both of us are in engineering field.

I think it would be hard to come up with an economic argument to support buying a home now if there is a reasonably good chance you will be moving in three years. It would almost make more sense to buy a home in San Jose now (and rent it out) and rent for the next three years in Southern California.

[gav_sharma]

Why San Jose ?

Buying has two advantages versus renting.....

1) Since I know I will be working at my current job for three more years I can buy now and instead of paying rent pay that money towards owning my own home. That money would be close to $42k.

2) The interest paid towards home purchase will be tax deductible.

I did not list Carpinteria in the list since I believe it will be hard to find a 3 bedroom place for under 250-300 there.

[BRinSM]

how much in closing costs will you have to bring to the table? what about maintenance costs? also remember that in most higher end communities that monthly rent will probably be 2/3 or less of the mortgage you would otherwise be paying. remember too that you'd also have to pay closing costs for selling the home in 3 years as well. take TO off your list as well if your budget is under $300k, it is very expensive and far from SB.f

[hilgi]

Originally Posted by gav_sharma

Here is my situation. I have been renting for 4 years in santa barbara.We have moved to Encino in LA since last year since my wife is going to CSU Northridge. I work in Santa Barbara. My company allows me to work from home 3 days a week so commute is not bad.There is no way I can buy a home in Santa Barbara. So I am thinking of buying a place somewhere near camarillo/ventura/TO since interest rates now are pretty low.

I already know I might have to move in 3 years once my wife finishes her graduate school. Most likely I will have to move to San Jose since both of us are in engineering field. But I was thinking with interest rates so low and lack of demand bcoz of 8000$ credit expiration it might be a good time to buy now.

Once I move to San Jose I will try to rent this property out and hopefully the rent will cover most of the cost of monthly payment. I have over $150k in savings but over half of it is invested in stocks. I am not sure how much to use for downpayment now.So I can afford a home upto 300k without stretching myself.

So from purely investment perspective
1) Where would you recommend buying TO/Oxnard/Ventura or Camarillow ?
2) What kind of property should I buy knowing that I will need to rent it out within 3-5 yrs ?
3) Do you think its good time to buy ?
4) Me and my wife personally would like a minimum 2 bedroom place and since I don't like HOA fees I am leaning towards Single family or town homes.

Please any advice regarding home ownership in Ventura area would be helpful since I am totally unfamiliar with the area as well as I am a first time homebuyer

Wait two years to buy, housing in CA is still overvalued. All bubbles go back to the prices where they started. This bubble most likly started in 2000, some say 1996. 2000 prices would be ok.

[SOON2BNSURPRISE]

I just looked at a home in the neighborhood that I grew up in. It is a 3 bedroom 2 bath home with a 2 car garage on a 9,000 square foot lot. The home was built in 1959 and has 1,200 square feet of space. It is selling for $200,000 and is in a very nice family neighborhood. Nearly all these homes are kept up and in great condition. The home is located in Port Hueneme and rents for even money at the $200,000 mark. Lets say that you put 20% down, then you could walk away with an income producing property. Still many including me are thinking that the price is still high. I remember in 2000 when that neighborhood was selling in the $150,000 range. A co-worker told me back then that he had just bought a home way out in Port Hueneme for $150,000. When we talked I found out that the home was a block from where I grew up. At the time my parants were still living in Port Hueneme. Within 3 years those homes were selling for $300,000 plus and by 2006 they were selling for $550,000.

Here is my thinking. The last to buy homes in the bubble happened sometime in 2007. Many of those people financed those homes by getting ARM's. The favorite ARM of the day was a 5 year ARM that would reset on the 5 year mark or in 2012. You had a lot of people buying in 2007 and a lot of those people can not qualify to refinance, will not get help from the government, and will end up loosing their homes. In the example that I gave of the Port Hueneme homes, people bought for $550,000 and now the homes are selling in the $200,000 to $250,000 range. I am willing to bet that by 2012 the value declines further and we are back to 2000 prices again.

[gav_sharma]

Assuming i am taking a 250k loan if I buy a house for 320k now with a 70k down

at current interest rate of 4.8 the cost over period of 30 yrs would be = 472k with interest of 222k.

Now assuming the same house is worth 50k less in 2 years a drop of 15.5% in value but the interest rate is now 6.8% and my loan amount is now (250-50) = 200k .Hence over 30 yrs I would pay = 470k with interest of 270k.

So it depends on how the economy does and how inflationary the environment is in future. But my belief is that it is going to be much more inflationary in future and hence interest rates will be much more higher.

In any case I like the idea of buying in San Jose now and renting it out for three years. Problem is I wouldn't know where to buy a home there since we have no idea where we will land a job.

Regarding buying in oxnard/ventura area I was thinking of keeping the place for its 30 year term and rent it out instead of selling it in 3 years.

But it seems that most of you think the prices will fall further. I know its anybody`s guess but what do you think is a justified price for a 3 bedroom 2 bath place in a good school district in ventura/oxnard/camarillo area ? Maybe I can wait till I can find some place for such a price

[gav_sharma]

That raises another question........will there be ever a time when the rents cover the cost of monthly payments in Ventura/Oxnard/Camarillo areas ?

[SOON2BNSURPRISE]

Originally Posted by gav_sharma

That raises another question........will there be ever a time when the rents cover the cost of monthly payments in Ventura/Oxnard/Camarillo areas ?

In the example that I gave on the home in Port Hueneme the rents cover the cost of the home. In Many places in Oxnard the rent covers the cost of the home. So yes it happens now. You can rent a 3 bed 2 bath home for $1,800 or more a month. Some of those homes sell for between $200,000 and $300,000. Put 20% down and you have an income producing property.