Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
But it is in my nature to say more when one can say less))
We are considering buying a home in LA...modest place...but in a great school district...600 k with 20 per cent down means our payments at 3100 a month all in would be about the same as rent in same school district.
But we are getting cold feet and wondering if it would be smarter to pay off our tiny apartment worth 240k$ in the uk, close to London.london is a strong market.....so value is safer than in many places in the world.
If we used some of our deposit in this way we would then have 12k a year income from that property which is always rented out due to being close to a university.
In the uk we would pay tax on about $3 k of that income. We are not sure if we will pay tax again in the USA. Whether they will consider it extra income...the income will stay in the uk....I guess that will be our college fund.
In ten years we would have 120$ k minus maintenance expenses. The housing market is high right now. It is perfectly possible a property costing 600k may not be worth$720k in 2025. Look at what happened in2008.
We love the home we rent.....but no certainty how long we can rent it for. It is a far more expensive home than we could buy right now.
But the pull of buying a family home is high....but is it smart?
It seems on paper that paying off the uk property may be the smarter thing to do.
Any thought wise investment sages? We are early 40 s and have young kids.
What would you do?
Do both, rent the apartment out in the UK and use that money to finish paying it off (make sure you have a good tenant though, as that could lead to trouble). Get that house in LA and once the UK apt. is paid for then you will have that extra income. Good luck.
Thank you! We can't do both....if we pay off uk it eats into our deposit for LA.....we have 60 k left after paying off uk.... this is only a 10 percent deposit in LA.
Currently rent covers home loan with a little left over. 12 years to go on that home loan. Or we pay the outstanding 80 k from savings now, meaning we no longer have 20 per cent for LA home purchase.
Most likely home prices are getting near the top in the US before the next crash. I'm not saying the housing market here will crash soon, I'm just saying this will be around the top of the market in my opinion. I'm starting to see private investors doing stated loans again, which is what got us in the first bubble.
In stead of paying off the mortgage in the UK, rent it out and us the rent money to pay down your mortgage while you take your 20% deposit to LA. So you don't have to wait around or reduce your 20% to 10%.
Personally, I think it's a smarter move to go ahead and pay off the mortgage you already have before you get yourself tied up into another. Pay off the UK, own it in the clear - THEN begin saving to put down on a house here in the United States. I don't see having 2 unpaid mortgages hanging over your head. One is enough stress as it is.
Thanks everyone. Most helpful. My husband bought the uk property before I met him. I saved the 150 k deposit....was trying to buy in London then he got a job in Los Angeles...so we moved here and without green cards felt unsure about buying as we would have had to leave the country in my month.
The uk property is rented out...we make maybe an extra 200 $ a month after paying loan...we put that money aside for maintenance so never touch it.
Yes as much as I fantasise about owning a home...I have been saving for the 14 years of my working life....not worked for6 years since having kids but due to return to work in the next year...now my kids are over 3....it makes better financial sense to pay the 80k left on our existing 500 square foot home.
In ten years we will have generated 120 000$ in rent. We will pay no tax in the uk as it is below the tax threshold ...I wonder if we would pay tax in the USA on extra 12000 income generated from the only home we own? Need to find that out.
We do love the home we rent and landlord has offered a 3 year contract with fixed rent....my husband's job is not very secure so we may have to move out of state for a job...maybe we can move somewhere cheaper..most places after LA WOULD BE.
Is there any sense in using what liquid cash we have left....about 60k to put a deposit down on aHome somewhere else that we can rent out, where we would be willing to live if we had to leave LA...we make hardly anything in our liquid savings...I lost out on some stupid investment I made in98.... Money still not up to what I put in back then....wish I had just bought a house then. Still I know we are in a better position than many.
Can you supply details on the $600M house in LA: how may square feet, year built, lot size, bedrooms & bathrooms, kitchen and baths updated, garage spaces, swimming pool? Or is it just one of those ubiquitous tar paper shacks on a postage stamp lot?
The SoCAL market is now at the point where few people can afford the price of an average house, even with a 5% down Freddie Mac mortgage or even with a 3% down FHA mortgage.
The very generous US government has been helping homeowners whose mortgages are "underwater" from the last bubble with the FHA "short refinance" program, where the lender and the FHA agree to wipe out the excess of the mortgage balance over the market price and replace the mortgage with a new one with a reduced balance. This has propped up the housing market there. Otherwise, there would be a lot more foreclosures, reducing housing prices.
Pay off your UK mortgage and continue to rent. I believe that housing prices in SoCAL have reached a peak and will then start dropping, especially as the extended drought and drastic water restrictions to come will convince people to move away.
It depends on net worth. You don't want to have everything (or more than everything) in real estate while not having any stock market exposure. If you don't have much in the way of stocks, I'd suggest paying off London property and then investing the freed cash flow into the market. Alternatively, just invest your savings now as a lump sum into the stock market.
Also, do not rent a more expensive home than you could buy. Rent a similar one and invest the difference. This is a crucial point. If you aren't careful, you will be missing a wonderful opportunity to build wealth.
The key is having the stomach not to sell during a downturn, but to sit tight until the recovery.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
