U.S. CitiesCity-Data Forum Index
Covid-19 Information Page
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
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.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 11-30-2017, 09:41 AM
 
Location: Houston
17 posts, read 10,333 times
Reputation: 19

Advertisements

Wife and I moved to Houston about 3 years ago from Orange County, CA to start a business and buy a house. We realized that Houston is not where we want to be long term and we are starting to plan our "return" strategy.
One of the possible scenarios for our return is to buy a condo or town home in Cali after we save enough for a 15 to 20 % down payment, rent it out to cover most of the mortgage until we accomplish our goals in Houston (sell business and house) and then return to Cali with a place ready for us. Of course there are a lot of moving parts, number crunching, reserve money to establish ect.


Is this a reasonable plan?
Rate this post positively Reply With Quote Quick reply to this message

 
Old 11-30-2017, 01:40 PM
 
Location: Phoenix, AZ
2,813 posts, read 1,321,125 times
Reputation: 7188
No.


Absentee landlording is a big risk even for experienced landlords. The amateurs invariably get burned by tenants that don't pay rent, destroy the property, and take many months in court to get rid of.


If you use a management company, you share your money with them and it's still no guarantee that you won't get burned.




In an HOA people hate renters and will complain to the HOA every time your tenant slips up and you'll end up getting fined.


Besides, to get a mortgage on a rental often requires 30% to 40% down and if you lie to the mortgage company when you apply, that's fraud and comes with serious penalties.


My opinion for the two cents it's worth: Save as much as you can and buy when you are ready to relocate and move in.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 11-30-2017, 06:27 PM
 
2,898 posts, read 3,599,413 times
Reputation: 3191
1. The companies that "manage" the condo corporations thrive on creating financial hardships for owners in order to generate more revenues from "late fees", "payment plans", "collection fees", etc.

2. As part of that objective the management company will heavily promote either a "no renter" scheme or an expensive and useless "background check" scheme where the condo corporation requires the owners to pay (typically the management company or an affiliate) to perform a "background check". There will be fees for these and you are essentially at the mercy of the management company for this absurd racket. You also have no assurance that the condo corporation board won't adopt a "no renter" resolution or something that makes it basically impossible for you to be able to depend on renting.

3. If you violate either the "no renting" resolution or the "requires prior approval of the board (i.e., management company) scheme" you will then be subjected to "fining" and "late fees" for not paying the fines. The management company and aligned condo attorney will then threaten you with foreclosure to collect these fees.

4. It's a mistake generally to consider purchasing a condo to begin with. It would be a bigger mistake to purchase a condo in another state with the expectation of renting it out and moving there at some point in the future. Also as noted by adjusterjack - because the condo is not your primary residence it would be considered investment property. You will be required to have higher down payments, stricter (i.e., even more lender friendly) provisions in the security instrument, and a higher interest rate loan for investment property.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 12-01-2017, 12:39 PM
 
Location: Houston
17 posts, read 10,333 times
Reputation: 19
Some excellent points given. I had hitch that his wasn't a good idea. Plus I hate the fact that renters would be destroying my property where one day I will be living in.
My wife is worried that if we don't buy in the next few years we will be priced out of the S. Cali homes. We're kinda are already .

I'll go with option 2 as Adjusterjack mentioned. Save as much $$ then buy when ready to move back.

Thank you IC_deLight and adjusterjack! Cheers!
Rate this post positively Reply With Quote Quick reply to this message
 
Old 12-01-2017, 01:57 PM
 
Location: Central Mexico and Central Florida
7,151 posts, read 3,920,101 times
Reputation: 10388
Quote:
Originally Posted by Jamo51 View Post
Wife and I moved to Houston about 3 years ago from Orange County, CA to start a business and buy a house. We realized that Houston is not where we want to be long term and we are starting to plan our "return" strategy.
One of the possible scenarios for our return is to buy a condo or town home in Cali after we save enough for a 15 to 20 % down payment, rent it out to cover most of the mortgage until we accomplish our goals in Houston (sell business and house) and then return to Cali with a place ready for us. Of course there are a lot of moving parts, number crunching, reserve money to establish ect.


Is this a reasonable plan?
Will you have gain on sale of home in HOU? If so, you will pay capital gains tax on it if you sell it and have not lived in it for 5 out of the past 8 years, thanks to the new tax bill being voted on.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 12-01-2017, 03:08 PM
 
Location: Phoenix, AZ
2,813 posts, read 1,321,125 times
Reputation: 7188
Quote:
Originally Posted by Jamo51 View Post


My wife is worried that if we don't buy in the next few years we will be priced out of the S. Cali homes. We're kinda are already .
You can stay in Texas, you can move to Arizona. In both cases live for half what it costs to live in California (and carry a gun, too)


Many of us in Arizona wouldn't touch California with the 11' pole that we reserve for things we wouldn't touch with the 10' pole.


Rate this post positively Reply With Quote Quick reply to this message
 
Old 12-01-2017, 07:39 PM
 
Location: MID ATLANTIC
8,139 posts, read 19,987,845 times
Reputation: 9377
Quote:
Originally Posted by Jamo51 View Post
Wife and I moved to Houston about 3 years ago from Orange County, CA to start a business and buy a house. We realized that Houston is not where we want to be long term and we are starting to plan our "return" strategy.
One of the possible scenarios for our return is to buy a condo or town home in Cali after we save enough for a 15 to 20 % down payment, rent it out to cover most of the mortgage until we accomplish our goals in Houston (sell business and house) and then return to Cali with a place ready for us. Of course there are a lot of moving parts, number crunching, reserve money to establish ect.


Is this a reasonable plan?
I work for a credit union. Some credit unions have a category, Future Primary Residence. In your situation, if rental income is needed to qualify, you would have to buy as an investment purchase. If you can qualify and carry the payment, it's a 2nd home and you can put as little as 10% down, but more importantly, use the primary residence rate. This is where the industry doesn't go crazy if they find someone renting a 2nd home. It's more or less a qualifying issue. It's weird. I am the last person to suggest you misrepresent yourselves - it's just a different attitude with 2nd homes.

FWIW, almost every 2nd home loan I've done in the past 3 year has been a Future Primary Residence, someone targeting a location for where they want to live in the future. It's more common (w/ credit unions) than you would think.
Rate this post positively Reply With Quote Quick reply to this message
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.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
Follow City-Data.com founder on our Forum or

All times are GMT -6. The time now is 07:21 PM.

© 2005-2020, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top