Living for less than 2 years (Fremont: to rent, buying a home, buying)

[sonarrat]

Originally Posted by maya24

Sonarrat, thanks for the insightful response. Mind if I probe further? Our plan to buy a house if only to live in it for two years is so we can avoid paying rent for two years and hope that the property values rise. Even if the latter does not occur and house prices stay the same for the next five years, we would still save on the 2 yr rent. Its true that for the next three years that we rent it out to others, we would lose some because the rent wouldn't cover mortgage, but its a small price to pay and hopefully the house prices would increase enough to cover that difference.

As far as alternatives go, if we dont buy in Fremont, we wouldn't buy at all and keep renting for another two years, and buy when we move out east, which a lot of people say is a wise thing. Would you agree?

With property values still on the decline and foreclosures coming faster than ever, I wouldn't buy at all unless 1) I planned to live there indefinitely, or 2) it was a fully occupied income property. The way you are trying to do it, you'll be subsidizing their rent and taking the monthly hit. The way I am describing, they will subsidize your mortgage and your rent. $500 is a lot to be paying when at least half of it is going to HOA fees, which is money down the drain which doesn't get you any tax breaks.

Renting a property is a business. You need to approach it with a businessman's acumen. Do you know all the costs involved? Are you maximizing your returns or minimizing your losses? Are you properly insured in case of a casualty? Is the mortgage company going to call your loan if you turn the property over to a renter?

[nmnita]

Originally Posted by ecvMatt

The Bay Area is on the West coast, huh? What?


That hurt my brain.

I am a little confused as well? Do they plan on moving to the west coast or do they want to buy something in SFO for investment and then sell it and buy in the east or what? If they think property is cheaper in San Francisco than the east I think they may have a surprise coming..

Nita

[nmnita]

Originally Posted by maya24

Thanks for your responses.

@Jonotastic: We are looking in Fremont to buy and are looking at 350-400K range for a 2 bed 2 bath townhouse/condo in a good school district. In the area we are looking at, rents are expected to be around 1800-2000 per month.

Looks like east vs west coast threw people off I'll remember to be more specific next time!

I hope you are planning on seeing the property in person before you buy and know what you are doing. A lot of people are under the assumption, because of the economy and the problems in California that property is cheap, this isn't true, it is still off the wall..

Where are you getting your information?

Nita

[aslowdodge]

I'd check on the rents. They sound a bit optomistic and high. You can get a 3/2 house in Pleasanton for $2,000 with much better schools.
here's a scenario:
$400K condo
20 percent down makes a $320K loan at say 6%.

Payment $1918/ month
taxes about $416/ month
insurance $70/ month
HOA -let's say $200/ month
Prop mngmnt if you got $1800 in rent $180/ month
Repairs $75/ month

That makes $2859 per month

If you got $1800 per month in rent that would be -$1,000 per month.
But wait, we have to add a vacancy factor of say 10%, so now your rent is $1620.

You are in the hole $1180 per month, much more than the $500 you planned on.

I also didn't add any costs if the tenant damages beyond their deposit amount or any legal fees if you ever have to evict.

You are better off renting. I've been a landlord for over 25 years, trust me I think you will regret buying a place, especially if you rent from across the country. You are at the mercy of the managers honesty and integrity.

[GritstoGranola]

Way to break it down, Aslowdodge. And that's assuming they have $80K to put down, (not to mention the add'l $ for closing costs). And let's not forget how much it cost once you move into a new home...window treatments, paint, new carpet, and if the appliances are old, the pipes old, the wiring about to ignite, the roof shot, the water heater about to go...

If you are only going to be in S.F. 2 more years, rent something cheap, save your pennies, and buy a home in the east close to your family. Then, when you move east, you'll have enough money for a decent downpayment (20% or more!) and you can buy a home near your family. I'm from the east and trust me, San Francisco real estate prices are heartbreakingly high. And if you are lucky enough, you'll end up in the south where the prices of homes are low and the quality of life high (check out Atlanta and Charlotte real estate on line if you want to see some deals). The only bummer is the hummidity in the summer, but it's worth the sweat for the other 9 months! (No pun intended... Although, I get the feeling you aren't going south...

Good luck, I hope you take everyone's advice as it was intended, to help you on your way to home ownership and to avoid the hassles of being a long distance landlord...you don't want to be house poor when it's time to buy your home in the east...prices will stay low for a while, don't worry...

[bayarea-girl]

As many have already responded to it makes no sense to me why you would move to a place for only 2 years, buy, then move again. This is not the time to buy right now anyways. Like others have said and I can't say it better then them you will be spending more money out of your own pocket then bringing in from a tenant. Rents are way down right now too and it is hard for landlords to rent right now. Save your money and rent a place, you'll have plenty of cash in your hands to move and do with what you want. Buying a triplex or fourplex (something with more units) where you can live in one and rent the others out is a better scenario then a condo/townhouse and or single family property.

[nmnita]

Originally Posted by bayarea-girl

As many have already responded to it makes no sense to me why you would move to a place for only 2 years, buy, then move again. This is not the time to buy right now anyways. Like others have said and I can't say it better then them you will be spending more money out of your own pocket then bringing in from a tenant. Rents are way down right now too and it is hard for landlords to rent right now. Save your money and rent a place, you'll have plenty of cash in your hands to move and do with what you want. Buying a triplex or fourplex (something with more units) where you can live in one and rent the others out is a better scenario then a condo/townhouse and or single family property.

i agree and we are trying to explain that to our 26 year old granddaughter. They just sold their house in OKC. The market is fairly good there, but it is still suffering like the entire country. Anyway, here is their situation: she gets her BS in nursing in a couple of weeks and hubby will get his BS Dec 2010. they have to be out of their place by the 31st, have found a temp rental and plan to buy in Sept after she takes her state boards> This sounds fine, the only problem he has no idea where he will be working after graduation. they have said they will go wherever they get the best offer. Why do they want to buy again and live in the place mayber a year or so? I guess we all see things differently.

Nita

[aslowdodge]

Originally Posted by GritstoGranola

Way to break it down, Aslowdodge. And that's assuming they have $80K to put down, (not to mention the add'l $ for closing costs). And let's not forget how much it cost once you move into a new home...window treatments, paint, new carpet, and if the appliances are old, the pipes old, the wiring about to ignite, the roof shot, the water heater about to go...

If you are only going to be in S.F. 2 more years, rent something cheap, save your pennies, and buy a home in the east close to your family. Then, when you move east, you'll have enough money for a decent downpayment (20% or more!) and you can buy a home near your family. I'm from the east and trust me, San Francisco real estate prices are heartbreakingly high. And if you are lucky enough, you'll end up in the south where the prices of homes are low and the quality of life high (check out Atlanta and Charlotte real estate on line if you want to see some deals). The only bummer is the hummidity in the summer, but it's worth the sweat for the other 9 months! (No pun intended... Although, I get the feeling you aren't going south...

Good luck, I hope you take everyone's advice as it was intended, to help you on your way to home ownership and to avoid the hassles of being a long distance landlord...you don't want to be house poor when it's time to buy your home in the east...prices will stay low for a while, don't worry...

lol
I figured I gave it enough of a bad spin without adding your items

[Jonotastic]

Originally Posted by maya24

Thanks for your responses.

@Jonotastic: We are looking in Fremont to buy and are looking at 350-400K range for a 2 bed 2 bath townhouse/condo in a good school district. In the area we are looking at, rents are expected to be around 1800-2000 per month.

Looks like east vs west coast threw people off I'll remember to be more specific next time!

I normally always recommend buying vs renting even if you only plan to live there for a couple years. However, California is in HORRIBLE shape...Fremont isn't exactly the most desired part of the Bay Area as well. California's home prices are still over-valued, especially now with their economy and while I see hope for the country as a whole to improve in the next couple years...I don't think California will hit bottom until a couple years. With that being said...I'd actually recommend to rent, which I NEVER recommend.

[GritstoGranola]

Originally Posted by aslowdodge

lol
I figured I gave it enough of a bad spin without adding your items

Whoops!