I am mid 30s single women thinking about buying a townhome or SFH around 1 million. My TC is 250k (180 base and 15% bonus). I have 230k in cash. (50k of which is in Indian bank). 250k in stocks and index funds and 125k in 401k. My current rent is 1600( sharing a 2b apartment) and other monthly expense is around 1300/ month on average and I don’t expect it go up in the coming years. My non-rent expense has remained more or less the same in the last 8 years. I will most likely rent out the extra rooms in case I buying a home. As a single woman, townhomes seem to be safer but 300$ HOA seems a waste of money. Buying SFH would be ideal from an investment perspective. But It is hard to find good ones in Fremont and I am skeptical about buying SFH in Newark and Union City. I could consider townhomes in Fremont and Milpitas. Currently, I live in Fremont and used to commute to Oakland for work. Milpitas seems like a good location based on commute wise for any future career move. I don't expect to work in Oakland for my next job which could be after 1-2 years. Making such a large purchase as a single person makes me very nervous. On the one hand, I am fine renting apartments for the rest of my life and having roommates( I always had roommates after moving out of home and don’t like living on my own). But on the other hand, I have the money to buy a home now, and as the property values can become too high for me to afford me in 3-4 years. But there is also a possibility that the housing market might fall because of the surge of WFH in many companies. This process has made me very stressed. The confusion ranges from if I should buy a home at all. If so, should it be SFH or townhome? Will I be okay with SFH in union city or Newark as it will make for a worse commute? Or should I just go for a Townhomes closer to South Bay (like Milpitas)near BART( which makes the commute to South Bay and SF bearable but not a good investment compared to SFH)? Even the process of buying a home seems overwhelming. I would appreciate any advice for someone in my situation.#personalfinance #investments
Don't buy a townhome. Sfh or bust. Buy a sfh and rent out extra rooms to help you ease in. That said home ownership should be fun so if it's stressful don't do it. It's ok to be a renter and invest elsewhere. Good luck.
Since you don't have such a strong desire to purchase a house, I would recommend not buying one right now. Honestly renting gives you much more flexibility and due to the pandemic it is unclear how the wfh policy will shape out for the most of the industry.
Continue renting. No need to buy a home right now.
Buy sfh
I recommend renting until you are comfortable and have a material change in life circumstances (have a family or after a year into the next job with significant TC change). Invest your money into index funds. If you are stressed and nervous now, I can assure you maintenance of a SFH is significant stress and more so as a landlord. Peace of mind and optionality is better than stress :). You haven’t enumerated strong enough reasons to buy
My main reasons are mostly as means of good investment. I don't have a high desire to own my own place. But I fear I might not be able to buy a house in 5 years if I miss out now. It's mostly FOMO that I ll miss out on the real eastse returns.
I understand, very similar situation as you, somewhat different outcomes. Another way to help with decision making is - if you cannot live in the house and need to move within 3-4 years (because you took a job far away, married etc) then would you be comfortable paying 4%-7% on total house price as REA commission (assume no appreciation m, in such short time horizon it may even go down in value) OR you comfortable being a landlord (it’s a nightmare being a landlord in CA and more so in the Bay Area. The laws are very favorable for renters, almost anti-landlord. House maintenance is LL responsibility. You may have to get a property manager who take 10%-15% of monthly rent as commissions). If this scenario stresses you further or such a change is likely, do not buy.
Condos are ideal for starter home specially when you are single. Agreed, they come with HOA but that also translates into peace of mind for stressful activities like landscaping or yearly certifications. SFH may be a lot of work if you don't want to run around with the maintenance work. Condos on the other hand are almost hands free and you can easily rent out a room in a 2 bed 2 bath plan. You can start building equity with a condo now and eventually if life situation changes then move to a SFH.
Buying anything is a much better financial choice than renting
Rent and buy MSFT
No. It’s not always the case. Buying in an inflated market is not a wise financial choice. Some places, you can now rent for what would otherwise cost you for mortgage interest + property taxes + HOA/co-op fees and etc. Either way, it’s throwaway money, since it’s not paying down the principal. Furthermore, if property values won’t rise, you won’t not even be able to cover the 6% for the realtors’ commission.
Buying a home can be daunting. Just go through the motions of finding an agent, getting pre-approved for a loan, visiting some homes, etc. Do that for a few months and it becomes normal. Then you will know what you actually want to do. You won't be able to just think this out.
I’d wait till next year to buy. There are some new townhome communities in the Newark area that perhaps you may want to check out. Also consider Pleasanton, your million will go further there. Don’t underestimate the flexibility provided by a rental if you want to keep your career choice flexible.
Rent until you are single. Property taxes, maintenance and everything would go up once you buy a home . If you are ready to rent out a portion of it then it should be fine but it’s not easy to rent out right now
I don't expect to share the house with a partner anytime soon. I most likely to be single into my 40s.
Property taxes, interest, insurance and hoa will be more than my current rent. (since I only share an apartment. I. Might move to a separate apartment in couple of years.)