Buying out of frustration

[Guleed Yusuf]

Hey All,

My wife and I are "young" 27 year old professionals and moved to San Diego from Seattle 3 years ago after graduation college. My wife started graduate school and finished last May. The renter market in San Diego is very competitive and it makes it very difficult to find a decent place that isn't too far from downtown were we work and play. Also, if you're familiar with SD you'll know that the further you go from DT/ hillcrest/NP the less diverse it gets and as a young black couple with no kids, we really don't want to live too far in the "suburbs".

Because my wife was attending grad school for the last 2-3 years, we tried to live modestly in a small 1bd 1ba 600 sq ft ($1K/m) but had pest problems in the first 2 place we lived in (cockroaches were coming in from an open bathroom fan in the 1st place and from the pluming in the kitchen wall in the 2nd place). This past summer we decided that since we have dual income now, we should upgrade and get nice 2bd 2ba and make sure that the place is nice enough ($2k/m) as to avoid previous problems, i.e., pest. After searching for 6 months we found a place and moved in August 1st just to find out that the place had bed bugs and all of our belongs are now infected. We are moving out again and are looking again. (any insight on dealing with a landlord who knowingly, after the professional exterminator told them that it wasn't ready for tenants, rented to us is GREATLY APPRECIATED)

This started a conversation between my wife and I as to the next step. We don't want to rent anymore but on the other hand SD is a very expensive market, in addition to a move back to Seattle being our 2 year goal (summer 2015). What looks really attractive to me is buying a multifamily home to cover some of our expense or completely pay for the mortgage and live mortgage free (extra savings towards our next home in Seattle). We also want to start a rental portfolio so I figured by applying this strategy it can be the first home we start with for our portfolio (i'm mostly interested in buy n holds) and once we move back to Seattle we can rent out the unit we lived in during our time in SD.

Numbers mean everything so here it goes ....... (Income is stated as gross)

- Our combined income is $125K (before an avg bonus of 15K annually)

- Monthly expense are $4K (rent alone is half of hour total expenses)

- Total debt is $60K (all of it is student loans, no CC or car payment)

- Monthly debt servicing expense $1K (currently it's $300, since my wife's loans are in the grace period)

- Debt-To-Income around 15-20%

- Credit score 705 myself and 670 for my wife

We are new to the REI world or the buying a house world and I just want to test the waters and see if any of you think that this is even worth pursuing or not. I understand that there is limited information posted here so naturally I'm willing to provide more spec's if need. Any insight is greatly appreciated.

Cheers,

GY

[Yiv L.]

@Guleed Yusuf Welcome to BP. It's good thing that you and your wife are looking to buy instead of keep renting, but you need to make sure you do thorough homework first. Matt brought up one good point to consider. Also, with price upswing in SD area in the last two years, a decent livable 1200-1300 SFR closer to DT area will cost you approximately $400k. If you decide to buy townhome or condo, HOA fees are outrageous there, ranging $300-$400 per month. Also, newer construction has additional property tax called Mello-Roos, which can add a few hundred $$ per month to the cost of ownership. Not to scare you, but just to give you some info to work on.

At the same time, you should begin talking to the bank to see how much loan both you can qualify so that you can see you will be able to get. With all the info on the table, then you can decide whether you want to buy or continue to rent. Good lucks.