Seeking advice for buying a house.

[Filipp Nesterov]

Hi everyone!

I apologize for the lengthy post!!

We are currently living in a rented apartment in Cary, NC, but we are thinking of buying a new house. We have some questions that we need your help with.

We only have enough money for a 3.5% down payment, which means we will have to get an FHA loan. The average house in the area we're interested in costs around $500K (Wake Forest, NC).

We're not sure which strategy is best for us:

1. Buy a house in an "Airbnb good area" (not where we want) that is good for renting under short-term rentals (STR). We would live in it for at least a year (as required by the FHA loan), and then move to a rental house in a good neighborhood with good schools. We could then rent out our purchased house to make extra income and accelerate depreciation.

PROS: The cost of homes that would fit under STR is $100K less than the homes we're considering as our permanent residence. If the interest rate stays at around 5%, it's possible that renting near good schools will be cheaper in the next couple of years. The purchased house will also help in writing off taxes and bring additional income.

CONS: We would have to live in an older house for a year, and there is no guarantee of good schools. There might also be potential renovations to be done.

2. Buy a home to live in a good and up-and-coming neighborhood (Wake Forest, NC). We think that real estate prices will rise, and investing in the house is guaranteed to pay off in the years to come.

PROS: Good schools are available in the area, and the growth in our area on housing is predicted. Everything is developing, and in a few years, the price of a house will be higher for 20-30% more.

CONS: Right now, with interest rates, the house is more expensive than renting. This means that less money will be left over for potential STR investments in the future, with no extra income and depreciation on this one.

For clarification, we plan to live in another country in 3-5 years, and by that time, we want to have a source of income in real estate.

We would love to hear an outside perspective, especially if you've been in a similar situation.

Thank you in advance to each and every one of you for your help!