Primary Residence or Investments?

[Tanya Ansari]

Dear BP members:

I really need to hear some advice. 

Long story short:

-we are full time high income earners with W2 (also pursuing a start-up in biotech on the side) moved from Bay Area to SD (Cali)

-invested in Indy last year (duplex)

-we rented in SD for 5 mos while finding out the best area to live in and now are looking to buy primary residence

-we have about 240K in cash and another 130K coming soon from the sale of another property.

-we do plan to move out from Cali in 5 years (due to high taxes and expenses)

We both work from home, so we need to  have our own place, plus we have a toddler w/nanny in the house. Therefore were looking for 3-4 bdr in good areas of SD (4S, Rancho Penasquitos, Poway, Rancho Bernardo, Carslbad) where good community is. However, people are going all the way to removing all of the contingencies including appraisal and for a house of 900K-1 mil offering 1.2 mil and higher.

I don't feel offering and paying so much cash for something that is not going to bring me any income but actually is a liability. Is it better rent for around $3500, invest in other states rather than pay mortgage of $5500-$6000? However, we would lose appreciation (and it has been around 9% last year). 

Again for us, a community is important, so we don't want to buy duplex in SD as most of them are in not so good areas (of our criteria). 

Please consider that closing costs; moving fees and real estate agent fees are being paid for us.

Please advice.

Thank you!

Tatiana.