Help! Not sure whether to buy in Dana Point or San Jose!

[Emily Shirk]

Hi!

Thanks for taking a moment to help me sort this out. My husband and I just moved to San Jose about 6 months ago for his job. The area is nice but very expensive and our goal is to return to Dana Point, Ca in the next year or two. His prior work has been as a contractor so we have needed 3 years of income to qualify for a home loan (and one bad years tax return has had us stuck in limbo.) Now that he is a W2 we have had no trouble getting financing and we want to make a move on purchasing our first home... the thing is we plan on heading back to Dana Point in the next year or two (where he will return to contracting) and so we want to secure our housing now before we get stuck with the 3 years of income proof again. The dilemma is do we buy in San Jose or Dana Point? My thoughts on San Jose is we can probably get a fixer upper in the 700k range and hopefully sell for a profit between the remodeling & the market hopefully continuing to go up... but would our profits be enough to justify it after paying for our realtor, etc. to make it worth it in just 2 years? If so, I am hoping that we would be able to take the money from selling and put it down on a home in Dana Point... but that could lead us into the 3 years income proof issue.... but maybe with a nice down deposit it wouldn't be as big of an issue? (We are using VA Loan). OR do we stretch our necks out and buy something in Dana Point with the hopes of renting it while we live up here? There is a little bit of risk to this because 1) we aren't supposed to rent our a VA loan house (but I think we can get away with it temporarily since we do plan on using it as a primary residence) 2) We aren't putting much down so our monthly mortgage will be high ($3,300/mo (P&I, Taxes, etc included) on $500k or $4,461/mo on $789k to give you an idea) which means we might not be able to cover the whole mortgage with a renter so we would have some cost out of pocket. Not the end of the world but not ideal since we are already paying $3k/mo rent in the bay.... I am very excited to get a move on buying but I am loosing my mind trying to figure out where.... San Jose is more expensive but with a possible greater return... and Dana Point is where we want to end up but is it risking too much too soon? Any thoughts or advice would be GREATLY appreciated!!

[Richard Ayvazyan]

You might be overthinking this one. If it was me (been there, done that) I would jump on the opportunity to buy where you are now.  Don't think about 2 or 3 years from now. If you can buy something now and turn around and sell it and make profit NOW (no brainer).  If the profit is large enough, you might not need to worry about future financing.  There are products out there where you can put 30% or 35% down with stated income (no verification).

We must of moved over 10 times in the last 8 years.  Our movers know us personally by know (no joke) and my wife gave up unpacking the boxes, knowing that I am always looking for the next flip.  

Don't run away from your situation of over think it, embrace it.