Housing Stipend: cover rent or buy house?

[Jeffrey Nordin]

Hello friends, please excuse the perhaps ignorant nature of this scenario. I'll try to keep it succinct, and it goes without saying that I appreciate your thoughts and time! I'm a health care independent contractor, with an open ended contract in San Joaquin county, CA. I receive either a covered hotel room or a housing Stipend, $100/day. I'm opting to choose the stipend bc rent averages $1500/month here, which means I can pocket $1500/month. I had ZERO intention of purchasing a SFH in CA for all the obvious reasons (cost, taxes, eviction rules, etc). My GF reminded me that I could purchase here under FHA loan, thus somewhat bypassing the insanity of high down payments. But the property would NOT rent at 1% of purchase price, unless I bought a crack house and flipped the hell out of it (perhaps wise, but I know my limits) Due to travel time to work, I'd HAVE to purchase near Stockton: Lodi, Manteca, perhaps Elk Grove. These areas are not awesome, but they're expanding in that sort of Eastward to cheaper housing way that CA tends to. My only exit strategy would seem to be resale with appreciation bc at $420K purchase price (new build in nicer area), I'd never generate $4200 monthly rent (typically around $1800-1900 here). This is a new build, KB Homes, 2188 square foot single story 3/2/2. PITI around $2850, I'll be here getting stipend for two years only. thoughts? thanks so much! Jeff

[Andrew Linderer]

I’m not from Cali so I don’t know the market but in AZ you have to live in a FHA house for 2 years before selling or you get hit with a capital gains tax so do your research on that. Cali may be different. I’ve been in my house for about 2.5 and I’m listing it next month. Will probably make 60k and I’ve only put about 15k into it in improvements. Appreciation is awesome!

Another idea would be to rent in Cali and buy a small place elsewhere. If you can rent for 1500 in Cali and use the other 1500 to pay the mortgage on a house in a cheaper market, maybe even rent it out while your not living in it you might be able to have a bit of cash flow and build some equity at the same time and have a place to move to when your done in Cali. Just a thought.