First house for a young man

[blueskull]

Hi all. This thread is to ask opinions about buying my first house.
As I'm progressing in my degree program, I'm about to graduate, and I'm expected to stay as a postdoc for at least 2 years. Depending on future situation, I may stay as a faculty, or I may leave and find a real job.
I plan to buy a house, for both investigation and to reduce cost of living. As someone might have heard, economy bubble is collapsing in China, and my parents' want me to buy a house in US as a safe deposit in case Chinese currency collapses. In the meantime, here (RDU metropolitan), real estate's value gains about 10% each year, while tax is only 1.03% (Raleigh city+Wake county), besides evaluated taxable value of houses is overall lower than their real market value.
So, long story short, I have $260k on hand (my parents sold one of their apartments used for renting, and I sold my 2 small houses for renting, both in China), and my parents can get me another $10k~$20k if REALLY needed. I plan to buy a small townhouse in Raleigh/Cary, NC with this money.

My questions:
1. Should I spend all the money (read: ALL) on a house that leaves me no money at all (maybe a few k$ in checking account, but that's it), or should I buy a cheaper house and spare some money in case of emergency? Right now I have 2 choices: a $270k house, including all costs, and a $220k house, including all costs, both townhouses, both are of similar 1700 sqft construction area, both have 1 garage+2 front door parking, the more expensive one has 3 bedrooms (so the rest 2 rooms can generate renting revenue) and is built in 2012, while the older one is a 2006 house with 2 giant bedrooms (despite giant, a single bedroom is worth the same from a tenant's eye).
2. I can generate ~$500 per month revenue per bedroom, and that means each year, I can make $12k from the $270k house, and $6k from the $220k house. Factoring in that, which one is my best choice?
3. Should I buy a house from the first place? I do NOT have a green card or H1B. I'm on F1 visa, but I'm sure if working in university, I have 100% chance to get H1B if my OPT runs out. In the meantime, I have confidence to get 100 paper citations (which qualifies me EB1 NIW green card program).

Inputs are very appreciated, as I'm about to pull the trigger very soon.

[Scrts]

I've purchased my 1st house like 8 months ago and I don't regret going for cheaper option. It was a 3 bedroom house, which I've modified myself to be 4 bedroom now. Did some other stuff to raise the value and when I think about it: do I need lots of space and a big house? Nope. The more space you have - the more garbage you put around yourself. And you have to clean it. In addition to that, you have to heat additional space that you don't even spend 5% of your time per day. Go for bigger when you will have kids.
On the other hand: what if US crisis will repeat? Your losses with that more expensive house will be worse.

[HackedFridgeMagnet]

My 20c
Buying a house is such a big financial decision, don't rush into it.

Look for a house that is going to suit you for at least the next 5 years, because if you sell before then you have probably wasted money.
Spend some time looking and you may get a bargain.
Apparently low ball offers do occasionally work too.

In the meantime you could try to align your savings with the housing market using some sort of Share based property portfolio. This way if the property market rises fast, then your savings should rise fast too.
Doing this could take the pressure off trying to buy the house without proper diligence.
Buying a house in a rush is a sure way to pay more than you need too.

One other thing, don't assume you know which way a market is going, if it's any sort of decent competitive market then most of the pricing signals have already been factored in.

good luck.

[IanB]

Keep in mind that the costs of owning a house do not stop after you have bought it. Unless you are buying a brand new house there will be routine and not-so-routine maintenance costs that crop up. Such costs can occur anywhere from yard work, painting, fences, plumbing, roof, garage doors, appliances, termites, all sorts of things. Everything you expect the landlord to take care of when you are renting, you now become responsible for. Not to mention annual costs like insurance and property taxes.

Before buying, get some estimates of typical annual operating costs from homeowners you know or work with, and make sure you will have sufficient income to cover them. Owning a house when you do not have a full time job can be a recipe for poverty.

[Towger]

Here:
More bedrooms = higher rent = higher value = easer to resell.  2 bed houses are also not as suitable for a family...  Unless the large rooms can be properly divided, meeting all building codes etc.

Houses are going up on average €2k a month here, after a recession.  About 11% a year.   People who did not buy during the recession are now being screwed, as rents are rising faster and have just surpassed boom highs.

There are very few new houses being built, the remaining builders are all building office blocks, less messing and more profit.  Current count on way to work is 16 large cranes.  All these offices have been pre bought off the plans by companies leaving London due to Brexit. So they can't lose!

Edit: Just heard to the radio is that houses in Dublin are going up 4k a month.

[Nusa]

Be prepared to only rent for 9 months of the year. There are always a lot of summer vacancies in college town rentals.

[Red Squirrel]

Keep in mind that costs of living go up every year, so whatever your monthly costs will be, ensure you have plenty of leg room.  Taxes are going to be the biggest expense other than the mortgage.  Mortgage is about the only thing that won't go up every year, but it's a good idea to pay more on it than you have to as more than half of your payment is interest.

Long term it does make more sense to own than to buy, not only financially but simply because you have an actual place to really call home that is yours.

[EEVblog]

My 20c
Buying a house is such a big financial decision, don't rush into it.
Look for a house that is going to suit you for at least the next 5 years, because if you sell before then you have probably wasted money.
Spend some time looking and you may get a bargain.
Apparently low ball offers do occasionally work too.

I'd 2nd that.
If the market is so hot that it's next to impossible to find a bargain, then walk away.

[EEVblog]

Isn't the Chinese government limiting export of Yuan to $50k per person or some such?
I heard they are trying to stem the rush of currency out of the country.
http://www.theaustralian.com.au/business/markets/chinese-credit-controls-put-clamp-on-property/news-story/9d40204d395a41759e6d29a5262cafce
https://www.businessinsider.com.au/there-are-more-reports-chinese-buyers-are-having-problems-settling-on-their-australian-properties-2017-5
https://www.businessinsider.com.au/cba-tighter-fx-controls-in-china-should-slow-but-not-stop-capital-outflows-from-the-country-2017-1

[Towger]

Also, that policy starts from July 1st, and I got money before that.

I wonder how much of a kibosh that will put on the Australian housing market?

[Gary350z]

My dad is quite the expert on this. He has many houses. Here is one thing he has said.

Your facts: house cost = $260k, real estate value gains about 10% each year.
You say you want to pay cash for the house.

Option 1: pay cash in full for house.
Return on investment = (10% x $260k)/$260k = 10% per year.

Option 2: get a loan, and put down a 20% ($52k) down payment.
Return on investment = (10% x $260k)/$52k = 50% per year.

This is called leverage. My dad says buy the house with the smallest down payment you can. These are rough numbers, not including many things, but you can see the difference. It all depends on what you want. I am definitely not an expert on this, I am just passing along a little information.  Good luck.

P.S. I have read many of your post.

[coppice]

Isn't the Chinese government limiting export of Yuan to $50k per person or some such?
I heard they are trying to stem the rush of currency out of the country.

They try. They don't really succeed. There are so many ways around such a restriction.

[EEVblog]

My dad is quite the expert on this. He has many houses. Here is one thing he has said.
Your facts: house cost = $260k, real estate value gains about 10% each year.

Unless it doesn't.
The last two Sydney housing booms had a 5+ year flat period afterwards.
We've just had the biggest boom in history, and many indications are that the boom is over.

Also, can and do lose money on homes. If you overpay and then are forced to sell you can loose big time.
Some suburbs in Sydney drop 30-50% after a boom, usually the exclusive ones with designer home were people overpayed for huge expensive houses on small blocks of land.

We have an entire generation of new housing investors who have not seen realestate prices stagnate or go down, or interest rates go up, they will be in for a big shock.

[kasone]

I have lived in a paid for house for about 30 years and would not want to have a monthly payment. I was even laid off from my job for 30 days in a re-organization and not having to worry about house payments relieved a lot of stress.

If you spend all of your available on a house, you will not have any money to repair the inevitable problems that will come up. 

If you want financial advice, check out daveramsey.com. He has some great advice on money and has a proven concept that has helped a lot of people.

[coppice]

I have lived in a paid for house for about 30 years and would not want to have a monthly payment. I was even laid off from my job for 30 days in a re-organization and not having to worry about house payments relieved a lot of stress.

If you spend all of your available on a house, you will not have any money to repair the inevitable problems that will come up. 

If you want financial advice, check out daveramsey.com. He has some great advice on money and has a proven concept that has helped a lot of people.

A relaxed and stable life has a lot more to do with low outgoings, than a high income. Low outgoings are much easier to replace.

[tszaboo]

The housing market varies from continent to continent, country to country, town to town and time and luck. It requires local knowledge to tell you whether a deal is good or not.
Right now, I pay  about 0.2% of the value of my flat as my monthly rent. Meanwhile the interest rate is some 2-3% yearly. It makes no financial sense to purchase it.
I know the market in another country few years ago. There the monthly rent is higher percentage, but the interest rate was insanely high. Everyone bought a house. The renting market was less than 3% of the total. Everyone got the rent nominated in Swiss franks, because the rent was cheaper. Some 10 years ago. Before 2008. Now they feel stupid. It required government intervention to avoid complete collapse of the market.
One thing for sure, I would never buy a house 100% cash. Money can be used better way than a piece of dirt and some bricks.

And there is the thing: It is very stupid thing to buy a house before your life makes a mayor change. And before means 5 years. And change I mean kids in or out, marrige, retirement, work, going expat (AKA immigrate).

[WastelandTek]

not even joking

[tronde]

not even joking

I think we must consider one most important thing "bluescull" said:

I plan to buy a house, for both investigation and to reduce cost of living. As someone might have heard, economy bubble is collapsing in China, and my parents' want me to buy a house in US as a safe deposit in case Chinese currency collapses.

This is not only about to find a place to sleep.

[WastelandTek]

A "young man" should not be totally tied down to his parents wishes.  Have them buy a managed rental, or invest in a REIT, gold or Bitcoin.  Get out there and climb some hills, meet some girls, swim in the ocean.

[nctnico]

Keep in mind that the costs of owning a house do not stop after you have bought it. Unless you are buying a brand new house there will be routine and not-so-routine maintenance costs that crop up. Such costs can occur anywhere from yard work, painting, fences, plumbing, roof, garage doors, appliances, termites, all sorts of things. Everything you expect the landlord to take care of when you are renting, you now become responsible for. Not to mention annual costs like insurance and property taxes.

Before buying, get some estimates of typical annual operating costs from homeowners you know or work with, and make sure you will have sufficient income to cover them. Owning a house when you do not have a full time job can be a recipe for poverty.

I agree! Also get the house checked from top to bottom to look for problems with rot and other potential money pits. To be honest: I wouldn't buy a typical US wooden frame house at all (except in earthquake areas)! Also check for things like quality of the sinks, taps, door handles, etc. That way you can see the current owners take care of their home or patch things up.

BTW another option is to have a house build so everything is new.

[vodka]

not even joking

I think we must consider one most important thing "bluescull" said:

I plan to buy a house, for both investigation and to reduce cost of living. As someone might have heard, economy bubble is collapsing in China, and my parents' want me to buy a house in US as a safe deposit in case Chinese currency collapses.

This is not only about to find a place to sleep.

But a house of the 158 meters per square  for only man, that is a bestiality in cost and maintenance. Now, i don't know that kind the lab  would want him , but i think that for living  an one person(eat,sleep)  with 40 or 50 meter per square  is sufficient and more cheapest.

Now about the rooms rent  , i see a risk too elevate. You never  don't know that sort of tenant find you, he or she might be a sons of bitches or adorable peoples .
http://www.lavanguardia.com/local/maresme/20170607/423229153751/calella-aurora-rodriguez-inquilinos-amenazas.html.
On the other hand, if you have tenants  have more probailities that by accident  of the tenant his home burns . The tenant will lose 500 bucks but you will lose all and if the insurance pays you will have many luck.

[vodka]

Keep in mind that the costs of owning a house do not stop after you have bought it. Unless you are buying a brand new house there will be routine and not-so-routine maintenance costs that crop up. Such costs can occur anywhere from yard work, painting, fences, plumbing, roof, garage doors, appliances, termites, all sorts of things. Everything you expect the landlord to take care of when you are renting, you now become responsible for. Not to mention annual costs like insurance and property taxes.

Before buying, get some estimates of typical annual operating costs from homeowners you know or work with, and make sure you will have sufficient income to cover them. Owning a house when you do not have a full time job can be a recipe for poverty.

I agree! Also get the house checked from top to bottom to look for problems with rot and other potential money pits. To be honest: I wouldn't buy a typical US wooden frame house at all (except in earthquake areas)! Also check for things like quality of the sinks, taps, door handles, etc. That way you can see the current owners take care of their home or patch things up.

BTW another option is to have a house build so everything is new.

And how do you see the defects on the house, if it is hidden? For seeing you will have to break the wall or the floor. Furthermore, there is an other question. Whom does the inspection hole if there aren't defect? The buyer or the seller?   

[nctnico]

Keep in mind that the costs of owning a house do not stop after you have bought it. Unless you are buying a brand new house there will be routine and not-so-routine maintenance costs that crop up. Such costs can occur anywhere from yard work, painting, fences, plumbing, roof, garage doors, appliances, termites, all sorts of things. Everything you expect the landlord to take care of when you are renting, you now become responsible for. Not to mention annual costs like insurance and property taxes.

Before buying, get some estimates of typical annual operating costs from homeowners you know or work with, and make sure you will have sufficient income to cover them. Owning a house when you do not have a full time job can be a recipe for poverty.

I agree! Also get the house checked from top to bottom to look for problems with rot and other potential money pits. To be honest: I wouldn't buy a typical US wooden frame house at all (except in earthquake areas)! Also check for things like quality of the sinks, taps, door handles, etc. That way you can see the current owners take care of their home or patch things up.

BTW another option is to have a house build so everything is new.

And how do you see the defects on the house, if it is hidden? For seeing you will have to break the wall or the floor. Furthermore, there is an other question.

An expert can see the tell-tale signs of previous leakages and you should be able to get into the crawl spaces for an inspection. A good thermal imaging camera is a very useful tool.
Look what Google came up with: https://www.homegauge.com/buyerseller/samples.html

[PartialDischarge]

If I were you I'd wait. Maintaining purchasing power of money is not easy anywhere today. You are betting on a house which is ok, but the future is very uncertain nowadays . For example you mentioned that you can 100% get a H1B visa. I'd seriously question that figure, not because of your skills, but because under the current administration that may not be the case in the near future.

[vodka]

Keep in mind that the costs of owning a house do not stop after you have bought it. Unless you are buying a brand new house there will be routine and not-so-routine maintenance costs that crop up. Such costs can occur anywhere from yard work, painting, fences, plumbing, roof, garage doors, appliances, termites, all sorts of things. Everything you expect the landlord to take care of when you are renting, you now become responsible for. Not to mention annual costs like insurance and property taxes.

Before buying, get some estimates of typical annual operating costs from homeowners you know or work with, and make sure you will have sufficient income to cover them. Owning a house when you do not have a full time job can be a recipe for poverty.

I agree! Also get the house checked from top to bottom to look for problems with rot and other potential money pits. To be honest: I wouldn't buy a typical US wooden frame house at all (except in earthquake areas)! Also check for things like quality of the sinks, taps, door handles, etc. That way you can see the current owners take care of their home or patch things up.

BTW another option is to have a house build so everything is new.

And how do you see the defects on the house, if it is hidden? For seeing you will have to break the wall or the floor. Furthermore, there is an other question.

An expert can see the tell-tale signs of previous leakages and you should be able to get into the crawl spaces for an inspection. A good thermal imaging camera is a very useful tool.
Look what Google came up with: https://www.homegauge.com/buyerseller/samples.html

I see many TV  programs of the reforms of houses, particulary of the USA & Canada. I can confirm that i see amazing things:  Beams floatings ,without support stand a full floor without collaping,
illegal stairs  without accomplishing with the laws of the local council, plugs with anti-reglamentary height,etc.  All this that i told, to the fooly owners have had that put more money for  resolving it and  they contracted to inspectors for inspectioning their homes but they didn't find nothing.

If i contract an inspector is by he informs me from the things that  i can't see. Because a broken binge or a slice on a door ,it is  small change, instead a rot beam , i may represent the live or the death, that i spend a fortune that might bring to bankrupt.