Buy a property rather than rent? Chicago
 

A newbie here. Very likely to be making a move to Chicago from the UK. It seems on the basis that I could pay cash (by dipping into existing UK loan facility that I have) that I could be a cash buyer for property. The property prices seem really good value compared to highish rents and therefore loan interest appears more favourable then rent. I realise interest rates for loans will eventually rise but probably slowly and also property prices will start to rise then too. Purchase seems a good option assuming that I don't plan to try and sell it fairly quickly! Are there some pitfalls I am missing? Thanks

Re: Buy a property rather than rent? Chicago
 

Unless you can get a UK personal load or dip into the equity on property, very few lenders (if any at all) will finance a house in the US.

Also the important thing to look into is the school district (if you have children) and the property taxes.

If you are on a L1 or H1-B visa, you may want to wait until you have a green card since if you lose your job, you will be required to leave the country quickly.

Re: Buy a property rather than rent? Chicago
 

Don't do it...if you have to sell within 10 years, you'll likely not recoup and you'll be battered with any closing costs on the sell, which are much higher here than the UK.

That and you just don't know what the area will be like till you live there, and with the snow in winter, it's a massive concern...the whole how well is it ploughed, if you can cope with being on a slope etc.

Much better idea to just rent for a year, get to know the areas than buyon a whim and get lumbered with a lemon, especially as you won't know anything about the upkeep and costs such as what would you do if the sumpump died, or the furnace carped it.

Re: Buy a property rather than rent? Chicago
 

I agree with Bob, wait a few months (at least 6) and figure out the best area to buy a home. The area, the neighbourhood, schools, etc etc, all affect property values and you'd probably be better off in the long run if you take the time to research and look into the best areas to buy your home before jumping straight in to home ownership.

Re: Buy a property rather than rent? Chicago
 

I've already bought somewhere, move out in late September. BUT, I know the area extremely well and have a very close friend who lives in the area. I also had the cash, so no mortgage. What I did notice is that the rental costs are very high compared to the UK. I worked out that 3 years rental on the place I'm buying is around 30% of the price I paid.

Re: Buy a property rather than rent? Chicago
 

But the property taxes are part of that, that get lumbered on a home owner and without a mortgage you don't get to make as many of those deductions that most people would get to make ownership kind of worth it...I mean $10K or more in property taxes can skew the whole value triangle a bit :)

Re: Buy a property rather than rent? Chicago
 

I suggest that you first settle down in Chicago, and after a few months in the job evaluate what you want to do. If you are coming on a permanent visa, and have a job lined up, then take time to select a neighborhood you want to be in for atleast a few years.

Apartments in Chicago (condos) have not had a major dip in prices. The current economic climate does not look good for property values to go high very fast.

Re: Buy a property rather than rent? Chicago
 

Thanks for all the info. My discovery that rent seems high compared to purchase price relative value looks right but I understand the need to be really sure before taking the plunge. Will rent for a while and then decide later.

I recognise that property prices are not going to rise very quickly but after 3 years rather than have completely lost 30% of the value paying rent you could gain around 30% of the value of the property (still need to understand the property tax issue though)

Again, thanks for everyones input.

Re: Buy a property rather than rent? Chicago
 

But you wouldn't be making that kind of gain in property value...you'd be lucky if it didn't lose further value for a couple years and be marginal a few years later...plus you lose a lot of tax deductions owning out right, and taking a partial mortgage without credit history would wipe anything out.

Think of rent as just another living expense just like the electric bill.

Re: Buy a property rather than rent? Chicago
 

Also Chicago has a shrinking population (2000 to 2010 census data). In fact the 2010 population number (2.695 million) is lower then the 1920s population (2.701 million) number.

Ok no one knows the future but that seems risky to me to be buying property in such a city.