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Buying houses

Buying houses

Old Apr 17th 2016, 5:33 pm
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Default Buying houses

Hi All,

I've been living and working just outside Charlotte for the past 7 months and so far, I am absolutely loving it.

I had 2 houses in London. My main residence and a little 3 bed terrace which I rented out. I sold the renter the year before I moved to the US and after costs/tax etc I pocketed enough money to buy an nice house in North Carolina.

I'm currently renting a house in a little town called Denver which is about 30 mins North of Charlotte. It's a 4 bed, 3 bath in a nice area and I am paying $2000 pcm, the house is probably worth $350,000.

I am over here on an L1B. I want to get myself onto a more secure visa ASAP and I am working on that with my employer.

I've been thinking, I've got the money sitting in UK banks in sterling making me nothing (well 100 pounds a month) whilst I am paying out $2000 a month in rent over here. Over the next 4 years (after this visa ends) that comes in at about $100,000. Surely I need to at least think about buying a place in NC.

If I do buy, There is a lot to think about - UK/US exchange rates, costs associated with buying, Visa stability, The tax benefit of having a US mortgage, Should I look at a mortgage rather than buying outright, Can I even get a mortgage??

Before I start overthinking all this, Does anyone think that in my position that buying house in NC would be an extraordinarily bad idea?

Thanks All,

Last edited by capin; Apr 17th 2016 at 5:56 pm.
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Old Apr 17th 2016, 6:03 pm
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Default Re: Buying houses

It's a much easier decision if you have a green card. The round-trip costs of buying and selling are pretty high, and the risk of losing access without a green card is significant. The tax benefit is not a reason to do it - it is a way to mitigate your losses in the payments if you do.
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Old Apr 18th 2016, 3:36 am
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Default Re: Buying houses

Originally Posted by capin View Post
Hi All,

I've been living and working just outside Charlotte for the past 7 months and so far, I am absolutely loving it.

I had 2 houses in London. My main residence and a little 3 bed terrace which I rented out. I sold the renter the year before I moved to the US and after costs/tax etc I pocketed enough money to buy an nice house in North Carolina.

I'm currently renting a house in a little town called Denver which is about 30 mins North of Charlotte. It's a 4 bed, 3 bath in a nice area and I am paying $2000 pcm, the house is probably worth $350,000.

I am over here on an L1B. I want to get myself onto a more secure visa ASAP and I am working on that with my employer.

I've been thinking, I've got the money sitting in UK banks in sterling making me nothing (well 100 pounds a month) whilst I am paying out $2000 a month in rent over here. Over the next 4 years (after this visa ends) that comes in at about $100,000. Surely I need to at least think about buying a place in NC.

If I do buy, There is a lot to think about - UK/US exchange rates, costs associated with buying, Visa stability, The tax benefit of having a US mortgage, Should I look at a mortgage rather than buying outright, Can I even get a mortgage??

Before I start overthinking all this, Does anyone think that in my position that buying house in NC would be an extraordinarily bad idea?

Thanks All,
You can get a mortgage. I am not sure you will get the best rate becasue your credit history will be a little short.

The exchange rate is a bugger. The GBP is at historic lows. A couple of years ago you got 1.71$ per pound. Now it is 1.41$. Almost 20% loss! But it there was brexit I think the pound would drop further. Although you might get a nice bump from a remain vote. My friend is in the same situation as he sold his flat in Europe and is unsure whether to move the money...
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Old Apr 18th 2016, 12:35 pm
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Default Re: Buying houses

Originally Posted by bewildering View Post
The exchange rate is a bugger. The GBP is at historic lows. A couple of years ago you got 1.71$ per pound. Now it is 1.41$. Almost 20% loss!
Not exactly. It was well below 1.40 in the 1980s.
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Old Apr 18th 2016, 2:04 pm
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Default Re: Buying houses

Originally Posted by capin View Post
Before I start overthinking all this, Does anyone think that in my position that buying house in NC would be an extraordinarily bad idea?
Not at all. I bought my first house in the States when I was on an L1B. And, though I've lived in four different houses subsequently, I still own that one, and it rents like a champ.

The buying process was pretty easy, once I'd got my head around the different terminology and jargon. The costs of buying weren't that much, because my offer had the seller pay the closing costs (quite normal). And the tax benefits were much appreciated.

Go for it.
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Old Apr 18th 2016, 3:53 pm
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Default Re: Buying houses

Originally Posted by benblaney View Post
.... The costs of buying weren't that much, because my offer had the seller pay the closing costs (quite normal). And the tax benefits were much appreciated.

Go for it.
There was nothing "special" about your offer - it's not "quite normal", it is TOTALLY normal, that is how the US property market works. .... So anyone looking to buy should consider that buying comes with a hidden future cost of at least 6% of the final selling cost when the time comes to sell. Therefore buying a home might make little financial sense unless you are reasonably certain to live in the house for 3-5 years.
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Old Apr 18th 2016, 4:06 pm
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Default Re: Buying houses

Originally Posted by Pulaski View Post
There was nothing "special" about your offer - it's not "quite normal", it is TOTALLY normal, that is how the US property market works. .... So anyone looking to buy should consider that buying comes with a hidden future cost of at least 6% of the final selling cost when the time comes to sell. Therefore buying a home might make little financial sense unless you are reasonably certain to live in the house for 3-5 years.
We've bought two houses so far, and sold one, and none of them have involved the seller paying the buyer's closing costs. Agents along the way (in AZ and OH) have told us that it's definitely something expected for starter homes, first time buyers, etc, but that once you're a rung or two up the ladder into the 3-4 bed larger homes, it's no longer a thing. I expect there are regional differences, though.

I'd advise anyone to assume the round trip of buying and selling a house will eat up at least 10% of the house value. As well as the realtor fees, the standards for showcasing the home for sale seem much higher here, and it's expected that you'll have done some notable upgrades during your ownership - new roof/ AC/ kitchen - and that you'll fix a lot of the niggardly repairs that the inspection finds if they're related to the systems like water or heating, even if the systems are functional.
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Old Apr 18th 2016, 4:13 pm
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Default Re: Buying houses

Originally Posted by kodokan View Post
We've bought two houses so far, and sold one, and none of them have involved the seller paying the buyer's closing costs. ....
I took that to mean paying the buyer's agent fees. Having the seller pay for the inspection and legal fees would be more unusual.
.... I'd advise anyone to assume the round trip of buying and selling a house will eat up at least 10% of the house value. As well as the realtor fees, the standards for showcasing the home for sale seem much higher here, and it's expected that you'll have done some notable upgrades during your ownership - new roof/ AC/ kitchen - and that you'll fix a lot of the niggardly repairs that the inspection finds if they're related to the systems like water or heating, even if the systems are functional.
I hear that 2% of market value annually is a fair estimate of the money to be spent on repairs, maintenance, and upgrades to "keep up with the market". That sort of expenditure is certainly consistent with my experience, albeit reduced to reflect that I do a lot of the work myself, .... but it eats up huge amounts of my time.

At very least many sellers pay for a one-off one year "home systems insurance", to cover repairs to heating, plumbing, included appliances for a year.

Last edited by Pulaski; Apr 18th 2016 at 4:20 pm.
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Old Apr 18th 2016, 6:57 pm
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Default Re: Buying houses

Originally Posted by benblaney View Post
The costs of buying weren't that much, because my offer had the seller pay the closing costs (quite normal).
That very much depends on the market. Certainly where I live the seller would piss themselves laughing if it was suggested they pay the closing costs, and move onto the next offer. House near us just sold in 3 days for 29% over the asking price and there were 8 competing offers.
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Old Apr 18th 2016, 7:47 pm
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Default Re: Buying houses

Hi All,

Thanks a lot for all the responses, suggestions and advice.

Is it fair to say that in my circumstance that buying a house may not be a bad idea and merits further investigation? Just trying to avoid any expensive blunders.

Thanks,
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Old Apr 18th 2016, 7:54 pm
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Default Re: Buying houses

Originally Posted by capin View Post
..... Is it fair to say that in my circumstance that buying a house may not be a bad idea and merits further investigation? Just trying to avoid any expensive blunders. ....
That would be a personal judgment, based on how likely you think it is that your job could be eliminated and your visa voided, leading you to have to leave the US within a few days, and leaving you to sell a house in absentia, and/ or which you could only visit sporadically.

So buying has the potential to a monumentally expensive blunder, but that is only a risk, not a certainty.
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Old Apr 18th 2016, 8:01 pm
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Default Re: Buying houses

Originally Posted by capin View Post
Hi All,

Thanks a lot for all the responses, suggestions and advice.

Is it fair to say that in my circumstance that buying a house may not be a bad idea and merits further investigation? Just trying to avoid any expensive blunders.

Thanks,
The very fact that you are seeking re-assurance after being given a range of opinions, advice and factors to consider indicates that you have your own doubts. If so don't do it.

It MAY not be a bad idea, but we can only tell you after at least five years.
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Old Apr 18th 2016, 9:51 pm
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Default Re: Buying houses

Originally Posted by capin View Post
Hi All,

Thanks a lot for all the responses, suggestions and advice.

Is it fair to say that in my circumstance that buying a house may not be a bad idea and merits further investigation? Just trying to avoid any expensive blunders.

Thanks,
I would cost out the worst case scenario of your visa being pulled, based on your local real estate market.

I wouldn't have done it where we were in AZ, at least not with the house we bought and lived in there, because it was at the higher end of the local pricing and might typically be 'sticky' when it came to sell (it actually sold in under two weeks, but that was after some months of intensive clean/ paint/ prep to depersonalize and show-home it). It was also a useless rental house for similar reasons, had a high HOA cost, etc.

I may, in AZ, have considered buying a smaller, cheaper home, more in line with the local wages and what would sell quite easily or rent in a heartbeat due to being in a good school district.

I would be much less concerned about it here in our OH neighborhood. We're in a 'dead men's shoes' area which is highly desirable with not much for sale ever, and what does come up is expected to be well cared for but somewhat dated - people aren't expecting TV show level bling of professional landscaping and granite countertops. Anything that hits the market - around one house every 3-4 months - sells the first weekend.

If Redfin operate in your area, I find their email notification excellent. I have it set up to ping me straight away when anything new comes up in my area; initially this was for house hunting but now it's for keeping a general eye on my investment.,
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