Purchase a home outside my area?

Question

Hi,
I currently live in the San Francisco Bay area, which is extremely expensive for a single female. I make decent money, however not enough to afford a house, maybe a small condo/townhouse with a high HOA. I did look in the Central Valley which I can afford the down payment and mortgage if I don't have renters, and still be able to pay my current rent in the Bay. I don't know enough about first time home buyer programs, do you recommend looking into those before purchasing outside of my area?

Thanks!

Martha

Jeff Zimmerman · Answer

@Martha Hernandez First time homebuyer programs can be great in a number of ways and can make your deal hard in others.  They are great because they usually provide a lower interest rate and lower down payment, some even give the buyer a "silent second" loan which lowers the overall first loan amount and has no monthly payments due with no interest. The "silent second" is then paid off at sale.  Where they are hard is that they come with a more strict appraisal, and for a seller who knows that they are more likely to accept an offer that is using a conventional loan with a less strict appraisal.

When it comes to Fresno, this may be a great place to start your investment portfolio if it's affordable for you.  You may want to run some numbers to see if you will make more money in 5 years by purchasing a home in Fresno and a townhome in the bay or if you continued to rent in the bay and bought multiple homes in Fresno that cashflow.

If you'd like to talk more about Fresno I'm happy to answer any questions you have, just shoot me a message.  Good luck!!!

Martha Hernandez · Answer

Thank you. This is exactly what I'm struggling with. I get so much more for my money elsewhere AND just in case I have months without renters I can still afford my current expenses and the mortgage there. I'll look into the book. Thanks!

Nathan Gesner · Answer

It sounds like you want to invest but you also want your own home. The San Francisco market is so out of control that I wouldn't recommend doing anything there. You can spend $1 million or more just to buy a basic duplex and it still wouldn't pay for itself with you renting out half of it.

Read "Long Distance Real Estate Investing" by David Greene. Minimize your expenses in San Fran by finding a roommate situation, save every penny, and invest in other markets.