So you’re relocating to the Bay Area from the UK or Europe. You may be on an H-1B visa, an L-1, O-1, E-1, R-1 or TN and these are just the nonimmigrant visas. Your company’s relocation package, if they’re sponsoring you and your visa, usually covers the costs of moving and storing furnishings and other household goods, along with (maybe) help selling an existing home and costs incurred house hunting, temporary housing if necessary and all travel costs by the employee and family to the new location.
What then? Do you buy straight away? Do you rent? What are the pitfalls of either … how do you know which is the right approach?
When we first moved from London to San Francisco in 2010, both my wife and I had been to SF several times with work but living here was a totally different proposition. We took advice from friends and work colleagues on where to live. Our criteria was:
2 Bed, 1.5 Bath with parking (on street if no restrictions)
Budget $2,500 -$2,700 max (it was 2010!)
Near a shuttle bus stop (for my wife who was commuting to the South Bay)
To be in a “stereotypical” SF neighbourhood.
After many condo viewings and potential CraigsList scamming pitfalls, we ended up finding a great apartment just off in Buena Vista Park. We totally enjoyed living there.
Several years on, fate has led to us living in Toronto, New York, back to the UK and now back in SF again. We have come full circle, renting again – at double the cost – with a view to maybe buying in a year’s time. We had n’t planned on coming back to SF, life just took over!
Where am I going with this? Well … when you first move to the city and become aware of how much it is to rent, the dread of all that “dead” money going on rent, your thoughts turn to buying a home here. What’s the process? How much will it cost? Even if you are in a position to buy immediately (e.g. You’re a qualifying cash buyer and don’t require financing) my advice would be to hold off until you’re better prepared, better informed.
Firstly, live in the city, get to know it before even considering buying something. If it’s your first, second, third, tenth home purchase you need to understand what you’re buying.
There’s no rush:
Get to know where you are living. SF is only 7 x 7 miles but the neighbourhoods are very different. Get to know them. Spend time in the ones you think you know and like and the ones that are recommended to you. Many people ask me, is it the right time to buy, economy-wise? What if the housing market crashes? My take on this, think carefully about what you’re buying, do your research. Buy for the right reasons and buy something you can afford. That way there will always be an upside as you’re in the house you want and area you want – irrespective of macros economics!!
Know where you want to buy:
Location, location, location. A great house in an area you don’t like or is impractical is a resounding NO. It’s a bad investment in your time, emotional well-being and money. Work out the best fit for you in terms of commute, walk-score (what amenities are within walking distance), security and of course, budget. Think what’s convenient, not inconvenient.
Buy with your head:
Buying a home is an emotional decision as much as rational. You may be wowed by a home but then think rationally about how it fits your needs. A loft-style apartment with no closed off bedrooms may be cool to look at but if privacy is important to you and you have guests/family staying regularly then can this be fixed or is this simply not practical?
Build up your knowledge and credit score:
If you’ll require financing, you also need to establish yourself here, build up your credit history and score, to take advantage of the finance available to you. If you’re in a position to pay cash then clearly financing will not be as much of an issue. Some banks are wary of lending to “newbies” with only a year’s history of living in the US and a credit score below 700. Some banks are able to lend with a credit score of <700 but there’s a simple rule, the more risk the lender takes, the higher a premium or interest you’ll be paying. Get established first, have three lines of credit, keep a well-organised and run account, then take advantage of the lower lending rates. Banks like Wells Fargo have special departments catering for “newbies” so check them out or speak to a Mortgage Broker about your options.
To reiterate. Buying a property is the single biggest investment for the majority of people. Take your time. Don’t allow yourself to be panicked into buying. In the coming posts, I’ll be looking into more detail about the issues surrounding buying your home here in the Bay Area.