[1] 43R model suggests a low-price high-yield rental property. With that I can live rented or buy a family home
Rental as percentage of purchase price(i.e. gross rental yield) is high in NY and other part of U.S. so it’s better to buy rather than rent [1]. However, presumably in Chinese-like locations, leasing is probably cheaper than buying.
Holding a REIT with 6% yield, I can possibly delay the purchase by a few years.
My initial priorities:
- small price tag, light “weight”, flexible.
- location — see https://tanbinvest.dreamhosters.com/2017/05/04/location1st-u-s-home/
Bargain —- let’s define the meaning. We find out the current asking prices and last transaction prices. Then we wait for something significantly cheaper. This is possible because the unit we like may not be favored by 90% of the buyers.
Budget —- default 300k. Only for a great bargain would I exceed that. Down-payment 50-100k. I can’t afford a heavy monthly commitment, given my single income.
The basic plan —- within 2 (not 4) qualifying locations for a family home (not rental property), wait for bargains in various categories. I guess the most affordable category would be a 1BR apartment or small wood house.
Before my son comes over, we could rent …. near a reasonable middle school and see how he fares.
Before high school, as Junli suggested we can buy a small family home (condo?) in a good school district for investment. After kids go to uni, we can sell it. XR, Jack He, grandpa, Bill Pinsky, and Junli had a 2nd suggestion — rent in a school district. See https://tanbinvest.dreamhosters.com/2017/05/13/school-district-tips/
If staying 5Y+ in the U.S. then we should buy not rent — rule of thumb[1]. Perhaps buy a small house near Chinese community first. I plan to buy a U.S. home soon after Cambodia shops.
However, consider the benefits of 43R model 17% GRY and consider Not buying a family home. Grandpa told me many times that before I settle down in one city, it’s not urgent to buy a home.
Home purchase is a big decision and heavy commitment. Many immigrants pay high rent for many years before buying, so I could wait for 5 years. I’m not like some families with no property, so my rent outlay is offset by my rent income. So here a let-go attitude is a huge relief.
REIT — (Venkat) as a proxy to owning a property with reliable rental income and good liquidity, so I could buy it early and sell when I am ready to buy a home.
If we decide to wait, then accept the high rent. If we decide to buy, then consider the total cost:
- • mortgage burden
- • pTax – $8k/year for a 500k home
- • maintenance – Most wood houses need lots of maintenance… Condos may also need maintenance and require maintenance fees…