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ponderer
Posts: 11
Registered: ‎04-12-2013
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What would you do?

Oh experienced ones... what would you do?  We know we want to buy in a better school district, but trying to decide between keeping our current place and renting it out, or selling our current place and consolidating money to buy a more expensive place than we could otherwise.   

 

Our situation:

We currently have a townhouse in Mountain View, bought in 2007 at the peak :smileysad:.  We are just barely at or maybe slightly below where we paid for it.    If we sell, we might get at most $350K in equity back after.  If we keep it and rent it out, I think that the rent will almost cover our mortgage payment, if we put in a couple hundred more per month.   We love where we're living now, it was a new construction when we bought and walking distance to downtown, but the kid is almost school age and we'd like a better school district.  Also, we've seen our friends who bought SFH in good school districts get a big increase in their values the past 5-6 years, while we've stayed flat at best.  

 

We want to buy a SFH in either West San Jose, Cupertino, Los Altos, Saratoga, or Palo Alto.

 

If we keep our current townhouse for renting out, we would only be able to afford a place in West San Jose or Cupertino.  If we sold our current townhouse to get more for down payment, we may be able to afford a lower-end SFH in Palo Alto.

 

I would personally prefer to live in Palo Alto over Cupertino/West San Jose.  But which would be better for long-term returns:  Having a townhouse in MV + a SFH in Cupertino/West San Jose? Or having just a SFH in Palo Alto?

 

Would love to hear your thoughts!   Thank you!!

Super Contributor
BAzx
Posts: 216
Registered: ‎07-08-2012
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Re: What would you do?

[ Edited ]

Townhouse in MV + a SFH in Cupertino/West San Jose >> Rental in MV should be desireable as a on going rental income to pay for the townhouse and may also enjoy the appreciation of the property.  SFH in PA is current very high in demand so I question the value of having one property vs having two.  BTW schools in Cupertino are very good...

Silver Trusted Contributor
mac94010
Posts: 772
Registered: ‎06-17-2012

Re: What would you do?

Smart people would keep the property to rent out and buy another lower end house.

 

Since I am not smart, I would sell this one, concentrate my fire power and do my best to squeeze my way up as high can get without big risk.  If you are the type who fit into PA, or one who have the drive and dream to move up, you will never have to move again, or else you will live in another city, most likely very happy but keept on thinking what it could have been.

 

Top and primary factor is schools.  Sunnvale/Cupertino have great schools, but my gut feeling is PA is just on a different plateau.  For that, any amount of money is a good investment.

 

Vanity-wise, Sunnvale/Cupertino/San Jose are all great top areas, but once you said you live in PA, you get respect, you no longer need to prove yourself, because PA itself says it all about you.  Wether if this factor can help you in your profession or career is up to yo.   Naked and ugly but true, vanity can be profitable.

 

Nobody else can help you in your decision or share the consequence, you are all alone.  

 

Gold Trusted Contributor
Jil
Posts: 2,747
Registered: ‎10-24-2011
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Re: What would you do?

I second mac's comment "Smart people would keep the property to rent out and buy another lower end house". This was told by my realtor, 3 years before, when I wanted to sell the current home and buy a new one. It has risk, keeping and maintaining rental, but gives you reward as a long term asset, especially places like MV.

 

She honestly told me "I may get commission selling your home and buying another, but it is not good for you. Sell the home when you are not affordable or when you have no other option except selling".

 

Read many posting about how crazy the market around West San Jose, Cupertino, Los Altos, Saratoga, or Palo Alto. Too many full cash offers in these areas and it is difficult to get one. Attend few open houses and see the results.

 

At this current market, chances of getting an SFH is low at these places. No one accepts contingency sale condition (such your buy contingent upon your primary home sale). You can not sell the home before you get am SFH at these areas. If you are depending on loan, banks are very tight lending policy. Loan qualification itself a big hassle. In short, chances of getting a home and getting a loan is very low.

 

Hence, you need to stay in your existing home as such. Better to look around SFH with extra cash you have. If you do not get any home, be happy and stay in your home. If you get some home, you can decide whether to sell or rent depending on the situation.

 

Contributor
ponderer
Posts: 11
Registered: ‎04-12-2013
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Re: What would you do?

Thank you everyone for generously sharing your thoughtful advice! Jil, that's a really good point about maybe not even getting the houses. We're getting pre qualified for a loan and don't think the loan will be a problem. But not sure if we'll be able to compete with all cash offers, that offer 200-300k above asking price! Gosh where is all this cash coming from??

Actually, our realtor did say that there's a lot of cash from China because as the government is cracking down on and investigating corruption, lots of people are funneling that money to the US and buying houses before it can be confiscated.
Silver Trusted Contributor
mac94010
Posts: 772
Registered: ‎06-17-2012

Re: What would you do?

If you can make it work, go for Palo Alto.
 
Hardest part is the jump to the next plateau, at work, social circles or where you live. Bottom of the market lowers the tide to make it easier, this maybe the only chance. The fact most people will not do it makes this a rare opportunity in your life, do you have what it takes? do you deserve to live in Palo Alto? not just the money, but do you have what it takes for a higher level? 
 
Everybody wants to be rich or be the boss, but the reality is very few will do what it takes or seize the opportunity, or not even realize when the angel is at the door and shutting the door on her face. Furthermore, look around you, most people don't even dare to think about such possibilities, they think it is beyond reach, they think they are not worthy consequently they are not worthy.
 
This could be a critical junction in your life, when you will disappear into the crowd or make the jump to the top 5%.  
 
A word of encouragement, people who live in Palo Alto used to live elsewhere like you.
Contributor
ponderer
Posts: 11
Registered: ‎04-12-2013
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Re: What would you do?

Mac, very well put tell it like it is response! Thanks. Actually while we really like Palo Alto, also worried that our kid might have an inferiority complex when surrounded by all the richie rich sort privileged kids. We'd probably get a shack there.

Maybe Cupertino is more down to earth with kids of more normal working people.

I wonder if a shack in Palo Alto gets better returns or a somewhat on the higher end house in Cupertino. I did think conventional wisdom was to buy the cheapest house in most expensive zip code you can afford. I think a challenge with our current place in MV is that our house value is quite well above the median price in our zip code.
Silver Trusted Contributor
mac94010
Posts: 772
Registered: ‎06-17-2012
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Re: What would you do?

What makes you think they are rich? parents with young kids in schools are just like you.

What makes you think rich people are arrogant or snobbish? only "other people" think they are.

What makes you think rich kids are spoiled? only "other people" assume that.

Does living in Palo Alto make you rich, arrogant or pretentious? or make your kids spoiled brats?

 

 

 

 

Gold Contributor
manch
Posts: 1,850
Registered: ‎05-18-2011
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Re: What would you do?

I'd rather save another year or two and buy in HB. Once you get beyond 1.5M-2M there is little competition. Houses in HB is better value than PA. 

Gold Trusted Contributor
Jil
Posts: 2,747
Registered: ‎10-24-2011
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Re: What would you do?


manch wrote:

I'd rather save another year or two and buy in HB. Once you get beyond 1.5M-2M there is little competition. Houses in HB is better value than PA. 


BTW, what is HB, which area?