Housing is a significant expense in our lives. The more I earn, the more I rely on my medical income. I want to drive my housing expenses as far down as possible, hence this condo purchase in Southern California.
As a single guy, it’s much easier for me to do these things. I understand for those of you who have to worry about kids and a school district, this isn’t quite as feasible.
Cost of Living in the US
Real estate in the US can be expensive. The US draws the world’s talent. People move to the US to work hard and achieve a lot.
As physicians, we compete with business owners, CEOs, company presidents, professional athletes, and people in the entertainment industry.
My friend, a computer programmer, earns well north of $200k. My buddy owns real estate and fast food restaurants and has an income in the millions.
Physicians earning a W2 income of $250k will have difficulty competing.
Real Estate in the US
If you are willing to live in parts of Colorado or Texas, you can still find affordable real estate. That’s not desirable to many.
There are homes in the $500k range in Southern California, but you would be living in less desirable neighborhoods.
Purchasing a condo in Southern California is a more viable option. You can find condos for several million dollars. But if you are comfortable with the barebones, then you are in luck.
Physician living in Southern California
Living in Southern California isn’t ideal, to be frank. I don’t enjoy the vibe or the culture. But it’s a great place to work. The income opportunities and opportunities to make a difference are enormous.
I can be on a per diem pool in SoCal, fly in occasionally, and pick up shifts. Or, I suppose, just keep running my telemedicine practice.
To do this comfortably, I prefer to have a base in SoCal. Long Beach is one of those cities where real estate is much lower than in other parts of Southern California.
The trade-off is that LB is heterogeneously safe. You have pockets of good and bad neighborhoods marbling the entire city.
My Condo Purchase in Southern California
I have a CA state license and don’t care to have others. The experience of multiple state licenses left a bitter taste in my mouth.
Purchasing from Abroad
I decided to purchase a condo in Long Beach while I was living in Spain. Purchasing real estate sight unseen is discouraged; understandably so.
It’s doable if you have simple criteria. It helped to have friends and family walk the neighborhood and property.
Finding a Realtor
I found a local realtor from Linkedin and reached out to him. Good guy and good conversations.
I told him I’d be willing to buy a $300k property cash or put $200k down for a $500k property.
I wanted to buy a condo in Southern California, specifically Long Beach. It needed to be a 1-br or more.
I didn’t care about parking even though everyone said that was a bad idea. Uber/Taxi is how I get around, so car ownership isn’t for me.
My realtor sent me 6 properties to review online. I picked 2 I liked. He then did a walkthrough and sent me videos.
So I only reviewed 2 properties that met my criteria and ended up buying one of them.
Timing the Market
I always add money to my private brokerage. I cash these out whenever I want to invest in a business or real estate.
The securities market crashed right when I decided to buy. My $300k went down to $200k. Still, I was up from what I had invested.
I cashed out $150k as soon as I knew I wanted to make the purchase.
The first unit was around $450k, and though the housing market took a major theoretical dive, the owner didn’t want to budge.
The mortgage company didn’t want to approve me for a $450k loan, which simplified my decision tree.
The other property I considered was listed for $335k, and we made an offer of $290k. The owner agreed to $300k. So, we entered escrow.
I didn’t qualify for a mortgage at $200k down for a $500k property, even though I could have bought the place in cash, given my net worth.
That is fine by me, it made the search criteria more simple.
The bank agreed to let me use my brokerage account as a down payment. And my income would be the money I made from my healthcare consulting and the various gigs I picked up.
Escrow was complicated because I was living abroad. I needed to sign documents, most of which needed an electronic signature.
The deed of trust and loan docs needed wet signatures before a notary. For this, I booked an appointment at the consulate, which handled it.
Housing Costs in Southern California
As a proud owner of a tiny 1-bedroom apartment in Long Beach, I have to pay HOA dues, property taxes, and a mortgage.
The mortgage will set me back around $1,500. The HOA and property taxes will be around $500 per month.
I can pay off the $200k mortgage at any time, I have the cash. But I prefer to hold on to my cash for now.
Living in SoCal for $2k/month of housing expenses isn’t bad. I anticipate we’ll rent the place out when we’re not there and offset quite a lot of that.
I have rented out my condo in Portland, and friends have stayed in my Spain condo.
This condo will have a carrying cost of $2k per month. Short-term housing in the same area would cost us $4k per month.
Renting it out long-term would get me $1,800/month. But I would get to write off some depreciation, property taxes, etc. Maybe a wash there – but that’s not bad.