Even in the post-pandemic era, when office vacancy rates are still relatively high and foot traffic remains low in metro areas such as NY and LA, the decision to buy a property closer to work is typical. Recently, I spoke with a colleague who is relocating from Texas to New York for a job he’s been eyeing for over a year — and he finally got the offer!
There’s nothing quite like the feeling of being accepted into the role of your dreams. Manifestation, patience, a bit of luck, and good timing indeed work wonders!
However, whether it’s moving cross-country for a new job or buying property for convenience to cut down on the commute, there are a handful of risks involved. Besides the financial considerations and reliance on the new position or current role to cover living expenses, buying real estate itself is a daunting task, or should I say job, especially when it comes to maintenance, hidden fees, and unexpected tasks to take care.
Real estate, one of my favorite assets, is often regarded as an appreciating asset that offers both utility and passive income. Yet, behind its allure lie hidden costs, from upfront closing expenses to dealing with rental-related challenges we’ve all experienced.
I’ve encountered not only my colleague facing such decisions on whether to move for work but also from a friend in my MBA program who weighed the pros and cons of commuting from New Jersey versus purchasing a property downtown near school. I realized many prospective buyers find themselves in this limbo, uncertain about whether to buy or not. It’s no surprise, considering that real estate is one of the most significant purchases of our lives and should be approached with careful consideration.
For those considering buying property and having enough capital to do so, it may be tempting to invest rather than let cash sit idle in savings or a portfolio. But whether it’s for a job or to ease the commute, here are some key considerations to keep in mind prior to making the decision:
Case 1: Buying a Property to Cut Down on Commuting Costs
Many Americans have grown accustomed to the comforts of working from home during the pandemic, avoiding lengthy commutes and enjoying home-cooked meals. Now, facing the return to reality, questions arise about whether the old way of life is worth resuming. Evaluating the need to purchase a property for convenience involves questions like:
- Would I have considered purchasing this property before the pandemic?
- Despite being able to afford it, will the increased cost of living truly enhance my quality of life?
- What aspects of the commute bother me the most, and are they worth the potential drawbacks of purchasing property?
As I’ve navigated my own decision-making process, I’ve realized that commuting a bit further from upstate New York is preferable to owning another property just 30 minutes away. While I’ve found Manhattan real estate can be an appreciable investment, it’s not suitable for everyone, especially if the monthly costs and ways of living don’t align with one’s lifestyle for the foreseeable future.
Case 2: Buying a Property to Relocate for a Role
Similarly, when considering purchasing property tied to a specific job opportunity, it’s essential to remain cautious:
- Nothing is guaranteed, so it’s wise to have a backup plan in case things don’t go as expected.
- Drill down what your Plan B entails — whether it involves side hustles or additional income sources to sustain yourself in the new city.
- Take time to acclimate to the new environment before committing to a long-term investment or rental agreement.
- Ensure your new position hasn’t undergone any recent layoffs and get a sense of the average length of time that colleagues stay in the position
In the fast-paced real estate market where prices are directly correlated with interest rates and macroeconomic factors, understanding your current circumstances and evaluating your readiness for property ownership is crucial. While real estate can be a lucrative investment, it also requires significant time and effort, particularly when dealing with tenants and maintenance. Let’s face it. It isn’t an immediate investment and many people find themselves in this trap believing it will pay off. The golden rule that states, “if you’re not living there for more than five years, it’s recommended to rent,” should be the basis of consideration and now go deeper to evaluate your circumstances. This is all in an effort to prepare you down the road and not be cash crunched.
Whether you’re moving for a job opportunity or seeking to simplify your commute, being prepared for unexpected challenges while hoping for the best outcome is advisable. Understanding your reasons for entering the real estate market can help smooth the journey toward making that dream a reality. But no rush.