Moving for a new job is a huge but exciting step in your life. You may be seizing an important opportunity to advance your career or moving to an area that appeals for a different reason, such as lifestyle, climate, recreational amenities, or proximity to family (or distance from if you prefer).
Regardless of your motivation for the job relocation, you must rent or buy a new home. You’ll want to proceed carefully so that you make good financial decisions. Buying a home when you move for a new job is a costly undertaking, but you don’t have to jump into the purchase. You may find it very worthwhile to develop a home buying strategy that maximizes your financial return on investment.
New Employer May Cover Your Moving Expenses
Your new employer may assist you with some or all relocation expenses. Upon receiving a job offer, you can negotiate the details of what your employer will pay for. To prepare for the negotiation, you could get some moving to a new job quotes for various moving expenses. Common relocation expenses that an employer could pay for include:
- Professional packing and moving services
- 1 to 3 months payment for a short-term rental while you look for permanent housing
- Payment of Realtor fees
- Payment for extra travel needed for house hunting
Historically, relocation assistance has been a benefit extended to upper management, professionals, and existing employees being transferred within a company. These days, companies offer relocation packages more often. The benefits have proven to be a good recruiting tool to attract talent and make job relocation worthwhile. The competitive technology and healthcare industries pay for new hires to relocate more than other industries.
If you need to move as a new hire, you should take advantage of the employer’s relocation program as much as possible.
Not everyone has the benefit of an employer willing to pay their moving expenses. In that case, you will have to pay your moving expenses out of pocket. Although the bills land in your lap, you could create opportunity from the move in more ways than earning a paycheck.
Decide If You Want to Jump Into Home Ownership Right Away
Your first major decision is whether you want to buy a house near your new job right away. High earners typically take this step because they have the financial means to do so and want to get settled in permanent housing right away.
Some people simply prefer owning and hate renting, which is understandable. As a renter, you do not build equity. Your rent money just goes down the drain never to benefit you again. Additionally, you have no control over who does repairs at your residence. Perhaps your landlord or property management company does a good job or maybe it’s a clown show.
If you strongly prefer home ownership, then buying a new home right away will be a priority for you.
However, renting for a while could be advantageous. You won’t get in too deep in your new environment with a mortgage only to discover that you dislike your new company and want to bail. Or worse yet, your dream job turns into a nightmare because you were misled about what the new job would be like.
The top reason to rent an apartment or house for six months to a year after moving for a new job is that it will give you time to get to know the area. You can spend time exploring the new city or region and decide which neighborhoods appeal to you and are a good fit for your short or long-term purposes.
Your time spent as a renter may also grant you the chance to find a good deal on a home. You might get to put in an offer below asking price on a property that has been stagnating on the market for whatever reason. When time is on your side, you could encounter a motivated seller.
Decide If You Want to Sell Your Old Home
Should you already own a home when you decide to move for a job, you might wish to consider keeping it instead of selling it. Depending on your current mortgage payment and other expenses, you might be able to rent it out as a positive cash-flowing property. Since you’ll be an absent landlord, you’ll need to enlist a property management company to take care of things. Running the numbers on the operational expenses and current market rental rates will let you know how feasible this option is.
Obtaining a home loan for your new home in your new work location could be challenging. The absence of a rental income history on the current home will prevent you from counting it as income. The prospect of paying two mortgages could make your debt-to-income ratio too high to qualify for a loan to buy a second house.
If the numbers are in your favor, then renting your old house and buying another house would be your first step toward building a real estate portfolio and increasing your net worth as the years go by. Other People’s Money (OPM) is the best way to build wealth, and having someone else pay for your real estate is worth thinking about.
Retaining ownership of your current home also keeps your options open should you ever want to move back. When your renter’s lease expires, you could just return to your old home.
Of course, you may want to cut ties with your old location. The sale of your current home should put a chunk of money in your pocket that lets you reduce your borrowing costs on your next home. You also won’t have to take on the burdens of being a landlord.
How to Shop for a House When Moving for a New Job
House hunting in a new town can be challenging because you’re unfamiliar with the territory and the market. You can mitigate this factor by:
- Researching the real estate market online
- Asking your new co-workers about good neighborhoods
- Asking your new co-workers for Realtor referrals
A knowledgeable and helpful real estate agent could make a big difference in helping you find a suitable property. You’ll want to select someone who has been representing the market for several years. Many people try their hand at being a real estate agent and don’t really know what they’re doing at first. Some agents are part-timers. When you need to rely on the advice and guidance of an agent, your best bet is to go with someone who has a proven track record.
No matter who you choose as agent, remember to trust but verify. Real estate agents are notorious for saying whatever they think needs to be said to close a deal. They may not even know the answers, but you can look at the property disclosures, title report, and inspections. Inspect all paperwork personally so that you know the details.
Some home buyers have children or plan to have children, which normally makes school districts a concern. When you plan to relocate for employment, you can conduct online searches to learn about the reputations of various school districts in your target area. School district quality varies quite a bit, and it’s worth choosing to live in a good one if you want your children to have a good start in life and peer group.
Due to the value assigned to homes within desirable school districts, even people who do not have children or whose children are grown may still factor this into their searches. Good school districts help homes retain their value or increase in value because those properties traditionally have higher demand.
Recreational activities matter to many home buyers as well. You may want to be near a park with nice jogging paths or close to a beach or gym. In addition to recreation, people value proximity to lifestyle enhancers like access to retail stores, theaters, and restaurants.
Establish Your Budget
Budget is the boss when it comes to buying a house. Your income and savings directly determine how much you can spend.
However, this does not necessarily mean that you should spend the absolute most that you are able. There are ways to control your housing budget unless you insist on buying a move-in-ready house that does not need renovations. Maybe people desire this because it’s nice to have, but it does mean that you’ll be pay top dollar in your market.
Before you put down that big down payment and sign your name on a massive mortgage, spend some time thinking about the tradeoffs that could save you money and create value as the years go by.
Foreclosures and other distressed properties can definitely save you money on a down payment and borrowing costs. Yes, you’ll have to spend on repairs and renovations, but many of those can be spread out over the course of a few years. Only mission critical issues necessary to make a place habitable require immediate outlays of cash.
In general, you can create value by fixing up a home that has some blemishes particularly if it is located in a good neighborhood with higher relative values. You won’t have the prettiest home, at least not for a while, but vanity rarely puts money in the bank.
If you know you don’t want a “work-in-progress” home, you can consider house hacking. This approach offsets your financial inputs with OPM. You could buy a duplex or a four-plex, live in one unit, and rent out the others. In this way, your tenants pay your mortgage, and you build equity in a multi-family property.
Another house hack is to buy a larger, nice home and rent rooms to people. One or more roommates can slash your housing expenses. This of course works best when you find the right people. A nightmare roommate would be worse than a bad tenant in a separate unit.
Think About Long-Term Value
You moved for a job once, and you might move for a job again. With this in mind, you’ll want to buy a house that has some appeal on the market in case you need to sell it again. This means you should avoid overspending in case home values go down and you need to list it on the market.
If you think that your career will take you to new places in a short number of years, you might buy a house that is specifically appealing to the market in general instead of just you. Even if you want a cozy cottage just to yourself, you might opt to buy a three-bedroom house just because that’s what sells the fastest.
Good location, like being near a park, or other features, like handicapped accessibility, can make your home stand out in any market.
Apply Your Strategy to Optimize Your Home Purchase
As you consider the many factors that go into a home purchase when you move for a new job, be honest with yourself. If you’re not sure what you want, let the market dictate your best choices about what holds value in your new city.