Accommodation in California

Purchasing property in California

If you decide to invest in buying property in California, you will be happy to know that the purchasing process is quite straightforward. However, you should still engage the services of a real estate agent and a lawyer to make sure you follow the process correctly and get the best deal. Remember, non-citizens can buy property, but will need an Individual Taxpayer Identification Number (ITIN) if they don't have a Social Security Number.
Here is a breakdown of the nine steps you must take when purchasing a property in California.

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Step one: Define your budget

Consider all related expenses to determine your budget for buying a home in California. The median home price in California is currently $909,400. Ensure you have a credit score of at least 620 for most loans. A typical down payment is 20% (about $181,880 on a median-priced home). Budget for 2% to 5% in closing costs ($18,188–$45,470) and maintain a debt-to-income ratio of no more than 36%. Annual home maintenance typically ranges from 1–4% of the home's value ($9,094–$36,376).

Step two: Pick the right neighborhood

Research and invest time in selecting the right neighborhood for your home. Consider average home values, property appreciation trends, proximity to essential locations like work or schools, commute options, and available amenities. Be prepared to compromise – finding a place that ticks all the boxes is hard.

Step three: Hire a real estate agent

Even in the straightforward California housing market, a reliable real estate agent is essential. Look for an agent with experience in your preferred neighborhood, property type, and price range. Check reviews and complaints, and conduct interviews to choose the agent who best suits your needs. Before signing a buyer's agency agreement, you can attend showings with different agents to ensure a comfortable working relationship.

Step four: Get pre-approved for a mortgage

In the US, many property sellers require a mortgage pre-approval before showing homes. Average 30-year fixed mortgage rates are currently around 6.08%. Obtaining a pre-approval letter indicates to home sellers that you are financially prepared to commit. To get preapproved for a US mortgage as an expat, you'll need a valid passport, visa, and either a Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN). Other things you will have to supply include proof of income, bank statements showing funds available for the down payment, and possibly an international credit report if you don't have a US credit history. Get started by preparing all required documents and contacting lenders who offer mortgages to non-residents.

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Step five: Start house-hunting

The exciting part begins as you view different properties. To make the most of your house-hunting experience, list priorities, from essential features to desirable bonuses, for your new home.

Step six: Make an offer

Once you've found your dream home, it's time to make an offer. Homes can sell in as little as 30–45 days after listing in active markets. Knowing this, it's essential to consider market trends and act promptly to secure your desired property. Beyond the price, you can also make your offer more appealing by being flexible with contingency clauses and other terms. With a well-informed approach, you can increase your chances of a successful home purchase in California.

Step seven: Sign the contract and make a deposit

Once you've agreed on the price, you'll be asked to pay an escrow deposit, also known as earnest money, to demonstrate your seriousness as a buyer. The earnest money will be held until closing and will become part of your down payment and overall closing costs. If you break the contract, the money will be kept by the seller. However, if certain contingencies aren't met, you can get a refund for the earnest money. These contingencies typically include financial, inspection, and appraisal aspects.

Step eight: Appraisal and inspection

After your offer is accepted, it's time for due diligence. This involves inspections to uncover hidden damages and an appraisal required by your lender to ensure the property's value aligns with the amount you're borrowing.

Step nine: Closing

The final step is the closing process. Before finalizing the contract, you'll conduct a final walkthrough to ensure the property is in appropriate condition with no damage. During the closing, you'll sign a lot of paperwork, so having your real estate lawyer or agent present can help explain each document and handle any remaining questions before completing the purchase.

Renting property in California

Renting in California can be a practical choice if you're not ready to buy a property. And if you're new to the area, renting is important initially to get familiar with your new city and housing market.

The availability and prices of rental options vary hugely depending on your desired location in the state, with coastal cities like LA, San Francisco, and San Diego having some of the highest rents.

Currently, the statewide average rent ranges from $2,398 to $2,770 per month, depending on the property type. In major cities, San Francisco averages $2,600; Los Angeles, $2,311; San Diego, $2,800; and Sacramento, $1,670.

To start, you'll need to find a house or apartment that suits your needs. You can explore neighborhoods in person, looking for "For sale" or "Open house" signs and contacting agents for more details or immediate viewings. Alternatively, you can use online platforms and local newspapers to narrow down your search based on criteria like price, location, number of rooms, and amenities. Craigslist, Zillow, and other online tools are very helpful.

Once you've found a place you like, contact the property manager, owner, or real estate agent to schedule a viewing. If you're interested in renting the property, you must fill out an application. The owner will review your application and conduct a credit check, which requires a Social Security number. If you have a little credit history as a new expat, providing references, wage slips from your employer, and a bank statement can be helpful.

In many cases, you'll also need to show proof of earnings. Larger rental companies may require your monthly earnings to be three times the rental amount, while smaller ones may be more flexible. If you're currently unemployed, you might need to provide a higher initial deposit.

After reviewing your application, the landlord or management company will decide on your tenancy, and you should expect to hear back within a few days to a week. Depending on where you are renting, the market can be very competitive, with many other potential renters showing up for viewings. If this is the case, try to make yourself stand out from the crowd, or look to different avenues to find your new place, like Facebook groups, word of mouth, and so on.

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Flat-sharing in California

Sharing a flat in California can be a great option if you're on a tight budget and want to save on rent. By sharing an apartment or house with other tenants, you can split the rental costs and even divide household responsibilities. Platforms like SpareRoom, Roomi, Craigslist, and Facebook Marketplace are commonly used. If you're new to the area, also consider temporary options like Airbnb or extended-stay hotels, although prices can be steep in popular tourist areas.

You can also opt for subletting a room, which is common for short-term rentals when you have just moved to a new place. People often advertise their sublets on Craigslist or share them on social media, so it can be helpful to ask around if you don't yet have a network there.

Useful links:

Zillow

For Rent