It's amazing bro. In this road it feels like we are in India!
because we are driving on the left side and on the right side, cars are coming.
That is so cool!
This is so cool bro!
- This happens only in this road, right? - Yes. It does... only for some time.
Yep...
After this, we will go back to the right lane
then we will feel like we are back in the US!
I mean, the road system.
So anyways, today we are going to visit one of our friend's house.
Finally reached one of our friend's house.
Many people were asking that if you want to buy a house in the US,
because right now, the housing market is on a boom!
The prices are more but the interest rates are pretty low.
The interest rates nowadays are 2-3 percent
so if you take advantage of this and buy a house
at low interest and convert this to a business.
Let's say you have bought a 2 floored house,
One floor for yourself and you give the other one on rent,
through the rent, you can pay the mortgage.
(mortgage is basically the loan payment)
So won't you be creating business with this?
Won't you be creating AirBnb or rental income by this?
And that also on student visa or H1B visa.
We will get all those questions answered by my friend. Let's go!
So let's start with the tour.
First of all, can you please introduce yourself?
Hi guys, my name is Prashank.
And I am here since 2014.
I came here to do my Masters in the University of Florida.
I am in Atlanta since 2016.
This is my house.
I am a mechanical engineer.
So, welcome into my house.
Oh! Thank you!
So, by the way, you are currently on H1B visa, right?
- Yep. - Okay. Awesome!
So... Starting with the tour...
Like... you can start from anywhere you like.
Basically that was the entrance. And you enter this way.
There is the kitchen here.
These are my appliances as you guys can see.
Refrigerator... And then...
So, when you buy a house, is the washer, dryer and the fridge included?
- Yeah washer- What are the complementary things you get when you buy a house?
The stove, microwave, dishwasher are included in complementary.
Fridge may or may not be included.
- It's not always included. - Okay.
If you wanna sell, then is it up to you
to include the fridge or not?
Yeah it's upto me.
I can choose whether to include the fridge or not.
And in that way, I can manage the prices of the house.
Awesome! Okay, so let's move on.
Yeah, so basically guys, this is my living room.
There's TV here...
Nice...
Then this is the dining area.
That's my bar and there's a bit of music section there.
And if you come back, here is the backyard.
Nice!
- Hi Arpit! - Hi!
Come.
It's going to rain. The weather is great!
Yep. It's been raining today...
So doesn't this become noisy? You have a highway in front of you!
The houses here have one more good thing that the insulation and isolation in great!
So during winters, even if it's 0 degree outside,
the temperature is maintained inside.
Awesome!
- We just saw a rabbit and snake here. - Seriously!!
Yeah.
You will see rabbits here. I have also seen snakes a couple times..
Oh my God! Weren't you afraid?
What's there to be afraid of?
There were so many snakes in the MSET hostel!
Coincidentally, both are from NIT Bhopal!
- Yeah we both- - It's not a coincidence..
- We are college friends! - Yep. We are college friends!
The coincidence is that we both met on Atlanta.
Yeah! Exactly.
- We missed the garage. - So guys, yeah, we forgot one thing.
We are gonna show the garage as well.
The garage is included in some houses and in some it is not.
So, this is my garage and this is my car.
And I bike as well. So this is my bike.
Nice! I do that as well! How much did you pay for this?
I took it for 500 dollars.
- Nice! I took one for 150. - This is a mountain bike.
It's a mountain bike... so it's different as I go for trail biking
These are a bit expensive.
Okay. Let's go upstairs.
So all the bedrooms are upstairs, right?
My house setup is kinda...
below, there's the living room, dining and the patio.
And for the bedrooms and stuff you need to go upstairs.
So this is the bathroom I guess.
One bathroom... This is like half bathroom, right?
This is the half bathroom.
It's not for bathing. This is just your toilet.
- Okay. Let me just show it. - Yeah.
Yeah. Half Bathroom. Okay.
And then, all the bedrooms upstairs.
So this is a three bedroom house.
- Ahan. - Three bedroom two and a half...
There are three bedrooms upstairs. This is my master bedroom.
So as you guys can see... My bed, my TV over here, my dresser
I think it's a 40..45 inch TV? - 43. - 43? Awesome.
- So this is king sized bed right? - This is a Queen.
- Queen size? - Hmm.
I get lots of confusion. Do you know all the bed types?
So basically there are twin, full and then Queen and King.
So there are four types of beds.
- This is the Queen bed. - Awesome!
I have a Queen as well. I think.
So this is like attached bathroom? No.
- No this is my closet.
The closet is there and the attached bathroom is here.
Okay.
I have tub and Jacuzzi.
And what about the pricing?
What was the price when you bought the house?
And what was the price during selling?
The price was around 170-180 when I bought the house.
It's 3 years old. I bought it in 2018.
The prices have now jumped to 30% more.
Just because the housing market has been very strong.
So the prices have hiked up!
This is my second bedroom. This is sort of a guest bedroom.
It can occupy a complete bed.
This is also Queen.
By the way, this bed is going to be mine. We just bought it from him.
Maybe he had bought it for 300-400 dollars?
But we got it for 200 dollars.
- Thank you so much! - Yep! No worries.
- This, I think is the closet. - It's an additional closet.
So basically this is another bedroom with its own closet.
Got it!
Another third bedroom which I have made my office basically.
So I work out of here.
So there's another closet over here.
It's the same yet another bedroom.
- So you can keep a twin sized bed here? - You can fit in a Queen here..
because its size is the same as the previous bedroom.
Ohh! The size is the same!
And there must be common bathroom which is full.
This is common bathroom which is a full-fledged bathroom.
Awesome!
And that's it guys. So this is my home sweet home.
Yeah. It is beautiful.
So let's sit together and then we can talk about
how you bought it and what about the profit. - Sure
So finally, the first question I want to ask you is...
If you consider it as a business,
then how much profit you make generally
after 5 years.
And how much profit did you make? If you would like to share...
Okay, sure. I mean, yeah...
It depends on a lot of things because
the location where you are buying the house matters
So, if you are buying a house in a already developed area,
because it is already developed, so it's not gonna develop that much.
So the profits won't be much.
But if you buy in a already developed area then the renting chances are easy there.
Because everyone wishes to live in a developed area.
But, if you buy a house in sort of a developing area,
then you will get the houses cheap
rentals would be a bit difficult but you will get for sure
But the biggest advantage is that the property upraise is higher!
Because the development that's gonna happen in 5 years
if you see the property percentage wise
then it will raise more as compared to a developed area.
Okay, like if you see in Austin, Austin Texas has become so famous
for the profit people have made
because I have seen that people have made around 100-200 dollar profit
on a property which is 500k!
It wasn't that much here. Right?
Atlanta is actually booming as well. Like Atlanta is not behind!
In terms of... Yeah Austin is obviously far ahead but...
Atlanta is catching up as well.
Recently Microsoft said that they are gonna come to Atlanta
They hop in the 16 acre campus. So there are lot of jobs.
Google is here. All the big companies are moving!
If you see in mid town all the time construction is going on...
Because California, Silicon Valley has become so saturated
that a lot of people are moving to different avenues.
So the prices in Atlanta are pretty high as well.
So, recently because of house market right now,
houses are going off the market in two days!
They are selling very rapidly.
People are paying 20k-30k dollars over the asking price.
So Atlanta is an amazing place right now to buy real estate.
And invest in real estate market.
So now, let's talk about students. Would you recommend a student
on F1 visa... Whether they be on OPT
(like if he has just got a job and the money has started to come)
Or...
Even if he hasn't got a job, would you recommend buying a house?
I would not recommend on OPT personally,
because what happens is..
if for example, you didn't get selected in H1B lottery
and you have to go back to India while selling the house,
then your capital gains there...
you have to pay taxes on that
and that's quite a hefty tax
as a non-resident alien for tax purposes.
But once you get your H1B done,
then you become resident alien just for the tax purposes.
So at that point, if you actually sell your house, then
you won't have to pay taxes on those capital gains.
- I see... - Yeah.
That is interesting... But I would like to add an information.
I am on F1 visa but I am still a tax resident because I have been here for 5 years now.
If you have spent 5 years, then you become a resident as well.
Just imagine, if I had bought a house last year,
I was on on F1 visa.. (I am currently a resident after 5 years)
Then I don't need to pay taxes, right?
I am not sure about that. That needs some research
because there is another thing called substantial presence test.
You can calculate that substantial test from the IRS website.
It tells you the number of days you have spent in the last 3 years in the US
as a resident alien.
So that's when you become a resident for the tax purposes.
Would you recommend for H1B holders?
Sure! I mean after getting my H1B, the next thing I did was getting a house
because my dad is also into real estate.
And his first suggestion was that as soon as I have some savings,
to buy a house then I should buy it. Because...
renting... what you are doing is throwing away money.
That money, you are never gonna see back.
But with buying a house,
when you are paying your mortgage,
then a portion of yours is going towards the principle
and some are going towards the interest.
And the ones who are going towards interest are building their equity
because when you sell the house,
then you are going to get your money back.
Right? For example, this house
when I bought this house... Now I am planning to sell this
So the amount of money I am gonna get back
... the amount of money I invested in the mortgage of this house for 3 years
I am going to get all of it back!
Just because the house was appraised
along with that, I was moving towards the equity.
The money that I will get now
will be equal to the money that I have spent over the three years.
Basically I have lived in this house for 3 years for free in a way!
That's amazing! That's actually a profit as well, right?
- Exactly! - Awesome.
And...Because if you count the inflation,
you are even paying the rent.. you are not getting any asset
and due to inflation you are having a double kind off loss.
So you were beating that while buying a house.
And what about renting? Is is legal on H1B to rent rooms
to students... and is AirBnb legal as well?
Sure! I did it!
When I bought this house, I had a roommate from my company
and I used to rent a room to him and that is completely legal.
No problems whatsoever.
Wow! And from that you pay your mortgage?
Yeah it will help you with the mortgage and will become an additional income basically.
It's nice... you will get a roommate as well.. you know.
So somebody to spend time with. - Yep.
And what about interest rates? What are the rates nowadays?
The interest rates nowadays are quite less
Because of the pandemic, the federal government have reduced the rates
so in 30 years... (it also depends on your credit score and credit history)
but it's 2.5% nowadays for 30 year loan. That's amazing
And if you take for 15 years, it goes down to 1.7-1.8%
If you compare from 2-3 years ago, then
it was 4% for 30 years at that time and now it's 2.5% so...
1.5% matters a lot! - Yes! That is really good.
Like you saved 200,000 dollars by doing your job,
so better than buying a house worth 200,000, you
buy on a loan. That is better.
Because if you are investing the same money on S&P 500, you will get 7% annual return!
So you are actually making free money buy buying a house on mortgage!
Exactly. And buying a house on mortgage is important
because the system in America is that
you have to show that you are a good borrower.
Like when we open credit cards or take car loans
by that they know that we are a good borrower when we give the money back to the bank at time.
By that our credits are also improved.
So if in future we want to buy a bigger house,
or if we want to take a bigger loan then the interest rates increase a lot!
Now lastly, what were the steps that you took
like... was your loan approved first or did you buy the house first?
So what were the steps to buy this house?
The steps would be... First, contact a mortgage broker
Mortgage broker helps you analyze
...Firstly they will take all your information about the assets and savings you have...
On that basis they will tell you that you can be approved for this amount of loan.
For example if they say that based on your savings and everything
you can be approved for a 300,000 dollar house loan.
So you get that pre-approval letter...
You tell the bank and they contact the lenders and you get a pre-approval letter.
Once you have a pre-approval letter, you contact a real estate agent.
Then you start looking out for houses along with the real estate agent.
If you even clear for the 300,000 loan
it isn't mandatory to buy such a costly house.
You can choose your amount because
you want to save some of your credit for something else.
I will also like to add that you should not pick an expensive house.
Look at your expenses and decide the amount you can spend on a house.
If you are starting off, I would suggest to get a starter home
because if you are single, living alone or even if you have a small family,
a three bedroom house is good enough, right?
You don't need to buy like a 4-5 bedroom house
until you are planning to start a family
So I will surely speak of that.
Awesome.
And this has one more catch that...
when you buy, do you have to pay the fee of the real estate or..
the seller has to buy?
Yes, the biggest thing is, when you are buying
you don't need to pay any fees to the real estate agent
The seller needs to pay that.
Since the agent is free, it's always advisable to hire a real estate agent when you are buying.
Awesome!
So.. Thank you so much Prashank! It was lovely having you
You knowledge will definitely help students and H1B holders a lot!
- Sure! Thank you!
So we are here at Lowe's
Since Prashank is leaving the house so these boxes
will help in packing.