Author Topic: Ugh. Move? Stay? Invest? Move and Invest? So confused.  (Read 433 times)

ChairmanKaga

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Ugh. Move? Stay? Invest? Move and Invest? So confused.
« on: March 07, 2019, 11:16:15 AM »
Here's the setup. We outright own our home in Austin, thanks to inheritance and savvy finances. We bought about 15 years ago for ~$170,000, and thanks to the ballooning housing market here are looking at a home valued ~$340,000. That's NUTS.

The house isn't huge - 1,700 sq ft. Three beds, two baths, tiny yard. It's a starter home in a starter neighborhood. We've upgraded some - vinyl plank floors in the living room, tile in the bathrooms, kitchen and den, carpet in the bedrooms. The kitchen is dated and inefficient, but it's OK. Having seen most of the neighbors' houses, I'd say we were above average in terms of upgrades and overall maintenance.

We now have two daughters, 8 and 6 and I hate to say it, but we feel a little cramped.

Now I grew up in a family of four, and reviewing my life through Zillow realize I never lived in a house larger than 1300 sq ft. They were all older mid-century builds with tiny rooms and lots of shared space. Ands I'm fine. Zero trauma. So I don't get this compulsion to have so much space in a home that you could house a circus for the weekend. Homes larger than 3500 sq feet make me feel lonely and agoraphobic.

BUT.

My MIL is offering to advance us some of my wife's inheritance to invest in a new home. I won't say how much, but I will say that we could use it to make a down payment of around half of the nicest house we'd consider (here that means the $450-550k range), mortgage the remainder, sell our house, which'll go in a few weeks, if not days based on what's happening in the ATX market and our neighborhood, pay off the mortgage, and either invest the rest or do some updates and upgrades to the new place. While the area we are now is starting to slow a bit (last year our value increased by about 2%), the area we're looking at is still growing at roughly 3-5% a year, meaning we'd stand to make a fair bit of money over the next 10-15 years.

I just can't get over the inefficiency of a larger house, though. We have friends in Amsterdam who are raising two daughters in a 900 sq ft 2-bedroom flat, and they're happy as larks! I like my family. I like to see them. I don't want it to feel like they're living on another planet, even though at times it would be nice... but it seems wasteful, if profitable.

And I'd say we could take that inheritance and invest it elsewhere, like undeveloped land and wait until the nest is empty then build our retirement cottage, but the MIL is hinging this "early gift" on us getting a new house, as she feels we'll be miserable once the girls are older.

One final comment - I know the practical wisdom is to buy close enough to work to walk/ride, but look at ATX real estate. To get anywhere near our jobs downtown means in the range of $750k, and the teardown/rebuild craze is gentrifying the city to the degree that the guilt of participating in that is greater than the guilt of dealing with a 30 minute one way commute from SW Austin.

So what would you guys do?

Kierun

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Re: Ugh. Move? Stay? Invest? Move and Invest? So confused.
« Reply #1 on: March 07, 2019, 12:16:38 PM »
Sounds huge compared to my 850 sq ft 3br home. I'd stay if the only reason to move is the feeling of being a bit cramped, maybe instead look at why you're feeling cramped.  Too much stuff?  De-clutter the place. 

Personally, I don't fancy the idea of being advanced "inheritance" what if they need that money late in their years for medical expenses or whatever?

Hirondelle

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Re: Ugh. Move? Stay? Invest? Move and Invest? So confused.
« Reply #2 on: March 07, 2019, 01:01:46 PM »
I grew up in a place that was pretty much the size of your current house (it was close to Amsterdam). I have asked my parents several times why we lived (and they still live) in such a ridiculously large place. Seriously, the house was big enough to have 4 kids, also because there were 4/5 potential bedrooms (and 1.5bath, I never get the need for so many bathrooms in American houses?!).

There is 0 reason to get miserable when the girls get older and even if you would, you could just move once they are older and you do get miserable.

I second the suggestion to declutter. See how much stuff you can remove from your house and how much space that'll free up.

terrifictim

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Re: Ugh. Move? Stay? Invest? Move and Invest? So confused.
« Reply #3 on: March 07, 2019, 01:48:24 PM »
I think we'd also want to know more information about your overall plans before recommending a path forward.

1. Are you interested in FIRE? Generally the recommendation is to live in the smallest property that makes sense for your family to minimize housing costs (both mortgage/property taxes as well as maintenance)
2. Would the new location be in an area you are looking forward to living in long term? Or would you like to leave Austin if you could live elsewhere?
3. Are there any family dynamics regarding the inheritance that would be of concern? I.e. does getting the inheritance introduce any family drama?
4. What's the rest of your assets? Will this new property leave you "house rich, cash poor" or do you have a good investment portfolio?

+1 on the recommendations to de-clutter first.