Author Topic: Where to buy first/forever home. What would you do?  (Read 1604 times)

Engineer93

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Where to buy first/forever home. What would you do?
« on: September 06, 2017, 02:54:27 PM »
Hello mustachians.  Looking for some advice on where to buy a house that we plan on staying in until retirement.  My SO and I make 99k annually and are looking for a house that is 320k max.  I work downtown and she works about 8 miles north which takes about 20 minutes to drive. The 8 miles between my work and hers is the most expensive real estate in the whole city.  Houses are minimum 450k or this would be the perfect location.

 Option 1:  Houses within a couple miles of her work go for 300+. She may not work at this company longer than 5 years.  I'd hate to buy a house right next to it and then she switch jobs.  She also  works from home 2 days a week.  My job downtown would be a 10 mile drive each way and then I'd have to pay $50 a month for parking.  For me to bike it'd be 12 miles each way but along the greenway.  We also have a friend who said they'd rent a room from us if we lived in the north part of town for $500 a month but that'd probably  be 5 years max.

Option 2:  Townhouse downtown.  This would cost us probably 350k.  Above our max but I could sell my car for sure which no other option allows.  My SO says that she doesn't think she could raise a family in a townhouse.  Also,  we could probably rent a room out for $750 a month but she thinks it'd be weird if it was someone we didn't know.

Option 3:  Houses 10 miles east go for 220-250k.  We could buy a house east of downtown where we would both have to drive 10 miles each way to work but would be a lot cheaper.  We probably couldn't find a roommate that would live with us there.  I'd also have to pay for parking at work. 



Slow2FIRE

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Re: Where to buy first/forever home. What would you do?
« Reply #1 on: September 06, 2017, 06:08:37 PM »
I can only offer that you should set your plans without any renters whatsoever to do worst case scenario planning.  If you get a renter, that is a bonus.  A live in renter, I'd recommend a month-to-month lease that can be cancelled by either party with 30 days notice (or less if allowed by your state) to deal with concerns of compatibility.

If you have enough down payment to be able to comfortably make the housing payment + an expected $3000 of "surprise" maintenance in a year while still hitting your financial goals (401K, Roth IRA, etc) you should be fine.

How stable is your job?  How long have you been with that company?

What are your wife's concerns about the townhouse and raising a family?

If one of you loses a job (downsized, fired, company collapses), how will you make the house payments if your house is 3.2 x annual salary?

JoeFas

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Re: Where to buy first/forever home. What would you do?
« Reply #2 on: September 06, 2017, 08:01:23 PM »
One thing I do to minimize costs is bike to work. It's 13.5 miles each way, so it's decent exercise, and with the right attire you can do it all year.

CareCPA

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Re: Where to buy first/forever home. What would you do?
« Reply #3 on: September 06, 2017, 09:10:42 PM »
As another data point: I hesitate to make my housing decisions based off of my job at the time.
I plan to pick and live in a house I enjoy for a long time. A job can sour on me pretty quickly.
Always happy to help with tax or accounting questions - feel free to private message me.

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

Yes, in case it confuses you, I did change my forum name.

cliff

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Re: Where to buy first/forever home. What would you do?
« Reply #4 on: September 07, 2017, 02:39:48 AM »
In my opinion scratch option 3.  Saving some money at the expense of a long commute isn't really saving anything.  You're losing quality together time, adding to frustration, and perhaps wouldn't be in the highest demand spot for real estate in terms of price appreciation.  I've done that in the past and it's the least rewarding on a daily basis and the most quickly changed housing choices I've made.  I'd always felt that I got neither the good part of living where I wanted in town (amenities, environment, friends, family etc) nor was I close to work.  I jad to travel to get anywhere.  Essentially a dud move I regretted.

I like option 2 or possibly 1, myself.  You might consider getting a place that works well for you now in terms of convenience and that you enjoy now.  Particularly if there's upside on the exit.  By this I mean that if you would enjoy living in a townhome in terms of convenience to amenities around town, less time commuting as a couple, not feeling stuck in middlesville  - there is a big benefit to these worth the nominal incremental monthly difference especially considering you're spreading out that difference in cost over say 30 years.  If it is in town the big advantages are that it would be easy for you to rent out your entire place and relocate to a home that suits you better in the future i.e. to raise a family.  This is looking at the bigger picture because investment in rental property could give you a much better return than just the difference of the lower price of a more remote house.  I love real estate investment because of three reasons:
1. You make money if the house appreciates in value.  Over the long term I would choose that a desirable downtown location tends to stay in demand and appreciate (without having a crystal ball).  In the area where I live now I wish I had purchased in the city years before.
2. If you get a fixed rate mortgage your monthly mortgage payment stays the same for the full term i.e. 30 years but your rent might go up say 3 percent compounded every year.    That spread is a huge benefit.
3. Leverage and OPM.  You are putting down a small percentage down to buy a house.  When you move out and rent to another family you are getting rental revenue for the entire amount which you paid only a portion to have the right to do that.  Not only are you making money on the two ways as I mentioned in the first two above but you are also having someone pay off your loan which builds the dollar amount of equity in your home which is dollars into your pocket when you sell.  You can also refinance when you want once there's enough money so you can pull it out to buy your next primary home or investment/income property.

These kinds of dollars are much greater than the difference in the incremental difference of the price of the house downtown vs. remotely...and someone else will ultimately pay those dollars to you.

I don't know the nuances of your area and no one has a crystal ball so take my thoughts with a grain of salt--  and run your plans and questions by a professional real estate person to get some opinions from someone with local real estate knowledge.

Curious about how you and she feel about these ideas?

Best,
Cliff


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Fishindude

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Re: Where to buy first/forever home. What would you do?
« Reply #5 on: September 07, 2017, 07:40:49 AM »
When it comes to a "forever house", forget the money and buy the house and location that you will be happy in forever.
If it happens to be the expensive location, just save money longer until you can easily afford it.

TreesBikesLove

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Re: Where to buy first/forever home. What would you do?
« Reply #6 on: September 15, 2017, 10:27:57 AM »
Is it even possible to buy a forever home at age 24? Opinions and feelings change dramatically over a lifetime.

For what it's worth, I'd get a place downtown to enjoy car-lite lifestyle and maximum job opportunity for future job changes (a when, not if, situation).

dycker1978

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Re: Where to buy first/forever home. What would you do?
« Reply #7 on: September 15, 2017, 10:49:22 AM »
So she most likely wont stay in her job for >5 years.  Your jobs sour on you pretty quickly.  YOU ARE LOOKING FOR A HOME>  GIVE YOUR HEAD A SHAKE.  YOU ARE NOT READY TO BUT A HOME YET.

Me and my SO bought a $275k home before I found MMM.  We make quite a bit more then the $99K you talk of in a MCOLA.  I wish we would have waited. 

CareCPA

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Re: Where to buy first/forever home. What would you do?
« Reply #8 on: September 15, 2017, 07:49:43 PM »
So she most likely wont stay in her job for >5 years.  Your jobs sour on you pretty quickly.  YOU ARE LOOKING FOR A HOME>  GIVE YOUR HEAD A SHAKE.  YOU ARE NOT READY TO BUT A HOME YET.
...
I don't really think you can make a blanket statement like this just drawing on your past experience.
There are plenty of people at that age who are ready to buy a home. Just because you weren't, doesn't mean OP isn't.
Always happy to help with tax or accounting questions - feel free to private message me.

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

Yes, in case it confuses you, I did change my forum name.

dycker1978

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Re: Where to buy first/forever home. What would you do?
« Reply #9 on: September 18, 2017, 08:29:15 AM »
So she most likely wont stay in her job for >5 years.  Your jobs sour on you pretty quickly.  YOU ARE LOOKING FOR A HOME>  GIVE YOUR HEAD A SHAKE.  YOU ARE NOT READY TO BUT A HOME YET.
...
I don't really think you can make a blanket statement like this just drawing on your past experience.
There are plenty of people at that age who are ready to buy a home. Just because you weren't, doesn't mean OP isn't.

Really? Op says they wont stay in their job, "they sour on jobs quickly", and so wont stay for more then 5 years?  This is the epitomes of not quite ready to buy a house.

adamcollin

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Re: Where to buy first/forever home. What would you do?
« Reply #10 on: September 18, 2017, 09:42:56 AM »
Hello mustachians.  Looking for some advice on where to buy a house that we plan on staying in until retirement.  My SO and I make 99k annually and are looking for a house that is 320k max.  I work downtown and she works about 8 miles north which takes about 20 minutes to drive. The 8 miles between my work and hers is the most expensive real estate in the whole city.  Houses are minimum 450k or this would be the perfect location.

 Option 1:  Houses within a couple miles of her work go for 300+. She may not work at this company longer than 5 years.  I'd hate to buy a house right next to it and then she switch jobs.  She also  works from home 2 days a week.  My job downtown would be a 10 mile drive each way and then I'd have to pay $50 a month for parking.  For me to bike it'd be 12 miles each way but along the greenway.  We also have a friend who said they'd rent a room from us if we lived in the north part of town for $500 a month but that'd probably  be 5 years max.

Option 2:  Townhouse downtown.  This would cost us probably 350k.  Above our max but I could sell my car for sure which no other option allows.  My SO says that she doesn't think she could raise a family in a townhouse.  Also,  we could probably rent a room out for $750 a month but she thinks it'd be weird if it was someone we didn't know.

Option 3:  Houses 10 miles east go for 220-250k.  We could buy a house east of downtown where we would both have to drive 10 miles each way to work but would be a lot cheaper.  We probably couldn't find a roommate that would live with us there.  I'd also have to pay for parking at work.

I would have gone for 2nd option as it would be very profitable in the longer run.
Lone Star Realty & Property Management, Inc

CareCPA

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Re: Where to buy first/forever home. What would you do?
« Reply #11 on: September 18, 2017, 10:40:44 AM »
So she most likely wont stay in her job for >5 years.  Your jobs sour on you pretty quickly.  YOU ARE LOOKING FOR A HOME>  GIVE YOUR HEAD A SHAKE.  YOU ARE NOT READY TO BUT A HOME YET.
...
I don't really think you can make a blanket statement like this just drawing on your past experience.
There are plenty of people at that age who are ready to buy a home. Just because you weren't, doesn't mean OP isn't.
Really? Op says they wont stay in their job, "they sour on jobs quickly", and so wont stay for more then 5 years?  This is the epitomes of not quite ready to buy a house.
I never plan to stay at a job more than a couple years. That doesn't mean when I leave that job that I'll be broke with no income options. If everyone waited to buy a house until they found a job they wanted to stay at forever, no one would ever buy a house.

Edited to fix quote levels.
« Last Edit: September 18, 2017, 06:23:13 PM by CareCPA »
Always happy to help with tax or accounting questions - feel free to private message me.

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

Yes, in case it confuses you, I did change my forum name.

Jon Bon

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Re: Where to buy first/forever home. What would you do?
« Reply #12 on: September 18, 2017, 10:42:57 AM »
LOL

"Forever Home" A term invented by realtors to encourage young buyers to buy a much more expensive house than they need or can afford.

Sorry its kind of a stupid term for 95% of buyers. 24 year old JonBon would in no way recognize 34 year old JonBon let alone 44 or 54. Odds are the forever home is not going to work for most people. Unless you have access to an accurate crystal ball I think going on all in on a forever home is foolish. Life events happen, the 2.3 kids you were planning on did not happen, maybe a parent needs to live with you. Maybe your job moves far from your house, literally anything can happen.

My personal experience is buying 3 different homes by the time I was 31, I would not be nearly where I am financially and skill wise if I had just purchased a fancy home right off the bat, Heck I would probably still be slaving away at my original job. Instead I was able to quit and live off my passive income at 33.

GuitarStv

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Re: Where to buy first/forever home. What would you do?
« Reply #13 on: September 18, 2017, 10:52:16 AM »
It's important to remember that a 'forever home' needs to take into account your frailties as you age.  Are you going to be able to do yard work in your 80s?  Will you be able to walk up any stairs at all?  How hard is it going to be to make your dwelling wheelchair accessible?  Is the house large enough for kids?  Is it too large for you to be able to clean on your own in your 70s?

You might be able to stay at a place for 40 years, but the odds are that your needs will change dramatically in ways that you can't predict.  I don't think that a 'forever home' really exists for anyone.

Dicey

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Re: Where to buy first/forever home. What would you do?
« Reply #14 on: September 19, 2017, 04:58:30 AM »
Agree that Forever Home is marketing bullshit. "They" also like to point out that Warren Buffet still lives in the same starter home, blah x3. I'm sure he and/or his wife have remodeled the shit out of it, plus he owns other homes elsewhere, so it's not like it's the only place he has to hang his hat.
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Lmoot

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Re: Where to buy first/forever home. What would you do?
« Reply #15 on: September 19, 2017, 09:18:17 AM »
 I agree that the term "forever home" is kind of silly. I do however think that it is used more colloquially than literally these days, to also mean, "plan on staying for a while" house. In my case I accidentally bought my forever home at 25. It was the low of the recession, plus I got 8000 from the government, and it's a house I couldn't afford today.

 It also has sentimental value to me. My entire family, including my grandmother helped work on it. I have plants growing there, which were transplanted from my grandmothers yard. I have a tree growing there that was given to me under sentimental circumstances as well. Plus it's in a bomb location. Basically a little lush oasis in an urban area.

Regardless of if I live there or not (currently I am renting it out), I will never sell it. And even if I don't live there permanently in the future, it's in a tourist area so it would at least be a vacation house. I also believe deeply in roots, and though I do plan on living in other areas of the country, of the world, I like the idea of having something in my hometown to always go back to. So yes, you can make the commitment to own a property long term, in your 20s. One thing I didn't do was purchased the house based on the location of a job. Especially on an early retirement forum, I'm surprised that this is a consideration.

It just so happens by dumb luck, that I bought my house across the street from the type of place I would love to continue working at after retirement.
« Last Edit: September 21, 2017, 03:19:19 AM by Lmoot »

Jrr85

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Re: Where to buy first/forever home. What would you do?
« Reply #16 on: September 19, 2017, 10:00:38 AM »
Hello mustachians.  Looking for some advice on where to buy a house that we plan on staying in until retirement.  My SO and I make 99k annually and are looking for a house that is 320k max.  I work downtown and she works about 8 miles north which takes about 20 minutes to drive. The 8 miles between my work and hers is the most expensive real estate in the whole city.  Houses are minimum 450k or this would be the perfect location.

 Option 1:  Houses within a couple miles of her work go for 300+. She may not work at this company longer than 5 years.  I'd hate to buy a house right next to it and then she switch jobs.  She also  works from home 2 days a week.  My job downtown would be a 10 mile drive each way and then I'd have to pay $50 a month for parking.  For me to bike it'd be 12 miles each way but along the greenway.  We also have a friend who said they'd rent a room from us if we lived in the north part of town for $500 a month but that'd probably  be 5 years max.

Option 2:  Townhouse downtown.  This would cost us probably 350k.  Above our max but I could sell my car for sure which no other option allows.  My SO says that she doesn't think she could raise a family in a townhouse.  Also,  we could probably rent a room out for $750 a month but she thinks it'd be weird if it was someone we didn't know.

Option 3:  Houses 10 miles east go for 220-250k.  We could buy a house east of downtown where we would both have to drive 10 miles each way to work but would be a lot cheaper.  We probably couldn't find a roommate that would live with us there.  I'd also have to pay for parking at work.

How much of a downpayment do you have? 
I would not be in a hurry to buy something that costs more than 3 times my salary unless my downpayment was big enough that the loan was something closer to two or two and a half times my salary. 
I certainly wouldn't do it with the expectation that I would stay there until retirement.
And I wouldn't do anything that actually needed a roommate for it to be comfortable financially.
 

elvizzle

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Re: Where to buy first/forever home. What would you do?
« Reply #17 on: September 20, 2017, 07:54:04 PM »
Wait until you start thinking about having a family before buying your "forever home".  Your needs will change once you starting adding kids to the equation.

Lmoot

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Re: Where to buy first/forever home. What would you do?
« Reply #18 on: September 21, 2017, 03:29:32 AM »
It's important to remember that a 'forever home' needs to take into account your frailties as you age.  Are you going to be able to do yard work in your 80s?  Will you be able to walk up any stairs at all?  How hard is it going to be to make your dwelling wheelchair accessible?  Is the house large enough for kids?  Is it too large for you to be able to clean on your own in your 70s?

You might be able to stay at a place for 40 years, but the odds are that your needs will change dramatically in ways that you can't predict.  I don't think that a 'forever home' really exists for anyone.

I don't agree. I would never buy a house while I am young, based on what potentially 80 year old me may need. If that were the case, then everybody would be living in single level homes, and no one would ever buy multi levels or apartments. Besides there is a lot that can be done with lifts and ramps. Or if you are that frail, you might need to live elsewhere, where someone can look after you. FWIW, I know plenty of people (and in my own family), who could take stairs until they died.

I will actually be remodeling my house to include stairs (want to add a split level addition), it will be half levels, so more like "steps" than stairs. But yeah, if you have 40 years of healthy stair stepping ahead of you, that would be silly to nix that in anticipation of last several years not being capable. There's planning for the future, then there's crippling the present.

GuitarStv

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Re: Where to buy first/forever home. What would you do?
« Reply #19 on: September 22, 2017, 08:47:49 AM »
It's important to remember that a 'forever home' needs to take into account your frailties as you age.  Are you going to be able to do yard work in your 80s?  Will you be able to walk up any stairs at all?  How hard is it going to be to make your dwelling wheelchair accessible?  Is the house large enough for kids?  Is it too large for you to be able to clean on your own in your 70s?

You might be able to stay at a place for 40 years, but the odds are that your needs will change dramatically in ways that you can't predict.  I don't think that a 'forever home' really exists for anyone.

I don't agree. I would never buy a house while I am young, based on what potentially 80 year old me may need. If that were the case, then everybody would be living in single level homes, and no one would ever buy multi levels or apartments. Besides there is a lot that can be done with lifts and ramps. Or if you are that frail, you might need to live elsewhere, where someone can look after you. FWIW, I know plenty of people (and in my own family), who could take stairs until they died.

I will actually be remodeling my house to include stairs (want to add a split level addition), it will be half levels, so more like "steps" than stairs. But yeah, if you have 40 years of healthy stair stepping ahead of you, that would be silly to nix that in anticipation of last several years not being capable. There's planning for the future, then there's crippling the present.

I agree completely.  That's why the very idea of a forever home is kinda silly, nobody is planning for forever when they buy a home.

CareCPA

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Re: Where to buy first/forever home. What would you do?
« Reply #20 on: September 24, 2017, 08:18:43 PM »
It's important to remember that a 'forever home' needs to take into account your frailties as you age.  Are you going to be able to do yard work in your 80s?  Will you be able to walk up any stairs at all?  How hard is it going to be to make your dwelling wheelchair accessible?  Is the house large enough for kids?  Is it too large for you to be able to clean on your own in your 70s?

You might be able to stay at a place for 40 years, but the odds are that your needs will change dramatically in ways that you can't predict.  I don't think that a 'forever home' really exists for anyone.

I don't agree. I would never buy a house while I am young, based on what potentially 80 year old me may need. If that were the case, then everybody would be living in single level homes, and no one would ever buy multi levels or apartments. Besides there is a lot that can be done with lifts and ramps. Or if you are that frail, you might need to live elsewhere, where someone can look after you. FWIW, I know plenty of people (and in my own family), who could take stairs until they died.

I will actually be remodeling my house to include stairs (want to add a split level addition), it will be half levels, so more like "steps" than stairs. But yeah, if you have 40 years of healthy stair stepping ahead of you, that would be silly to nix that in anticipation of last several years not being capable. There's planning for the future, then there's crippling the present.

I agree completely.  That's why the very idea of a forever home is kinda silly, nobody is planning for forever when they buy a home.
I think I'm the odd one out in this conversation.
We're wrapping up building a house now. It is setup for our current time in life - i.e. child(ren), pets, etc. We also made sure it has a first-floor master suite in case we stay here forever. No steps to the porch, easy enough land to take care of, first floor laundry. All I'll have to do when I'm old and grey is pay someone to plow our driveway so I can get to my (presumably) daily doctor appointments.
Always happy to help with tax or accounting questions - feel free to private message me.

I am a licensed CPA in Pennsylvania. However, any tax advice I give should be considered general information and not used in the avoidance of tax. There is most likely information about your situation that I do not know, and thus you should do your own additional research.

Yes, in case it confuses you, I did change my forum name.