The Money Mustache Community

Around the Internet => Antimustachian Wall of Shame and Comedy => Topic started by: talltexan on November 29, 2016, 10:26:33 AM

Title: My BIL's new house
Post by: talltexan on November 29, 2016, 10:26:33 AM
All the in-laws were visiting my house for Thanksgiving. Everyone else is sooooo excited about this new house my Brother-in-law is buying. It's a $380,000 house, about an hour south of DT St. Louis, for annual income of perhaps $120,000.


Does this sound like a stretch to anyone else here? They aren't really trying to sell their current house (worth perhaps $180,000), but I imagine they will soon. His wife is pretty spendy, doesn't seem to worry about things mustachian...
Title: Re: My BIL's new house
Post by: Chris22 on November 29, 2016, 10:30:52 AM
I've always heard the rule of thumb that your house "should be" ~3x your annual income.  So $380k on $120k would follow that rule. 

Beyond that, is it smart?  Way too many variables to say yes or no.

"The now-defunct Washington Mutual Bank suggested up to 4-5 times: As a broad generalization, most people can afford to purchase a house worth about three times their total (gross) annual income, assuming a 20% down payment and a moderate amount of other long-term debts, such as car or student loan payments.Jul 22, 2015"

https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=how%20many%20times%20annual%20income%20for%20house
Title: Re: My BIL's new house
Post by: dougules on November 29, 2016, 10:39:46 AM
What does $380k get you in that area?  Here that would be a palace.  In the Bay Area it would be a cardboard box.  Does he have a bunch of kids or something?

He can probably afford it, but it sounds completely frivolous if the area is as LCOL as I'm guessing it is.  You're family's all wowed by it if it's big and fancy, but I hope he likes his job and that it's good and secure. 

I'm guessing he also extended his commute, too?
Title: Re: My BIL's new house
Post by: TheGrimSqueaker on November 29, 2016, 10:53:55 AM
I've always heard the rule of thumb that your house "should be" ~3x your annual income.  So $380k on $120k would follow that rule. 

Beyond that, is it smart?  Way too many variables to say yes or no.

"The now-defunct Washington Mutual Bank suggested up to 4-5 times: As a broad generalization, most people can afford to purchase a house worth about three times their total (gross) annual income, assuming a 20% down payment and a moderate amount of other long-term debts, such as car or student loan payments.Jul 22, 2015"

https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=how%20many%20times%20annual%20income%20for%20house

I've always thought that asking a bank how much I can afford to borrow is a bit like asking a fox to guard the henhouse. Didn't Stanley and Danko recommend that people never have a mortgage balance of more than twice their annual realized income after taxes?
Title: Re: My BIL's new house
Post by: Chris22 on November 29, 2016, 11:00:14 AM
I've always heard the rule of thumb that your house "should be" ~3x your annual income.  So $380k on $120k would follow that rule. 

Beyond that, is it smart?  Way too many variables to say yes or no.

"The now-defunct Washington Mutual Bank suggested up to 4-5 times: As a broad generalization, most people can afford to purchase a house worth about three times their total (gross) annual income, assuming a 20% down payment and a moderate amount of other long-term debts, such as car or student loan payments.Jul 22, 2015"

https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=how%20many%20times%20annual%20income%20for%20house

I've always thought that asking a bank how much I can afford to borrow is a bit like asking a fox to guard the henhouse. Didn't Stanley and Danko recommend that people never have a mortgage balance of more than twice their annual realized income after taxes?

You'll note WaMu quoted 4-5x, and whatever this source is ratcheted it down to 3x.  Also, it includes a caveat about 20% down, so it's really a mortgage of $300k on $120k.
Title: Re: My BIL's new house
Post by: talltexan on November 29, 2016, 11:12:32 AM
5 BR, 3 BATH house on 4 acres. It's about 10 min extra commute for him, 5 for her. She is really excited about filling it with a bunch of new furniture.
Title: Re: My BIL's new house
Post by: ketchup on November 29, 2016, 11:15:09 AM
5 BR, 3 BATH house on 4 acres. It's about 10 min extra commute for him, 5 for her. She is really excited about filling it with a bunch of new furniture.
Ugh, gross.  If I felt like spending that kind of coin on a house, it would be to move substantially CLOSER to work (I work in an expensive suburb).
Title: Re: My BIL's new house
Post by: TrMama on November 29, 2016, 11:19:16 AM
Wow, you must live in a pretty cheap area. I'd have been thrilled to get something with only a minor rat infestation for $380K.

Maybe their old house will become the first door in their new rental empire.
Title: Re: My BIL's new house
Post by: aFrugalFather on November 29, 2016, 11:19:22 AM
5 BR, 3 BATH house on 4 acres. It's about 10 min extra commute for him, 5 for her. She is really excited about filling it with a bunch of new furniture.

10 min extra on a 1min commute is not bad, but if the commute was already an hour?  The extra signifier doesn't really let people know how far this place is relatively....
Title: Re: My BIL's new house
Post by: MilesTeg on November 29, 2016, 11:25:36 AM
All the in-laws were visiting my house for Thanksgiving. Everyone else is sooooo excited about this new house my Brother-in-law is buying. It's a $380,000 house, about an hour south of DT St. Louis, for annual income of perhaps $120,000.


Does this sound like a stretch to anyone else here? They aren't really trying to sell their current house (worth perhaps $180,000), but I imagine they will soon. His wife is pretty spendy, doesn't seem to worry about things mustachian...

Not Even remotely a stretch in the current market. PITI on that mortgage, even if he financed 100% is still less than 20% of his income. A stretch would be a PITI around 28-30%, which is also the limit of what a bank would lend.
Title: Re: My BIL's new house
Post by: slugline on November 29, 2016, 01:34:02 PM
5 BR, 3 BATH house on 4 acres. It's about 10 min extra commute for him, 5 for her. She is really excited about filling it with a bunch of new furniture.

Come back to this thread (assuming this forum is still up and you remember) in about 18 to 24 months and give us a "hedonic adaptation" update. Let's see if they are still thrilled with the place or if they will be eyeing another upgrade.
Title: Re: My BIL's new house
Post by: Lagom on November 29, 2016, 01:41:37 PM
DW and I are looking to buy a $800-900k house in a couple years with a ~$150-160k combined salary, and still expect to save maybe 40-45% of our income after the purchase, so no it's not too much if they are mustachian. But it sounds like they are not, and also that for the area you live, that house is unnecessarily extravagant (In our case, we expect 3/1 or 3/2 with less than 1,300 square feet. Hooray Bay Area prices!).

Debt to income ratio is probably a more useful metric than salary if we are talking pure affordability. For us, the mortgage will literally be our only debt and even with taxes and insurance should cost about what we would have to pay in rent, maybe a couple hundred more (as long as rates don't rise too much!).
Title: Re: My BIL's new house
Post by: talltexan on November 29, 2016, 02:33:58 PM
COUPLE OF NOTES:

Brother in law admitted they are still making payments on a CR-V (their other car was a graduation gift from their parents/my in-laws). Brother-in-law works as a young attorney in a firm in which SIL's father is a partner. No idea whether he plans to buy in at some point. He commutes roughly 5-7 miles west to the county seat, dropping off kids at daycare on the way. SIL commutes to the city-center (roughly 40 miles North), two days a week, works from home on the other days.
Title: Re: My BIL's new house
Post by: MilesTeg on November 29, 2016, 04:05:03 PM
COUPLE OF NOTES:

Brother in law admitted they are still making payments on a CR-V (their other car was a graduation gift from their parents/my in-laws). Brother-in-law works as a young attorney in a firm in which SIL's father is a partner. No idea whether he plans to buy in at some point. He commutes roughly 5-7 miles west to the county seat, dropping off kids at daycare on the way. SIL commutes to the city-center (roughly 40 miles North), two days a week, works from home on the other days.

So he has pretty much a silver spoon life (well off parents/future inheritance and a guaranteed high paying job in family business) and you are worried about him buying a home that is reasonably affordable even without those life advantages??
Title: Re: My BIL's new house
Post by: russianswinga on November 29, 2016, 04:14:21 PM
Everything depends on the market.
I have an income that *shoud* hit 90K this year (wife is a stay at home mom).
We are hoping to buy a standalone house (3 bedrooms for us, the kid, + office/guest room), with a huge-for-us square footage of 1600 sq feet or so, in the next few years. This will cost $450-550K.

We are currently in a 1200sq ft 2-bedroom condo.
It is valued at $300K, we have about $100K in equity.

If we were in a different part of the country, like North Carolina or Tennessee, we could have not just a McMansion, but an actual mansion for the $300K

If we were in San Jose, California, we would not be able to afford even a standalone house for 1/2 a million. Only a condo.
But... we're in San Diego, where the market is only slightly stupid, not completely irreversibly retarded like it is further north.

So... it's all about the market. 
Title: Re: My BIL's new house
Post by: scottish on November 29, 2016, 04:33:29 PM
Kids in Toronto are dropping low 7 figures on old houses with combined incomes in the $100-$150K range.    They can't get 30 year mortgages up here, so if interest rates jump a percentage point or two they will be pooched when they have to renew.     Leverage gone wild.

the local governments are jumping on the opportunity to tax the snot out of them too.  $20K+ in land transfer taxes, for example.
Title: Re: My BIL's new house
Post by: Goldielocks on November 30, 2016, 12:21:08 AM
Kids in Toronto are dropping low 7 figures on old houses with combined incomes in the $100-$150K range.    They can't get 30 year mortgages up here, so if interest rates jump a percentage point or two they will be pooched when they have to renew.     Leverage gone wild.

the local governments are jumping on the opportunity to tax the snot out of them too.  $20K+ in land transfer taxes, for example.

is that an oxymoron or just sarcasm...   ? (bolded)   I tried to picture a million dollars as a "low 7 figure" number and just couldn't even....  (maybe if the number was odd? Then I could even...but that's backward.. It has a one in it, does that make it odd?)   

.dry humour.
Title: Re: My BIL's new house
Post by: talltexan on November 30, 2016, 07:44:07 AM
I'm actually wondering if Trump's election won't give a second wind to the real estate bubbles in 'Ronto and Vancouver.
Title: Re: My BIL's new house
Post by: boarder42 on November 30, 2016, 07:57:58 AM
i feel like someone could easily have written this post up about me and i'll be retired by 37 with over 2MM in the bank. 

just bought a lake front house on the other side of the same state thats a McMansion status - 441k(4bed 3.5bath). (but building what we wanted with lake front lot prices would have been more so i settled for a steal on one thats larger with a bit more wasted space - its about the location) plus i got a 3.25% 30 year rate.  so its like way way free money.

i have payments on both our cars WHY ... b/c interest rates are cheap. 
i have a boat b/c we use the lake but i do it as affordably as possible and am still break even on it. No payment here probably should have one though if i could find a good rate.

the list could go on.. but if you make a higher income its quite easy to save 60%+ and still have some things people would make fun of around here.  could we live in a small house close to work and retire by 33 probably.  but i made a cognitive decision to work 2 more years from our previous 35 goal to move to this house and dont really have any regrets since we made the jump. 
Title: Re: My BIL's new house
Post by: patchyfacialhair on November 30, 2016, 08:16:22 AM
Me personally, I think it's a little too expensive. We make a little more money than them and feel we are pushing it by buying a house less expensive than theirs.

That being said, I don't think it would be a stretch for the average american consumer. They should still be able to save 10-15% for retirement, comfortably pay the mortgage, and still have a ton of money for travelling/restaurants/expensive haircuts.
Title: Re: My BIL's new house
Post by: pancakes on November 30, 2016, 08:26:23 AM
$380k will barely get a 1 bedroom apartment where I live. Granted I live in a completely different country but I know plenty of people here on similar combined incomes to the OP's example who are buying $600k+ houses with a 10% deposit. $380k seems ridiculously cheap to me.

Clearly it depends completely on the market.
Title: Re: My BIL's new house
Post by: RetiredAt63 on November 30, 2016, 08:37:43 AM
I'm actually wondering if Trump's election won't give a second wind to the real estate bubbles in 'Ronto TO (the center of the known universe) and Vancouver.
Fixed that for you  ;-)
Title: Re: My BIL's new house
Post by: dogboyslim on November 30, 2016, 11:21:25 AM
I think its too much, but not unreasonable.  We purchased a home at 1.4x annual income. for a mortgage at 1.12x annual income.  That translated to about 15% of monthly expense.  At that rate, we could easily afford all the expensive kids activities and still pack away a good bit of savings, including paying the mortgage at a faster rate.  When I purchased my first home, I was at 3x annual income and I struggled to save much of anything even while living fairly frugally (but not by mmm standards).  I would never come close to that kind of leverage again, and if I had it to do over, I'd not have purchased that place.
Title: Re: My BIL's new house
Post by: adwasy on November 30, 2016, 11:30:44 AM
I don't know if I will ever be able to relate to the United States home prices...

380K at an annual salary of 120K seems incredibly reasonable to me.  I have friends with half the salary (in cdn $) that have put 5% down on shoe-boxes for that price.
Title: Re: My BIL's new house
Post by: Chris22 on November 30, 2016, 11:35:13 AM
I don't know if I will ever be able to relate to the United States home prices...

380K at an annual salary of 120K seems incredibly reasonable to me.  I have friends with half the salary (in cdn $) that have put 5% down on shoe-boxes for that price.

Likewise, I've watched property shows that take place in Canada with things like "I'm a barrista, and my wife is an elementary music teacher, and we're budgeting $850-900k for our first home..." that make me say WTF??
Title: Re: My BIL's new house
Post by: hucktard on November 30, 2016, 01:40:00 PM
A $380K house on $120K salary is very reasonable. Especially if BIL is a lawyer, because his salary will likely increase. Their commutes aren't even that long. It may not be super mustachian, but its not crazy spendy pants by any means. They could still save a large fraction of their income if they are frugal in other areas.
Title: Re: My BIL's new house
Post by: Making Cookies on November 30, 2016, 02:51:55 PM
We make good money and owe less on our house than we make per year. Our car broke and DW and I are agreeing nope, don't really want to replace that car. Would rather repair it and drive it several more years. "Hey, what would a paint job cost?" We might paint it ourself. 

Too much fun to watch the accounts build and know that if we want to impulsively do something out of town or replace an appliance out of our fun money we can and not blink an eye.

We'd love to have a big fancy house with fancy furniture and have people walk in and say "WOW" but like Dogboyslim was explaining, not fun to even feel the pinch of your spending. Our college years thin budget is still fresh in my mind despite being a long time ago.
Title: Re: My BIL's new house
Post by: Turnbull on November 30, 2016, 03:52:54 PM

If we were in a different part of the country, like North Carolina or Tennessee, we could have not just a McMansion, but an actual mansion for the $300K


Depends on where you go in Tennessee. If we can stop everyone from moving to Nashville maybe the real estate market wouldn't be going so crazy.

Here's your 300k mansion in Nashville ;) :

http://www.realtracs.com/PropertyDetail.aspx?PropertyClass=RES&DMQL=(AreaID%3d%7c1%2c2%2c3%2c4%2c5%2c6%2c7%2c8)%2c(ListPrice%3d280000-320000)%2c(ListingStatusID%3d1)%2c(OfficeListIsActive%3d1)%2c(IsListedOnInternet%3d1)&AreaID=1,2,3,4,5,6,7,8&MlsNum=1769581&Digest=lvFWuA1kv4PbPERSTzmjiA
Title: Re: My BIL's new house
Post by: SwordGuy on November 30, 2016, 04:23:53 PM
For perspective:

http://www.crackshackormansion.com/ (http://www.crackshackormansion.com/)
Title: Re: My BIL's new house
Post by: Turnbull on November 30, 2016, 04:35:07 PM
For perspective:

http://www.crackshackormansion.com/ (http://www.crackshackormansion.com/)

How does a normal person actually live in Vancouver?
Title: Re: My BIL's new house
Post by: Silverado on November 30, 2016, 05:13:17 PM

We'd love to have a big fancy house with fancy furniture and have people walk in and say "WOW" but like Dogboyslim was explaining, not fun to even feel the pinch of your spending.

I'm curious, why would you love to have people say 'wow' because you spent a lot of money? I hear/sense this type of attitude a lot, and just don't understand.
Title: Re: My BIL's new house
Post by: Undecided on November 30, 2016, 05:50:03 PM
I don't know if I will ever be able to relate to the United States home prices...

380K at an annual salary of 120K seems incredibly reasonable to me.  I have friends with half the salary (in cdn $) that have put 5% down on shoe-boxes for that price.

I don't know where in Canada you live, but it's not like the Vancouver/Toronto housing markets stand for all of Canada.

http://www.crea.ca/housing-market-stats/national-average-price-map/
Title: Re: My BIL's new house
Post by: Kansas Terri on November 30, 2016, 06:07:28 PM
I really enjoy looking at wonderful things that other people own! But, in the words of my Mother, "I would hate to have to keep it clean"!

Enjoy you brother's house, but never envy him!!!!!!!!!! I would rather vacuum for 15 minutes than an hour, I would rather clean 2 small bathrooms than one big one, I would rather....

You get the point.
Title: Re: My BIL's new house
Post by: talltexan on December 01, 2016, 07:45:29 AM
Closing date on the house is today.

I shared the numbers and the generally re-assuring feedback from this thread with my wife. Her response: "So does that mean we should buy a bigger house?" I think I'm going to need to start a new thread for that one.
Title: Re: My BIL's new house
Post by: zephyr911 on December 01, 2016, 08:31:37 AM
5 BR, 3 BATH house on 4 acres. It's about 10 min extra commute for him, 5 for her. She is really excited about filling it with a bunch of new furniture.
That is the epitome of consumer sucka shit right there. Pay more to spend more obligatory time working and more time driving just for the privilege of having more shit to take care of and more floor space under roof that you need to fill with more shit to take care of and pay for by driving farther to work and- *open mouth insert gun* fucking kill me already. It doesn't even matter if they can easily afford it, it's still dumbass circular thinking.

For perspective:
http://www.crackshackormansion.com/ (http://www.crackshackormansion.com/)
How does a normal person actually live in Vancouver?
My friends there rent (share) houses, and very small ones unless they have families/groups of 4-6....

"The now-defunct Washington Mutual Bank suggested up to 4-5 times: As a broad generalization....

Do their metrics have anything to do with their now-defunct status?

Our place is worth 1x my annual gross (not counting DW's), debt 85% of that, and I earn the mortgage payment every 1.75 workdays... ;)
Title: Re: My BIL's new house
Post by: mtn on December 01, 2016, 08:42:37 AM
We bought a house for $345 on similar income. It made sense for us. The house is bigger than we need, but about the smallest we could find since anything small gets bought up and replaced with a McMansion.

I don't see the issue with their house. A little big maybe, but I personally would love a huge house, other than heating and cooling it.
Title: Re: My BIL's new house
Post by: adwasy on December 01, 2016, 01:39:41 PM
I don't know if I will ever be able to relate to the United States home prices...

380K at an annual salary of 120K seems incredibly reasonable to me.  I have friends with half the salary (in cdn $) that have put 5% down on shoe-boxes for that price.

I don't know where in Canada you live, but it's not like the Vancouver/Toronto housing markets stand for all of Canada.

http://www.crea.ca/housing-market-stats/national-average-price-map/

I'm new to this forum but I'm already sick of this attitude. I speak from my experience. No shit if I wanted to live in North Battleford I could get a house for less...

Edit: Undecided, did you even read your own link? Average home price in Canada is $481K. I guarantee you that is not for a 5 bed 3 bath house that op is describing. What is the point of your comment?
Title: Re: My BIL's new house
Post by: MilesTeg on December 01, 2016, 02:05:14 PM
That is the epitome of consumer sucka shit right there. Pay more to spend more obligatory time working and more time driving just for the privilege of having more shit to take care of and more floor space under roof that you need to fill with more shit to take care of and pay for by driving farther to work and- *open mouth insert gun* fucking kill me already. It doesn't even matter if they can easily afford it, it's still dumbass circular thinking.


This is a post/poster that has drunk way too much of the MMM cool-aid. Real Estate is not a consumer good, and your subjective opinion about the relative issues or merits of this particular house are entirely irrelevant. Perhaps you have no use for anything but a shoe box to sleep in, but there are many quite good uses for a larger house and/or having some land whether it's keeping horses, frequent entertaining, or you are planning for a future that includes children or taking care of elderly family/friends down the road.

In short, get over yourself.
Title: Re: My BIL's new house
Post by: Lagom on December 01, 2016, 02:17:43 PM
That is the epitome of consumer sucka shit right there. Pay more to spend more obligatory time working and more time driving just for the privilege of having more shit to take care of and more floor space under roof that you need to fill with more shit to take care of and pay for by driving farther to work and- *open mouth insert gun* fucking kill me already. It doesn't even matter if they can easily afford it, it's still dumbass circular thinking.


This is a post/poster that has drunk way too much of the MMM cool-aid. Real Estate is not a consumer good, and your subjective opinion about the relative issues or merits of this particular house are entirely irrelevant. Perhaps you have no use for anything but a shoe box to sleep in, but there are many quite good uses for a larger house and/or having some land whether it's keeping horses, frequent entertaining, or you are planning for a future that includes children or taking care of elderly family/friends down the road.

In short, get over yourself.

While I don't completely disagree with your message, I hope you also realize that your argument represents exactly the sort of slippery slope that most spendy consumerists live their lives on. Real estate absolutely can be a consumer good in its own right. There is always a "good reason" to want a bigger house or fancier car, but like with most bad financial decisions, those reasons usually focus on things that have much less effect on happiness than the cost is worth. YMMV, of course, but this is a site for people who believe in the intrinsic value of FI and (generally) a relatively minimalist approach to material things. Opinions vary more widely on the latter, but at a certain point you can't really claim to be "mustachian," nor be upset when others point that out.
Title: Re: My BIL's new house
Post by: MilesTeg on December 01, 2016, 02:27:39 PM
That is the epitome of consumer sucka shit right there. Pay more to spend more obligatory time working and more time driving just for the privilege of having more shit to take care of and more floor space under roof that you need to fill with more shit to take care of and pay for by driving farther to work and- *open mouth insert gun* fucking kill me already. It doesn't even matter if they can easily afford it, it's still dumbass circular thinking.


This is a post/poster that has drunk way too much of the MMM cool-aid. Real Estate is not a consumer good, and your subjective opinion about the relative issues or merits of this particular house are entirely irrelevant. Perhaps you have no use for anything but a shoe box to sleep in, but there are many quite good uses for a larger house and/or having some land whether it's keeping horses, frequent entertaining, or you are planning for a future that includes children or taking care of elderly family/friends down the road.

In short, get over yourself.

While I don't completely disagree with your message, I hope you also realize that your argument represents exactly the sort of slippery slope that most spendy consumerists live their lives on. Real estate absolutely can be a consumer good in its own right. There is always a "good reason" to want a bigger house or fancier car, but like with most bad financial decisions, those reasons usually focus on things that have much less effect on happiness than the cost is worth. YMMV, of course, but this is a site for people who believe in the intrinsic value of FI and (generally) a relatively minimalist approach to material things. Opinions vary more widely on the latter, but at a certain point you can't really claim to be "mustachian," nor be upset when others point that out.

Does being 'mustachian' include being belligerent towards others choices from a position of zero context for that choice? That's the issue I have with the OP that I replied to. The cool-aid drinking position that the ONLY way is the most frugal way and that people who choose otherwise are 'dumbass circular logic consumer suckas' does more damage to the overall good message of MMM than anything else.
Title: Re: My BIL's new house
Post by: TrMama on December 01, 2016, 02:38:12 PM
For perspective:

http://www.crackshackormansion.com/ (http://www.crackshackormansion.com/)

How does a normal person actually live in Vancouver?

LOL. The last time that game was updated was 2010. For anyone playing it today, double the value of every property to get a 2016 estimate.

Normal people live in Vancouver the same way they do in NYC, Silicon Valley, Hong Kong, London, or any other large city. They live in very small apartments and don't have cars.
Title: Re: My BIL's new house
Post by: Chris22 on December 01, 2016, 02:39:01 PM
Does being 'mustachian' include being belligerent towards others choices from a position of zero context for that choice?

Well...yeah.  You've read some of MMM's blog posts, right?
Title: Re: My BIL's new house
Post by: MilesTeg on December 01, 2016, 02:47:21 PM
Does being 'mustachian' include being belligerent towards others choices from a position of zero context for that choice?

Well...yeah.  You've read some of MMM's blog posts, right?

LOL, MMMs schtick is somewhat tiresome, but does he attack people on a personal level whilst being willfully ignorant of context?
Title: Re: My BIL's new house
Post by: Chris22 on December 01, 2016, 02:50:08 PM
Does being 'mustachian' include being belligerent towards others choices from a position of zero context for that choice?

Well...yeah.  You've read some of MMM's blog posts, right?

LOL, MMMs schtick is somewhat tiresome, but does he attack people on a personal level whilst being willfully ignorant of context?

Not individuals, but yeah, he does speak in absolutes way more than I think he should. 
Title: Re: My BIL's new house
Post by: zephyr911 on December 01, 2016, 02:55:04 PM
This is a post/poster that has drunk way too much of the MMM cool-aid.
The irony. I'm so marginal that I often refer to myself as Must-"ish"-ian. I stated my case in dramatic terms, because I find it amusing to phrase things that way, period. (Hi, I'm Zephyr, have we met? I like dramatic words).
Quote
Real Estate is not a consumer good,
A personal residence absolutely is. It's one of the least worst ones, but it still is. It requires furnishing and upkeep, produces no cash flow, historically tracks the rate of inflation for a real return of 0%, and represents for many people the single largest outlay displacing actual investments.
Wanna talk to me about rentals, I'll tell you about how I'm beating the stock market with transitional multifamilies, but buying a bigger house to live in is a drag on FI. If it's what you really want, it should be the last thing you do before retiring.
Quote
and your subjective opinion about the relative issues or merits of this particular house are entirely irrelevant.
This is a discussion forum. Categorically dismissing the opinions of another on any topic, rather than engaging them on their own merits, is not only rude and uncalled-for, it misses the entire point of our being here and even calls into question the purpose of the site's existence. I've literally never talked to anyone on this forum in such a dismissive fashion and if I ever do, I hope someone calls me out for it.
Quote
Perhaps you have no use for anything but a shoe box to sleep in,
Bad assumption.
Quote
but there are many quite good uses for a larger house and/or having some land whether it's keeping horses, frequent entertaining, or you are planning for a future that includes children or taking care of elderly family/friends down the road.
This is all fine and good, but fundamentally indistinct from upgrading that Scion to a Tahoe, pre-emptively because someday you might need that third row and tow package).
Quote
In short, get over yourself.
Like I said, you're making way too much of perceived tone. We're all here for slightly different reasons, but life hacking to get ahead fast is the general thrust, and doing what this family is doing will put them behind, as opposed to many other alternatives of which we are all aware. I'm not going to apologize for straying into hyperbole while making that statement, because the statement is correct. They are free to make their choices, as are we all, but they would do well to be fully cognizant - as most first-world people are not, and as most LBYM/FI/FIRE/ERE/MMM-ers are, or strive to be - of the cause-and-effect relationships between those choices and their future financial state. Either way, they can do whatever they want. I'm not gonna worry about it... I'll be off pursuing my own agenda of charity work and beach time.
Cheers. :)
Title: Re: My BIL's new house
Post by: Lagom on December 01, 2016, 03:17:11 PM
Does being 'mustachian' include being belligerent towards others choices from a position of zero context for that choice?

Well...yeah.  You've read some of MMM's blog posts, right?

LOL, MMMs schtick is somewhat tiresome, but does he attack people on a personal level whilst being willfully ignorant of context?

The "consumer sucka" monniker is not intended to be a personal attack. It's shorthand for a mindset that many on this board acknowledge they themselves have embodied at various points in their lives. zephyr has responded for himself so I'll just note that as a long time member here, I personally read it as consistent with the jocular "face-punch" philosophy many posters adopt. Either way it remains valid to observe that more often than not, people increase their commute to buy bigger houses for reasons that are decidedly not mustachian. Sure there are "valid" reasons to want a large home, but not very many that don't involve consumeristic reasoning.
Title: Re: My BIL's new house
Post by: MilesTeg on December 01, 2016, 03:19:10 PM
The irony. I'm so marginal that I often refer to myself as Must-"ish"-ian. I stated my case in dramatic terms, because I find it amusing to phrase things that way, period. (Hi, I'm Zephyr, have we met? I like dramatic words).

Translation: you like acting like an immature ass.

Quote
A personal residence absolutely is. It's one of the least worst ones, but it still is. It requires furnishing and upkeep, produces no cash flow, historically tracks the rate of inflation for a real return of 0%, and represents for many people the single largest outlay displacing actual investments.
Wanna talk to me about rentals, I'll tell you about how I'm beating the stock market with transitional multifamilies, but buying a bigger house to live in is a drag on FI. If it's what you really want, it should be the last thing you do before retiring.

A consumer good is something that is consumed, i.e. used up. Things that hold value are not consumed. Of course, that they are not consumer goods doesn't necessarily mean they are the best use of the money. It depends entirely on ... wait for it ... the context of the situation.

Quote
This is a discussion forum. Categorically dismissing the opinions of another on any topic, rather than engaging them on their own merits, is not only rude and uncalled-for, it misses the entire point of our being here and even calls into question the purpose of the site's existence. I've literally never talked to anyone on this forum in such a dismissive fashion and if I ever do, I hope someone calls me out for it.

I did  not categorically dismiss your comments, I pointed out that they were subjective and given while being willfully ignorant of the context of the situation. Also concern trolling from someone who admits they like to act like an immature ass is hilarious.


Quote
This is all fine and good, but fundamentally indistinct from upgrading that Scion to a Tahoe, pre-emptively because someday you might need that third row and tow package).

So buying, say, a 3 bedroom house for 2 people that are going to shortly start a family is indistinct from buying an oversized, depreciating consumer good? That's a pretty ridiculous claim. Again, you are desperately trying to avoid context, because you'd rather use the opportunity to act like an immature ass.

Quote
Like I said, you're making way too much of perceived tone. We're all here for slightly different reasons, but life hacking to get ahead fast is the general thrust, and doing what this family is doing will put them behind, as opposed to many other alternatives of which we are all aware. I'm not going to apologize for straying into hyperbole while making that statement, because the statement is correct. They are free to make their choices, as are we all, but they would do well to be fully cognizant - as most first-world people are not, and as most LBYM/FI/FIRE/ERE/MMM-ers are, or strive to be - of the cause-and-effect relationships between those choices and their future financial state. Either way, they can do whatever they want. I'm not gonna worry about it... I'll be off pursuing my own agenda of charity work and beach time.
Cheers. :)

Ahh, the back tracking at 90mph. however, you re-confirmed that you just like to act like an ass. That's your choice and I won't try to dissuade you from it, but at least have the integrity to own it.

MOD EDIT: Read the forum rules.  If you can't debate a point without being rude, or insulting, please don't post.
Title: Re: My BIL's new house
Post by: MilesTeg on December 01, 2016, 03:28:32 PM

The "consumer sucka" monniker is not intended to be a personal attack. It's shorthand for a mindset that many on this board acknowledge they themselves have embodied at various points in their lives. zephyr has responded for himself so I'll just note that as a long time member here, I personally read it as consistent with the jocular "face-punch" philosophy many posters adopt. Either way it remains valid to observe that more often than not, people increase their commute to buy bigger houses for reasons that are decidedly not mustachian. Sure there are "valid" reasons to want a large home, but not very many that don't involve consumeristic reasoning.

I agree that people make poor choices regarding their home purchase, but like I've said many times now, it's all a matter of context. Even MMM acknowledges this.

As far as the jocular "face punch" stuff. That's the worst part of the MMM community. Encouraging childish behavior. But like I told the OP, if you want to act that way I won't try to stop you, but I do expect you to own it for what it is.

But again, I've never seen MMM go after a someone on a personal level sans context. He'll certainly roast someone buying a McMansion with a hummer to commute to his work an hour's drive away, but I've yet to see him attack someone for buying a truck to work their farm.
Title: Re: My BIL's new house
Post by: zephyr911 on December 01, 2016, 03:29:26 PM
Hypocrite. You can't simultaneously try to claim the moral high ground while repeating tired insults. When I'm over the mild irritation caused by said insults, I'm just gonna be bored, so don't expect further replies.
Title: Re: My BIL's new house
Post by: MilesTeg on December 01, 2016, 03:32:43 PM
Hypocrite. You can't simultaneously try to claim the moral high ground while repeating tired insults. When I'm over the mild irritation caused by said insults, I'm just gonna be bored, so don't expect further replies.

LOL I love it.

you: I like acting like an asshole
me: well, ok then I guess you're an asshole
you: OMG, why are you insulting me!

LMFAO
Title: Re: My BIL's new house
Post by: Undecided on December 01, 2016, 03:33:27 PM
I don't know if I will ever be able to relate to the United States home prices...

380K at an annual salary of 120K seems incredibly reasonable to me.  I have friends with half the salary (in cdn $) that have put 5% down on shoe-boxes for that price.

I don't know where in Canada you live, but it's not like the Vancouver/Toronto housing markets stand for all of Canada.

http://www.crea.ca/housing-market-stats/national-average-price-map/

I'm new to this forum but I'm already sick of this attitude. I speak from my experience. No shit if I wanted to live in North Battleford I could get a house for less...

Edit: Undecided, did you even read your own link? Average home price in Canada is $481K. I guarantee you that is not for a 5 bed 3 bath house that op is describing. What is the point of your comment?

Yes, I read it; I didn't mean to push your buttons, I was just focused on your phrase about not being able to relate to "the United States home prices"---they vary significantly across regions, as they do across regions in Canada. San Francisco housing is more expensive than any market in Canada, but the OP's BIL is buying on the outskirts of a tertiary city; maybe it's like buying near Halifax. It seems like that---housing prices outside major markets---is what you can't relate to. My point was just that the national comparison was misplaced, vs. a type-of-market comparison, for example.
Title: Re: My BIL's new house
Post by: Kansas Terri on December 01, 2016, 09:47:11 PM
Every person has the right to spend their hard-earned money on things that will bring them joy. For many of us, early retirement brings them joy. For this man, it well may be a big house. Personally, I would rather work on my oversized back yard instead of doing housework, and he and his family may prefer to do the extra housework. So my house is small but my yard is large, and his house is large.

It brings me joy to rebuild my home made greenhouse with my own 2 hands this winter. It may bring him joy to keep up a large house. IT IS HIS OWN CHOICE!
Title: Re: My BIL's new house
Post by: GoingConcern on December 01, 2016, 09:53:04 PM
$120k salary for a $380k home doesn't sound bad at all. 

Title: Re: My BIL's new house
Post by: Tjat on December 02, 2016, 06:44:04 AM
We bought a $400K house on a combined salary of $140K at the time. All depends on where you live. Also, the price is probably less significant to affordability than the monthly payment (homes are the only expense where this is probably relevant) as your price is often restricted to what's available in your location. Assuming a 30 year loan and 3.5% interest, that works out to a monthly payment of $1,706, which is only 17% of his gross income. Seems fine.
Title: Re: My BIL's new house
Post by: talltexan on December 02, 2016, 07:13:12 AM
So I am convinced that some part of a house is an investment, but some part of it is definitely just consumption.
Title: Re: My BIL's new house
Post by: Mississippi Mudstache on December 02, 2016, 07:43:24 AM
Point of reference: I just got pre-approval for a mortgage based on a household income of $76,000. I was pre-approved for $444,000: 5.8x my annual salary. Effing insane.

But $380,000 on a 120K salary seems reasonable to me. I bought my first house for $126,000 on a $42,000 salary, and that's when interest rates were 6-7%. Granted, it turned out to be a horrible decision, but that was because of the financial crisis, not because I couldn't afford the mortgage. I was never under any financial duress until I left the house and tried to sell the damn thing (it eventually sold for $79,000).
Title: Re: My BIL's new house
Post by: Chris22 on December 02, 2016, 08:08:49 AM
We bought a $400K house on a combined salary of $140K at the time. All depends on where you live. Also, the price is probably less significant to affordability than the monthly payment (homes are the only expense where this is probably relevant) as your price is often restricted to what's available in your location. Assuming a 30 year loan and 3.5% interest, that works out to a monthly payment of $1,706, which is only 17% of his gross income. Seems fine.

That's a good point too; assuming escrow of property tax, a $380k house could cost anywhere from, say, $200/mo to more than $1k/mo in property taxes.  That could wildly swing the affordability, and I'm guessing this guy is on the low end of that scale given his geography.
Title: Re: My BIL's new house
Post by: TheGrimSqueaker on December 02, 2016, 08:47:54 AM
For perspective:

http://www.crackshackormansion.com/ (http://www.crackshackormansion.com/)

How does a normal person actually live in Vancouver?

LOL. The last time that game was updated was 2010. For anyone playing it today, double the value of every property to get a 2016 estimate.

Normal people live in Vancouver the same way they do in NYC, Silicon Valley, Hong Kong, London, or any other large city. They live in very small apartments and don't have cars.

The great thing about Vancouver, though, is that you truly don't need a car even as a tourist. There's a badass bike-friendly public transit system and a reasonably well maintained system of sidewalks. You don't need a car even to get to the airport. I went adventuring there again a couple years ago and the city is still benefiting from the Expo 86 transportation infrastructure, which they have upgraded since. I didn't need a car at all, even with luggage. Schlepping groceries around would be a piece of cake compared to when I had to do it here several years ago.
Title: Re: My BIL's new house
Post by: Dicey on December 02, 2016, 10:15:48 AM
Hypocrite. You can't simultaneously try to claim the moral high ground while repeating tired insults. When I'm over the mild irritation caused by said insults, I'm just gonna be bored, so don't expect further replies.
Zephyr, you've been around long enough to understand that the comment that elicited MT"s rather eloquent response(s) was not particularly helpful. Frankly, to this long-time reader, it was far more of a rant than you're willing to accept responsibility for. Resorting to name calling does nothing to improve that impression.

If you're FIRE and spend your days at the beach and doing good works, you've clearly grabbed the brass ring. Why be so bitter?
Title: Re: My BIL's new house
Post by: Dicey on December 02, 2016, 10:49:21 AM
All the in-laws were visiting my house for Thanksgiving. Everyone else is sooooo excited about this new house my Brother-in-law is buying. It's a $380,000 house, about an hour south of DT St. Louis, for annual income of perhaps $120,000.

Does this sound like a stretch to anyone else here? They aren't really trying to sell their current house (worth perhaps $180,000), but I imagine they will soon. His wife is pretty spendy, doesn't seem to worry about things mustachian...
Now back on topic...I'm quoting the original post to refresh our memories:

tt, I have several problems with the questions you're asking:

- You do not know his actual income.
- You do not know how much down payment they have.
- What they chose to do with their existing home is irrelevant.
- It is entirely possible to achieve FIRE without slavishly adhering to a single rigid formula. (#askmehowiknow)
- It sounds like you might have a teeny, tiny bit of envy. Keeping up with the Jones, or wanting to, is frowned upon in these parts.
- It's really none of your business.

FWIW, our clown house in a HCOLA cost TEN times DH's salary. We bought it on a short sale and paid cash for it. We own three nice looking vehicles. They're all paid for. We're FI and I'm RE. I am fully aware that this might sound braggy (sorry, not sorry for what we are very grateful to have accomplished).

My point is that you cannot judge a book by its cover, nor should you attempt to.
Title: Re: My BIL's new house
Post by: talltexan on December 02, 2016, 12:15:36 PM
Diane C, thank you for these points. Indeed, I have attempted to NOT know my BIL's income, the figure I reported was taken as assumed by our other commenters, and the feedback useful with that understanding.

Envy: I do not envy the house, but I do envy the way the rest of the family is celebrating the purchase of this house as some kind of achievement, when it may simply be an act of extravagance that risks my BIL's future. I've seen some other commenters hint at this. I would like relatives to affirm my lifestyle choices as well. Perhaps part of he way of the mustache is in resolving to live without that. Would a true mustachian feel envy here?

Would a true mustachian allow a close relative to overspend on a house without some attempt at talking sense into him?




Sent from my iPad using Tapatalk
Title: Re: My BIL's new house
Post by: talltexan on December 02, 2016, 12:17:37 PM
Diane C, I'd argue that--since you paid cash for your house--the more relevant comparison isn't value of house to your salary, but value of house to the rest of your assets. Salary matters mostly when it's servicing a mortgage.


Sent from my iPad using Tapatalk
Title: Re: My BIL's new house
Post by: patchyfacialhair on December 02, 2016, 12:23:58 PM
Diane C, thank you for these points. Indeed, I have attempted to NOT know my BIL's income, the figure I reported was taken as assumed by our other commenters, and the feedback useful with that understanding.

Envy: I do not envy the house, but I do envy the way the rest of the family is celebrating the purchase of this house as some kind of achievement, when it may simply be an act of extravagance that risks my BIL's future. I've seen some other commenters hint at this. I would like relatives to affirm my lifestyle choices as well. Perhaps part of he way of the mustache is in resolving to live without that. Would a true mustachian feel envy here?

Would a true mustachian allow a close relative to overspend on a house without some attempt at talking sense into him?




Sent from my iPad using Tapatalk

Everyone has their faults, everyone feels envy and "sins" from time to time. We're a competitive species.

As folks have said before, your BIL is not making an obscene purchase. Sure, it may be out of line with your (or even my) values, but life is not all about absolutes. Just because someone isn't living the same "$24000 per year" budget as our lord and savior MMM, doesn't mean they're doomed to financial failure. Retiring at 65 after a professional career while saving 10-20% the whole time is something to be excited about. Only this community sees that as a failure.
Title: Re: My BIL's new house
Post by: Cassie on December 02, 2016, 01:25:36 PM
5 years ago we retired at 53 and 58 and downsized and paid cash for a smaller house. Some friends of ours that were 10 years older bought a much bigger house at 2700 sq ft with no pensions, small SS and both needing to keep working f.t. Their first house was underwater so they kept as a rental.  WEll they felt free to question our decisions and kept telling us we should not give up the bigger house or retire, etc.  We never told them we thought they were stupid. eventually we quit being friends because I got sick of it.
Title: Re: My BIL's new house
Post by: talltexan on December 02, 2016, 02:56:48 PM
Having to work longer than you want is not a disaster (although it is irksome). Financial stress decreasing quality of life and leading to resentment/financial stress/divorce/bankruptcy is the disaster.

What people on this thread have said in reaction to the #'s I posted makes me think I shouldn't worry about it in this case.
Title: Re: My BIL's new house
Post by: Dicey on December 02, 2016, 07:56:47 PM
...Would a true mustachian feel envy here?

...Would a true mustachian allow a close relative to overspend on a house without some attempt at talking sense into him?
1. No, true mustachians are impervious to envy and only bask in the praise of others once they've achieved FIRE.  Good mustachians try not to gloat, but it can be hard, because people can easily mistake all that happiness for gloating.

2. No, a true mustachian does not overtly prostheletyze to those who have not sought our help.

3. Gently now: True mustachians figure out how to remove the free advertising from their i-thingies before they post here. Just sayin' (softly, of course).
Title: Re: My BIL's new house
Post by: pbkmaine on December 02, 2016, 08:35:47 PM
Diane C is a better person than I am. When I see people buying stuff they don't need because of social pressure? I'm smug and I gloat.
Title: Re: My BIL's new house
Post by: pbkmaine on December 02, 2016, 08:47:46 PM
...Would a true mustachian feel envy here?

...Would a true mustachian allow a close relative to overspend on a house without some attempt at talking sense into him?
3. Gently now: True mustachians figure out how to remove the free advertising from their i-thingies before they post here. Just sayin' (softly, of course).

Diane C, why does this bother you so much? It's in tiny little print at the bottom of a post. Sure, it's free advertising, but so are the apples all over my devices. I don't put tape over them.
Title: Re: My BIL's new house
Post by: Dicey on December 03, 2016, 12:04:11 AM
...When I see people buying stuff they don't need because of social pressure? I'm smug and I gloat.

3. Gently now: True mustachians figure out how to remove the free advertising from their i-thingies before they post here. Just sayin' (softly, of course).

Diane C, why does this bother you so much? It's in tiny little print at the bottom of a post. Sure, it's free advertising, but so are the apples all over my devices. I don't put tape over them.
Because it's a really, really lame thing on the forum of a blog of this nature. Maybe that makes us more alike than not.

BTW, dagiffy01 has gone underground, but says via text he is alive and well. I'll pm if/when I know more.
Title: Re: My BIL's new house
Post by: Paul der Krake on December 03, 2016, 12:15:44 AM
Purely going by the provided numbers of purchase price and income, and assuming property tax of 1%, it doesn't unreasonable at all.
Title: Re: My BIL's new house
Post by: Freedom Invested on December 03, 2016, 01:23:59 AM
Envy: I do not envy the house, but I do envy the way the rest of the family is celebrating the purchase of this house as some kind of achievement, when it may simply be an act of extravagance that risks my BIL's future. I've seen some other commenters hint at this. I would like relatives to affirm my lifestyle choices as well. Perhaps part of he way of the mustache is in resolving to live without that. Would a true mustachian feel envy here?

I know how you feel. My home is barely 125% of our yearly income. My wife and I are likely the most frugal in our families and no one quite gets us. Whether or not your family gets you, you won't be beholden to a job like many of them may or may not realize they are beholden to. That should dispel any envy, no?
Title: Re: My BIL's new house
Post by: Freedom Invested on December 03, 2016, 01:42:22 AM
Would a true mustachian allow a close relative to overspend on a house without some attempt at talking sense into him?

And as much as you want to help, they are proud, and supported by family, of a purchase that is not easily quickly resold, so they're likely not to be receptive. Best to encourage those that are receptive, IMHO.
Title: Re: My BIL's new house
Post by: pbkmaine on December 03, 2016, 05:37:13 AM
...When I see people buying stuff they don't need because of social pressure? I'm smug and I gloat.

3. Gently now: True mustachians figure out how to remove the free advertising from their i-thingies before they post here. Just sayin' (softly, of course).

Diane C, why does this bother you so much? It's in tiny little print at the bottom of a post. Sure, it's free advertising, but so are the apples all over my devices. I don't put tape over them.
Because it's a really, really lame thing on the forum of a blog of this nature. Maybe that makes us more alike than not.

BTW, dagiffy01 has gone underground, but says via text he is alive and well. I'll pm if/when I know more.

Thanks for checking!
Title: Re: My BIL's new house
Post by: talltexan on December 05, 2016, 07:07:06 AM
Update: the family moved in over the weekend. My in-laws (BIL is their son) flew back in last night, rode home from the airport with me. I've seen the house over video-chat, and it is impressive. Hard to criticize (aside from taking a perspective of consumption is bad, that is).

I did learn that my BIL's household income is lower than I thought, about $105 K. For the few of you who said it was borderline, affordable that might matter. They are also paying PMI, hoping to re-finance once they sell the other house.
Title: Re: My BIL's new house
Post by: infogoon on December 05, 2016, 07:19:15 AM
Yes, I read it; I didn't mean to push your buttons, I was just focused on your phrase about not being able to relate to "the United States home prices"---they vary significantly across regions, as they do across regions in Canada. San Francisco housing is more expensive than any market in Canada, but the OP's BIL is buying on the outskirts of a tertiary city; maybe it's like buying near Halifax. It seems like that---housing prices outside major markets---is what you can't relate to. My point was just that the national comparison was misplaced, vs. a type-of-market comparison, for example.

In some places there's also a reversal of the expected pricing, where it's far cheaper to live in the city proper (especially once taxes are accounted for) than it is in the suburbs. The city I live in (Buffalo, NY) is one such place.
Title: Re: My BIL's new house
Post by: Goldielocks on December 05, 2016, 03:13:03 PM
I don't know if I will ever be able to relate to the United States home prices...

380K at an annual salary of 120K seems incredibly reasonable to me.  I have friends with half the salary (in cdn $) that have put 5% down on shoe-boxes for that price.

Likewise, I've watched property shows that take place in Canada with things like "I'm a barrista, and my wife is an elementary music teacher, and we're budgeting $850-900k for our first home..." that make me say WTF??

Well, the barrista is making $17 per hour plus mini tips ($34k per year) if at starbucks, less at other locations, and the elementary teacher is making between $75 and $90k per year, depending on experience and degrees.

So...  $120k per year combined income is possible.. at 38% income debt ratio  is ... $3800 per month to pay for mortgage, insurance, property taxes, heat and condo fees.   The should cover an expensive place, especially if someone gifts them most of the $180k down payment to avoid PMI.

In Canada, jumbo mortgages often get LOWER rates than smaller mortgages, too...
Title: Re: My BIL's new house
Post by: talltexan on December 06, 2016, 06:41:53 AM
Goldielocks' math is reasonable if you assume our couple pays zero in taxes (although I suddenly realize that some of that tax bill would be offset by a nice, healthy, $3,800 monthly mortgage payment in the US)
Title: Re: My BIL's new house
Post by: Goldielocks on December 06, 2016, 11:44:20 AM
Goldielocks' math is reasonable if you assume our couple pays zero in taxes (although I suddenly realize that some of that tax bill would be offset by a nice, healthy, $3,800 monthly mortgage payment in the US)

Ah, but don't bank formulas look at gross income for mortgages?   That is how they end up thinking we can all carry huge amounts...  even if we all don't have 22% average tax.

:-)
Title: Re: My BIL's new house
Post by: dougules on December 08, 2016, 11:35:00 AM
Every person has the right to spend their hard-earned money on things that will bring them joy. For many of us, early retirement brings them joy. For this man, it well may be a big house. Personally, I would rather work on my oversized back yard instead of doing housework, and he and his family may prefer to do the extra housework. So my house is small but my yard is large, and his house is large.

It brings me joy to rebuild my home made greenhouse with my own 2 hands this winter. It may bring him joy to keep up a large house. IT IS HIS OWN CHOICE!

I agree it's his right to do what makes him happy, but a lot of people buying luxury goods (which can definitely include real estate) aren't really going to get nearly as much happiness as they think they will from it.  It's entirely possible that 5 BR will be worth the money in terms of what it brings to his life, but most people who buy a house that big aren't going to get enough happiness to be worth it after the initial thrill wears off. 

It sounds like you get your money's worth out of your back yard, but there are plenty of people who spend hard-earned money on several acres and never even use it. 
Title: Re: My BIL's new house
Post by: talltexan on December 08, 2016, 01:15:38 PM
My in-laws bought a house on 3 acres in 1998. My FIL retired in 2004, then enjoyed a second career as a yard man (his own) for more than a decade.
Title: Re: My BIL's new house
Post by: talltexan on April 17, 2017, 02:17:22 PM
Thank you to all who posted. I have now finally been inside the house (over Easter weekend), and it is amazingly opulent.

Of course, the air conditioner for the second floor went out, which was unpleasant. Those south-facing windows are nice during the winter, but the heat really seems to build up in the late-spring in Southern Missouri. My BIL confided that he needs another $50,000 in progress to get rid of PMI, so I forwarded him some stuff from a different thread in this community. Baby-steps.

I'm back at home, although my wife and our children will be staying with them all week. I'm hoping living in that house for a week doesn't make my wife want to enlarge our housing sitch.
Title: Re: My BIL's new house
Post by: better late on April 17, 2017, 03:31:00 PM
Have they sold their prior home yet?
Title: Re: My BIL's new house
Post by: prognastat on April 17, 2017, 03:31:42 PM
Though our income is somewhat higher than your BIL and we could easily afford a similar or higher mortgage I would simply not want a 5 bedroom and 3 bathroom house due to the upkeep. With 2 DINKs working 40+ hours a week our 3 bedrooms 2.5 bathroom is already more than I can keep up with and if it were solely up to be I'd probably prefer 2 bedroom 1.5-2 bathrooms at most.

The amount of work and money spent on your home only increases as the size increases.
Title: Re: My BIL's new house
Post by: A Definite Beta Guy on April 17, 2017, 03:56:52 PM
I'd say no, that's too expensive, particularly if it's being spent on 5 beds. Beta household house was bought a bit north of $300k at a $150k annual salary...there's student debt that knocks that down to $130k. That seems like more than enough. I would've preferred spending even less, but we wanted 3 beds and 1.5 baths.

If I were your BIL, I'd downsize and plow the money into something else.

Definitely not INSANE spending territory, though.
Title: Re: My BIL's new house
Post by: talltexan on April 18, 2017, 06:06:59 AM
Have they sold their prior home yet?

They actually closed on the sale of the old house early in March, so only about three months of double-mortgage payments. Based on Zillow, they had a nice gain on that house, approx. 20% in five years.
Title: Re: My BIL's new house
Post by: A Definite Beta Guy on April 18, 2017, 08:15:25 AM
Have they sold their prior home yet?

They actually closed on the sale of the old house early in March, so only about three months of double-mortgage payments. Based on Zillow, they had a nice gain on that house, approx. 20% in five years.

Hehehehe, but who knows how much the money-pit took before that point!
Title: Re: My BIL's new house
Post by: Laura33 on April 18, 2017, 08:26:20 AM
Have they sold their prior home yet?

They actually closed on the sale of the old house early in March, so only about three months of double-mortgage payments. Based on Zillow, they had a nice gain on that house, approx. 20% in five years.

Wow -- so how are they still $50K short on the PMI payoff? 

FWIW, I think you have sufficient red flags here to be a little worried about your BIL -- the big house for no apparent reason, the spendy wife, the fancy finishes, the buy-first-get-finances-straight-after approach, etc.  I can also see how it would be frustrating for him to be getting all of the family praise/attention, when you are saving more and not being showy with your money.  But it's also not your job to "fix" him, and you can't make your family value what you value.  He'll probably be just fine, since he has the support of the in-laws and apparently a job for life (or at least the length of the marriage).  And you can take pride in living your own life, independently, and most likely retiring decades before him.
Title: Re: My BIL's new house
Post by: talltexan on April 18, 2017, 09:42:28 AM
BIL has a generous helping of human capital (JD actually), but, yeah, the spendy wife could become a problem.

Between car, lawn mower, house, etc., I estimate their total debt load to be about $360,000, or about 3X annual income. But it's all non-callable and at super-low interest rates (the obvious exception being the PMI).
Title: Re: My BIL's new house
Post by: Dicey on April 25, 2017, 12:30:19 PM
Have they sold their prior home yet?

They actually closed on the sale of the old house early in March, so only about three months of double-mortgage payments. Based on Zillow, they had a nice gain on that house, approx. 20% in five years.
This is kind of funny. Say what you will about the cost of HCOLA housing, but 20% over five years would not be considered a nice gain here. I had a place more than double in four years and our current home has appreciated at at least 10% every year we'very owned it. Our properties in LCOLAs don't appreciate nearly as much. Strange.
Title: Re: My BIL's new house
Post by: mtn on April 25, 2017, 12:34:02 PM
Have they sold their prior home yet?

They actually closed on the sale of the old house early in March, so only about three months of double-mortgage payments. Based on Zillow, they had a nice gain on that house, approx. 20% in five years.
This is kind of funny. Say what you will about the cost of HCOLA housing, but 20% over five years would not be considered a nice gain here. I had a place more than double in four years and our current home has appreciated at at least 10% every year we'very owned it. Our properties in LCOLAs don't appreciate nearly as much. Strange.

(https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcQnzugvtJNOSl4tF2ZDLrasHriVvtEpAhVDO2qB65LiUeHTbWPKmgFvG88)
Title: Re: My BIL's new house
Post by: talltexan on April 25, 2017, 01:30:44 PM
Yeah, the AC will apparently need an expensive new coil installed to get it working again...also, wife somehow got her iPhone (of course she has an iPhone) wet on her business trip, so there's that expense, too.

Mo' house, mo' problems.
Title: Re: My BIL's new house
Post by: Reynold on April 25, 2017, 01:37:09 PM
This is kind of funny. Say what you will about the cost of HCOLA housing, but 20% over five years would not be considered a nice gain here. I had a place more than double in four years and our current home has appreciated at at least 10% every year we'very owned it. Our properties in LCOLAs don't appreciate nearly as much. Strange.

Not a big surprise to me; LCOL areas are LCOL because people don't want to live there, through some combination of (1) poor weather and (2) poor local economy/lack of jobs.  Coastal California has the best combination of economy and weather in the country, so has the highest housing costs and appreciation.  Places like Seattle and Denver aren't quite as ideal a combination, but still pretty good, and affordable compared to CA, so they are appreciating fast.   I predict they will top out lower than CA because the weather isn't quite as nice.  Our place in CT appreciated about 25% in a little under two decades, not great on either front though a beautiful area to live so at least some appreciation.  Downtown Buffalo, where one earlier poster lives, has terrible weather and, like the rest of upstate New York, a very slow economy, if not going in reverse (I don't know it as well as some other upstate cities), so I suspect housing will stay very cheap. 

That is something I'm trying to persuade my DW of, if we retire to somewhere with decent weather and a good economy like Colorado or South Carolina, we should buy, if it is somewhere like Buffalo, we should rent. 
Title: Re: My BIL's new house
Post by: Just Joe on April 25, 2017, 02:43:48 PM
Good weather but gridlock traffic, endless sprawl, endless humanity, pollution, etc.... Hmmmm.... I stick with a LCOL area thanks!
Title: Re: My BIL's new house
Post by: Dicey on April 25, 2017, 06:34:44 PM
Have they sold their prior home yet?

They actually closed on the sale of the old house early in March, so only about three months of double-mortgage payments. Based on Zillow, they had a nice gain on that house, approx. 20% in five years.
This is kind of funny. Say what you will about the cost of HCOLA housing, but 20% over five years would not be considered a nice gain here. I had a place more than double in four years and our current home has appreciated at at least 10% every year we'very owned it. Our properties in LCOLAs don't appreciate nearly as much. Strange.

(https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcQnzugvtJNOSl4tF2ZDLrasHriVvtEpAhVDO2qB65LiUeHTbWPKmgFvG88)
Oh, what a pretty picture!

Today, on another thread, I posted a timeline of my history of real estate ownership since the late '80's. All in CA, two of the four examples bought as short sales. The first one, in a LCOLA, gained less than 15% in about eight years. (It should be noted that I sold it back to the original owner, for slightly under market value. An unusual set of circumstances.) The HCOLA rest have gained far, far more than that over the last 20 years. That bubble is really a balloon, to which my string is firmly attached. It's lifting me higher & higher, all the way to FIRE.
Title: Re: My BIL's new house
Post by: Dicey on April 28, 2017, 05:36:21 AM
Here you go...in this thread, the OP is wondering whether to buy in a less expensive part of thhe Bay Area or rent in a nicer area with better schools.
I agree with the others who are advocating renting in the better school district once you actually need it. You could always start investing in some rental properties in more affordable areas in order to build equity or receive some passive income depending on your personal goals.
That's exactly how I started in real estate.  Here's my story in case it's helpful.

Bought a 3+2, 1612 sf SFH in Riverside (where I did not live, but I grew up there, so knew the market) for $101k, which I rehabbed on a dime and rented out. I continued to live in a rent-controlled apartment elsewhere. Eight years later I sold it for $115k.

Bought a 2+1 882 sf apartment conversion condo in Orinda for $120k on a short sale. I rehabbed and moved into it. Four years later, in 2001, sold it for $260k.

Bought a 4+2.5 1701 sf townhouse in Walnut Creek for 390k. I rehabbed and moved in. I sold it in twelve years later for $600k, 'cause I got married and we discovered MIL had ALZ and we decided to move her in with us.

Bought a 4+3.5 2627 sf custom home in Walnut Creek for $938k on a short sale. Spendy, but the layout was right for four adults and it needed little fixing, plus DH walks to work. Zillow says it's worth $1.3M. Based on recent comps, and current market insanity, I expect it would go for $1.4M, but we're not selling yet, so who knows what will happen?

In the olden days when CD's were paying decent returns, it was typical to keep EF's and DP money in CD Ladders. I used that model as an inspiration to create a Real Estate Ladder of sorts.

Hope a real-life example helps.
Title: Re: My BIL's new house
Post by: talltexan on April 28, 2017, 07:40:23 AM
Dicey-
congrats on the real estate success! I'm not sure my BIL has the skills or inclination to engage in the types of rehab you describe, especially since it sounds like your Riverside house may have been a wonderful way to absorb a lot of time without turning it into much money. Owning real estate for him is purely consumption. And He cannot walk to much of anything from it (in contrast to your current house).

And we can add to this consumption a new AC coil and freon refresh to fix his AC unit that was not working the whole time my family was visiting him.
Title: Re: My BIL's new house
Post by: 401Killer on May 02, 2017, 09:47:11 AM
A $380K house on $120K salary is very reasonable.

Wow, I'm doing dramatically better than this then... By like, 3x!!!

Or everyone's definition of "reasonable" varies greatly... To me, a $380k home on only 120k income is absurd... Taxes, heat, energy, lawn... Eff that noise.

Good luck to them!
Title: Re: My BIL's new house
Post by: mtn on May 02, 2017, 09:55:13 AM
A $380K house on $120K salary is very reasonable.

Wow, I'm doing dramatically better than this then... By like, 3x!!!

Or everyone's definition of "reasonable" varies greatly... To me, a $380k home on only 120k income is absurd... Taxes, heat, energy, lawn... Eff that noise.

Good luck to them!

I have a, at last estimation, $355k house that is 1300SF, and costs less than $100 in combined electricity and gas monthly (on a 12 month average). It takes about 20 minutes to mow the lawn with an old-school rotary push mower. It is more house than we need, but legitimately the smallest we could find that was within our requirements (basically, it needed to fit a king bed and it needed to not flood, within a pretty specific area).

You got me on taxes though, but that is pretty insane across Chicagoland regardless.
Title: Re: My BIL's new house
Post by: jeromedawg on May 02, 2017, 10:16:24 AM
My BIL and his partner just closed on a $1M 4bed/2bath home in SF (south and outside of downtown). They actually paid $1.2M for it because they couldn't lose this place to another sucker so they bid up... you know, $200k: no biggie.

They have been living in a pretty nice loft up until this point since 2003 I think - they got that loft in downtown for around $400k and it would probably sell for over $900k now. It sounds like they want to try renting the loft out and seeing how much they can get for it. Of course, I'm pretty sure they're not taking into account the overhead from expenses and what not (the association for already is like $400-500). They still owe on that mortgage but being that it's pretty low, I think they would cash flow. I just don't know how much it would actually cash flow and if it's better than just selling the place. For that area, I would think it might be a better idea to sell the loft ASAP and use it to pay down the mortgage on the existing place so it's not as much of a burden - don't you benefit from a cap gains exclusions in doing this if you've lived in the place for 2/5 years? Their combined salary is probably close to $300k, so it's within target range of 'affordability' but them overbidding $200k plus certainly pushes it the boundaries.


I guess they got tired of the 'street noise' and area they live in where the loft is, even though it's within walking distance of everything. Not sure why they needed a bigger place for just the two of them. It seems like they want to host wine parties at their place or something. The other justification is "oh you guys and mom and dad can stay here when you visit" - I'm not sure how realistic that expectation is as I always stay with my parents on the other side of the bay and my in-laws barely ever go up to the Bay Area. Neither my wife nor I have the biggest desire staying with them when we visit either - they're just completely different people and I think we typically will get annoyed after only spending several hours with them. Whenever her brother comes to visit us, we feel like he expects us to cater to his every need (e.g. after 5 weeks of giving birth, my wife felt obligated to pick up a Starbucks coffee for him in the late morning while he was sleeping in - he didn't want to go get coffee on his own even though the Starbucks is a 5 minute walk from here but absolutely needed it because he can't go #2 in the morning without his coffee....?!?!?!). With a second LO now and him visiting again in several weeks, that's not going to happen ever again. My wife can easily have a pushover-mentality though. I generally try to stay out of her personal interactions with her family but maybe I should step-in and deny him this time around.

Anyway, back to OP's post - I posted something similar about a FB acquaintance who bought a $1M home which is slightly above the norm in my area (mid-HCOL). But it turns out, given their *estimated* salary, they might not be in over their heads after all. That said, as others have pointed out and what you know, there's much more than just the home and how much it costs at play here. It sounds like your BIL is a recipient of Economic Outpatient Care though, which is helping him afford this opportunity.
Title: Re: My BIL's new house
Post by: The Money Monk on May 08, 2017, 12:20:10 AM
Interesting to see so many people say that the local market is what determines if it was a good buy or not.

 Whether a purchase is a 'bargain' or not has nothing to do with if it is a wise purchase based on your income, savings rate, etc.

Just because most houses in an area are 500K doesn't mean it's always ok for somebody to buy a 300k house. It could still be more than somebody can afford.

I'm not saying it is in this case (that depends on what their total financial picture looks like), but that is just the wrong way to evaluate a purchase.

You don't decide if you can afford something by seeing if it is a 'deal', you do it by seeing how much money you have.
Title: Re: My BIL's new house
Post by: jinga nation on May 08, 2017, 06:08:54 AM
Interesting to see so many people say that the local market is what determines if it was a good buy or not.

 Whether a purchase is a 'bargain' or not has nothing to do with if it is a wise purchase based on your income, savings rate, etc.

Just because most houses in an area are 500K doesn't mean it's always ok for somebody to buy a 300k house. It could still be more than somebody can afford.

I'm not saying it is in this case (that depends on what their total financial picture looks like), but that is just the wrong way to evaluate a purchase.

You don't decide if you can afford something by seeing if it is a 'deal', you do it by seeing how much money you have.

Psssh! Where you been? That is so last century backward thinking. You borrow the max your allowed to, based on your sub-620 credit score. A deal is a deal if your peeps on social media agree. Everything else is alternative facts. /sarcasm
Title: Re: My BIL's new house
Post by: boarder42 on May 08, 2017, 07:55:13 AM
Interesting to see so many people say that the local market is what determines if it was a good buy or not.

 Whether a purchase is a 'bargain' or not has nothing to do with if it is a wise purchase based on your income, savings rate, etc.

Just because most houses in an area are 500K doesn't mean it's always ok for somebody to buy a 300k house. It could still be more than somebody can afford.

I'm not saying it is in this case (that depends on what their total financial picture looks like), but that is just the wrong way to evaluate a purchase.

You don't decide if you can afford something by seeing if it is a 'deal', you do it by seeing how much money you have.

Psssh! Where you been? That is so last century backward thinking. You borrow the max your allowed to, based on your sub-620 credit score. A deal is a deal if your peeps on social media agree. Everything else is alternative facts. /sarcasm

yeah whether you can afford something or not is not based on the level of a deal.  but a deal could make you stretch to afford something.  if its truly a good deal.  I did that with both my houses i've purchased in my life.  stretched and bought my first house with 3.5% down 7 days out of college.   why. 1. the govt was giving me 8k tax credit for buying 2. the house was a foreclosure that had been sitting for months on the market and i bought about 20% under what it was really worth. - though not much was selling at that time. 
house 2. got me where i wanted to be and was a wierd situation that a house that started at 120k more than it eventually sold for b/c of unique wierd timing circumstances and some minor updates being needed.  house is worth around 100k more than we paid the day we moved in. - this house wasnt really a stretch financially but i thought it would be at the time.  now we're earning the 5-7% housing increases on equity we didnt even have to buy.  - also was partially timing the markets here as i thought rates were at an all time bottom. - they werent but we still REFId at the actual bottom to an insane 3.25% 30 years interest rate.  <-- basically paying inflation
Title: Re: My BIL's new house
Post by: mtn on May 08, 2017, 08:21:24 AM
Interesting to see so many people say that the local market is what determines if it was a good buy or not.

 Whether a purchase is a 'bargain' or not has nothing to do with if it is a wise purchase based on your income, savings rate, etc.

Just because most houses in an area are 500K doesn't mean it's always ok for somebody to buy a 300k house. It could still be more than somebody can afford.

I'm not saying it is in this case (that depends on what their total financial picture looks like), but that is just the wrong way to evaluate a purchase.

You don't decide if you can afford something by seeing if it is a 'deal', you do it by seeing how much money you have.

Psssh! Where you been? That is so last century backward thinking. You borrow the max your allowed to, based on your sub-620 credit score. A deal is a deal if your peeps on social media agree. Everything else is alternative facts. /sarcasm

I don't disagree, but the initial purchase looked like something his BIL should be able to afford. Well, he definitely can afford it, but he may put himself into a hole because of spendypantsness.

Say you earn $120k. Which one of these makes the most sense:
1: A house worth $400,000 on a block where every other house is $1M, and the house down the street that was torn down just sold for $350,000
2: A house worth $350,000 on a block where every other house is $250,000

Area does have a say in what is affordable--I couldn't rent a 2 bedroom for less than $2,000 that gave both my wife and I a reasonable commute and was in an area we wanted to be in. So instead I have a $2,400 mortgage (including MIP, taxes, and home insurance).
Title: Re: My BIL's new house
Post by: talltexan on May 08, 2017, 08:38:39 AM
I'd be willing to forego some retirement savings if I were achieving unrealised gains of $1,000/month from my house. Shifting money from 401(K) contributions to the carrying costs of that house seems defensible if the goal is to maximize net worth in ten years.

Shifting money from outright consumption to the carrying costs of that house would be even better.
Title: Re: My BIL's new house
Post by: vivophoenix on May 08, 2017, 11:33:41 AM
Interesting to see so many people say that the local market is what determines if it was a good buy or not.

 Whether a purchase is a 'bargain' or not has nothing to do with if it is a wise purchase based on your income, savings rate, etc.

Just because most houses in an area are 500K doesn't mean it's always ok for somebody to buy a 300k house. It could still be more than somebody can afford.

I'm not saying it is in this case (that depends on what their total financial picture looks like), but that is just the wrong way to evaluate a purchase.

You don't decide if you can afford something by seeing if it is a 'deal', you do it by seeing how much money you have.

Psssh! Where you been? That is so last century backward thinking. You borrow the max your allowed to, based on your sub-620 credit score. A deal is a deal if your peeps on social media agree. Everything else is alternative facts. /sarcasm

I don't disagree, but the initial purchase looked like something his BIL should be able to afford. Well, he definitely can afford it, but he may put himself into a hole because of spendypantsness.

Say you earn $120k. Which one of these makes the most sense:
1: A house worth $400,000 on a block where every other house is $1M, and the house down the street that was torn down just sold for $350,000
2: A house worth $350,000 on a block where every other house is $250,000

Area does have a say in what is affordable--I couldn't rent a 2 bedroom for less than $2,000 that gave both my wife and I a reasonable commute and was in an area we wanted to be in. So instead I have a $2,400 mortgage (including MIP, taxes, and home insurance).

this is true. there are more factors involved than take home pay and house price.

I just bought a condo in a crazy expensive state, but I also rent out all of the rooms but my own.

yes, my mortgage is 21% of my take home.

but after roommates, I pay 8%. that does not take into account equity gains, so if i actually did the math I am probably earning money.

ooo i will go calculate that now
Title: Re: My BIL's new house
Post by: The Money Monk on May 10, 2017, 10:49:23 AM

Area does have a say in what is affordable

that's the thing - It doesn't. It has a say in what is AVAILABLE at any given price point, but what you can AFFORD is strictly a function of how much money you have available for that purpose.

If I can't afford a $200,000 house, finding one in an area where most other houses are $400,000 won't magically make me be able to afford it.

What happens in these HCOL areas you are talking about is that people either:
A. Have to make sacrifices in other areas of their lives to be able to pay for a house that is more than they initially could afford, but because of restructuring they end up being able to afford it.

B. They get a place that IS more than they can afford, and get into debt or other bad financial circumstances because of it.
Title: Re: My BIL's new house
Post by: mtn on May 10, 2017, 11:25:43 AM

Area does have a say in what is affordable

that's the thing - It doesn't. It has a say in what is AVAILABLE at any given price point, but what you can AFFORD is strictly a function of how much money you have available for that purpose.

If I can't afford a $200,000 house, finding one in an area where most other houses are $400,000 won't magically make me be able to afford it.

What happens in these HCOL areas you are talking about is that people either:
A. Have to make sacrifices in other areas of their lives to be able to pay for a house that is more than they initially could afford, but because of restructuring they end up being able to afford it.


B. They get a place that IS more than they can afford, and get into debt or other bad financial circumstances because of it.

So area does have a say in what is affordable.
Title: Re: My BIL's new house
Post by: MightyAl on May 10, 2017, 11:42:28 AM
I am from the area that the OP is speaking about and you would get a crazy amount of house with extremely low taxes if it is within Jeffco for that amount of money.  Probably paying ~$2k/year to the county.  If your not worried about schools it is a decent area. 

I have a more expensive house and make about the same money but I am paying $1.4k/ year in taxes.  I would say if they enjoy spending time at their house and on their property then it is a good investment.  We have chickens and a garden and love being away from everything.
Title: Re: My BIL's new house
Post by: The Money Monk on May 10, 2017, 01:01:32 PM

Area does have a say in what is affordable

that's the thing - It doesn't. It has a say in what is AVAILABLE at any given price point, but what you can AFFORD is strictly a function of how much money you have available for that purpose.

If I can't afford a $200,000 house, finding one in an area where most other houses are $400,000 won't magically make me be able to afford it.

What happens in these HCOL areas you are talking about is that people either:
A. Have to make sacrifices in other areas of their lives to be able to pay for a house that is more than they initially could afford, but because of restructuring they end up being able to afford it.


B. They get a place that IS more than they can afford, and get into debt or other bad financial circumstances because of it.

So area does have a say in what is affordable.

No. It may influence WHAT they choose to spend their money on (housing vs something else) but not on how much money they have to spend.
Title: Re: My BIL's new house
Post by: talltexan on May 11, 2017, 07:38:59 AM
I am from the area that the OP is speaking about and you would get a crazy amount of house with extremely low taxes if it is within Jeffco for that amount of money.  Probably paying ~$2k/year to the county.  If your not worried about schools it is a decent area. 

I have a more expensive house and make about the same money but I am paying $1.4k/ year in taxes.  I would say if they enjoy spending time at their house and on their property then it is a good investment.  We have chickens and a garden and love being away from everything.

Happy to learn about a Mustachian in the area...perhaps I can introduce you to the family, you'd be a healthy influence :-)
Title: Re: My BIL's new house
Post by: Dicey on May 13, 2017, 02:18:50 PM
Interesting to see so many people say that the local market is what determines if it was a good buy or not.

 Whether a purchase is a 'bargain' or not has nothing to do with if it is a wise purchase based on your income, savings rate, etc.

Just because most houses in an area are 500K doesn't mean it's always ok for somebody to buy a 300k house. It could still be more than somebody can afford.

I'm not saying it is in this case (that depends on what their total financial picture looks like), but that is just the wrong way to evaluate a purchase.

You don't decide if you can afford something by seeing if it is a 'deal', you do it by seeing how much money you have.

Psssh! Where you been? That is so last century backward thinking. You borrow the max your allowed to, based on your sub-620 credit score. A deal is a deal if your peeps on social media agree. Everything else is alternative facts. /sarcasm

I don't disagree, but the initial purchase looked like something his BIL should be able to afford. Well, he definitely can afford it, but he may put himself into a hole because of spendypantsness.

Say you earn $120k. Which one of these makes the most sense:
1: A house worth $400,000 on a block where every other house is $1M, and the house down the street that was torn down just sold for $350,000
2: A house worth $350,000 on a block where every other house is $250,000

Area does have a say in what is affordable--I couldn't rent a 2 bedroom for less than $2,000 that gave both my wife and I a reasonable commute and was in an area we wanted to be in. So instead I have a $2,400 mortgage (including MIP, taxes, and home insurance).

this is true. there are more factors involved than take home pay and house price.

I just bought a condo in a crazy expensive state, but I also rent out all of the rooms but my own.

yes, my mortgage is 21% of my take home.

but after roommates, I pay 8%. that does not take into account equity gains, so if i actually did the math I am probably earning money.

ooo i will go calculate that now
While you're clacking the keys of the calculator, don't forget to consider the tax implications. You could be far better off than you realize, after taxes, if you itemize.
Title: Re: My BIL's new house
Post by: talltexan on May 15, 2017, 07:03:36 AM
BIL has young kids, it's possible that childcare expenses are substantial for them, although grandma watches the kids during most business hours.

I estimate that he's logging a minimum of $1,000/month in mortgage interest, so how could they not itemize?
Title: Re: My BIL's new house
Post by: Dicey on May 15, 2017, 07:12:26 AM
I estimate that he's logging a minimum of $1,000/month in mortgage interest, so how could they not itemize?
I was commenting on itemizing to vivoPHX, but it occurs to me that some non-mustachians might fail to itemize out of sheer laziness. It's shocking how many people can't math, or just don't bother to.
Title: Re: My BIL's new house
Post by: Abo345 on May 15, 2017, 11:10:26 PM
I love people from the Midwest and/or South complaining about housing costs. Always entertains me.
Title: Re: My BIL's new house
Post by: Dicey on May 15, 2017, 11:41:56 PM
I love people from the Midwest and/or South complaining about housing costs. Always entertains me.
No shit. Me, too!
Title: Re: My BIL's new house
Post by: talltexan on May 16, 2017, 08:42:50 AM
True, but housing costs would be lower in all markets if families of four left the five-bedroom monstrousities to the more highly fertile.
Title: Re: My BIL's new house
Post by: dougules on May 16, 2017, 10:49:49 AM
I love people from the Midwest and/or South complaining about housing costs. Always entertains me.
No shit. Me, too!

Yes it's crazy.  Before we sold our second rental house, we had a total of 3 houses, almost 5000 sq ft put together,  worth less than a friend's 1300 sq ft house on the less desirable side of Berkeley.  We got our first rental for less than a lot of the ridiculous luxury vehicles you see running down the road a lot. 

That being said, a lot of people here don't make much at all as compared to earning potential in California.  Affordability is relative. 
Title: Re: My BIL's new house
Post by: redbird on May 16, 2017, 10:58:20 AM
I love people from the Midwest and/or South complaining about housing costs. Always entertains me.
No shit. Me, too!

Yes it's crazy.  Before we sold our second rental house, we had a total of 3 houses, almost 5000 sq ft put together,  worth less than a friend's 1300 sq ft house on the less desirable side of Berkeley.  We got our first rental for less than a lot of the ridiculous luxury vehicles you see running down the road a lot. 

That being said, a lot of people here don't make much at all as compared to earning potential in California.  Affordability is relative.

That's why you rent in a HCOL, live frugally, save lots of money, and then retire to a LCOL. It's ridiculous the cost difference.
Title: Re: My BIL's new house
Post by: cloudsail on May 16, 2017, 11:56:21 AM
I love people from the Midwest and/or South complaining about housing costs. Always entertains me.
No shit. Me, too!

Yes it's crazy.  Before we sold our second rental house, we had a total of 3 houses, almost 5000 sq ft put together,  worth less than a friend's 1300 sq ft house on the less desirable side of Berkeley.  We got our first rental for less than a lot of the ridiculous luxury vehicles you see running down the road a lot. 

That being said, a lot of people here don't make much at all as compared to earning potential in California.  Affordability is relative.

That's why you rent in a HCOL, live frugally, save lots of money, and then retire to a LCOL. It's ridiculous the cost difference.

I dunno, I'm pretty glad we bought our townhouse in the Bay Area four years ago. When we sell it this year, we will probably make more than we saved through our salaries the whole time we were here. I know some co-workers who never bought a house because the market was just too competitive, or bought one really far away, and there's definitely a lot of regret there. Though real estate speculation is always risky, of course. Kind of like timing the market. I wouldn't buy a house in the Bay Area now, if I were just moving here.

Just trying to say that there are no absolutes. You have to really assess the market and make your own judgments. When we first moved here the amount that we were going to pay for a small and old townhouse seemed insanely high, because we weren't used to the market. It took us a year to acclimate, during which time we watched housing prices climb ever higher.
Title: Re: My BIL's new house
Post by: talltexan on May 17, 2017, 08:09:51 AM
I'm impressed by your description of the appreciation in the Bay Area.

My BIL insists he paid $350,000 for a $400,000 house. Taking those numbers at face value--with a 3% down payment--and he's at 6X, Cash-on-cash.

But he has to sell that house to realize that gain. Otherwise, it's just consumption, for which he pays via the large carrying costs associated with that mortgage.
Title: Re: My BIL's new house
Post by: mtn on May 17, 2017, 10:18:32 AM

But he has to sell that house index fund to realize that gain. Otherwise, it's just consumption, for which he pays via the large small carrying costs associated with Vanguard that mortgage.

Gotta sell anything to make money on a financial investment.

Not that that should justify a housing purchase, but just adding another layer to the mess.
Title: Re: My BIL's new house
Post by: Jrr85 on May 17, 2017, 12:00:32 PM

Area does have a say in what is affordable

that's the thing - It doesn't. It has a say in what is AVAILABLE at any given price point, but what you can AFFORD is strictly a function of how much money you have available for that purpose.

If I can't afford a $200,000 house, finding one in an area where most other houses are $400,000 won't magically make me be able to afford it.

What happens in these HCOL areas you are talking about is that people either:
A. Have to make sacrifices in other areas of their lives to be able to pay for a house that is more than they initially could afford, but because of restructuring they end up being able to afford it.

B. They get a place that IS more than they can afford, and get into debt or other bad financial circumstances because of it.

You're using a pretty narrow definition of affordable.  I could afford a $100k car in the sense that I could send money to the dealership and have the car, but I cannot afford it in the sense that it is not a remotely reasonable purchase for someone with my income and net worth (which I think is fairly common way people use afford).
 
Similarly, I can't afford a $600k house where I live.  Could I afford a $600k house in a HCOL area that has good long term growth prospects?  Probably.  It would suck but a $600k house that you can expect to appreciate 5% a year is much more affordable than a $600k house that is probably going to fail to keep up with inflation. 

I personally think people are grossly overestimating property appreciation in HCOL areas, and that outside of the few places where the independently wealthy choose to move to, you can't continue to have property appreciation that outstrips income growth in the area.  But I do think expected appreciation impacts what people can reasonably afford to buy.   
Title: Re: My BIL's new house
Post by: Dicey on May 17, 2017, 06:35:56 PM
I personally think people are grossly overestimating property appreciation in HCOL areas, and that outside of the few places where the independently wealthy choose to move to, you can't continue to have property appreciation that outstrips income growth in the area.  But I do think expected appreciation impacts what people can reasonably afford to buy.
You are free to think that, but in the Bay Area, you'd be wrong. We've owned our current home outright for four years, and for each of those years, it has gone up in value $100k, which is more than DH earns. Our neighbor is building their dream house immediately next door. If it ever gets finished (we haven't seen their contractor in two weeks), we'll get another $100k bounce. It's an insane ride, but we're glad to be on it and not watching from the sidelines.

The reason that appreciation is so high is because there are a lot of high-paying jobs here. (We're "poor" in comparison. FWP, I know.) Plus, for some crazy reason, people still want to live here. First on the list is No Snow, followed by Endless Sunshine, then Magnificent Scenery.
Title: Re: My BIL's new house
Post by: Jrr85 on May 17, 2017, 09:00:29 PM
I personally think people are grossly overestimating property appreciation in HCOL areas, and that outside of the few places where the independently wealthy choose to move to, you can't continue to have property appreciation that outstrips income growth in the area.  But I do think expected appreciation impacts what people can reasonably afford to buy.
You are free to think that, but in the Bay Area, you'd be wrong. We've owned our current home outright for four years, and for each of those years, it has gone up in value $100k, which is more than DH earns. Our neighbor is building their dream house immediately next door. If it ever gets finished (we haven't seen their contractor in two weeks), we'll get another $100k bounce. It's an insane ride, but we're glad to be on it and not watching from the sidelines.

The reason that appreciation is so high is because there are a lot of high-paying jobs here. (We're "poor" in comparison. FWP, I know.) Plus, for some crazy reason, people still want to live here. First on the list is No Snow, followed by Endless Sunshine, then Magnificent Scenery.

Well I stand corrected. Certainly anything that has gone on for four years will go on forever.
Title: Re: My BIL's new house
Post by: talltexan on May 18, 2017, 08:48:05 AM

But he has to sell that house index fund to realize that gain. Otherwise, it's just consumption, for which he pays via the large small carrying costs associated with Vanguard that mortgage.

Gotta sell anything to make money on a financial investment.

Not that that should justify a housing purchase, but just adding another layer to the mess.

VTSAX pays a dividend, which you can immediately use to buy things.

Housing also pays a dividend, which economists call "Imputed Rent"; if you rent property out, it's the thing you sell to your tenant. If you live in the house, you're simply consuming the imputed rent.
Title: Re: My BIL's new house
Post by: Dicey on May 20, 2017, 10:07:44 AM
I personally think people are grossly overestimating property appreciation in HCOL areas, and that outside of the few places where the independently wealthy choose to move to, you can't continue to have property appreciation that outstrips income growth in the area.  But I do think expected appreciation impacts what people can reasonably afford to buy.
You are free to think that, but in the Bay Area, you'd be wrong. We've owned our current home outright for four years, and for each of those years, it has gone up in value $100k, which is more than DH earns. Our neighbor is building their dream house immediately next door. If it ever gets finished (we haven't seen their contractor in two weeks), we'll get another $100k bounce. It's an insane ride, but we're glad to be on it and not watching from the sidelines.

The reason that appreciation is so high is because there are a lot of high-paying jobs here. (We're "poor" in comparison. FWP, I know.) Plus, for some crazy reason, people still want to live here. First on the list is No Snow, followed by Endless Sunshine, then Magnificent Scenery.

Well I stand corrected. Certainly anything that has gone on for four years will go on forever.
That's a completely different argument.  If you'd like to move in that direction, I'll offer that I purchased a home in 1996 on a short sale, which more than doubled in price when I sold it four years later. The example given above was also purchased on a short sale. In another market, we've recently purchased two rental properties at their 15 years ago prices, because the market dumped when the Canadian dollar did.

Here's the point you missed: We could easily sell our home in the current market for at least $400k over what we paid for it, with multiple offers, and the gains would be tax-free. Just because it may not be the reality of your market doesn't make it completely real in others.

Counting on the market always going up is a fool's game. But making money in real estate is a proven way to create wealth, if done correctly.
Title: Re: My BIL's new house
Post by: englishteacheralex on May 20, 2017, 10:55:37 AM
Read through the heated discussion here with interest. We have a combined gross of $140k and own a 3/2, 900 square foot condo that we bought for $364k in 2015. Ideally we would have loved to buy for $200k or less, but that doesn't exist in Honolulu. It hasn't been a stretch for us so far.

One thing I will say: I LOVE it when family/friends buy big houses. Gives us one more fun place to visit. Some of them even let us throw parties at their places. Lots of fun for us, no giant mortgage or upkeep!
Title: Re: My BIL's new house
Post by: cloudsail on May 20, 2017, 09:37:40 PM
I personally think people are grossly overestimating property appreciation in HCOL areas, and that outside of the few places where the independently wealthy choose to move to, you can't continue to have property appreciation that outstrips income growth in the area.  But I do think expected appreciation impacts what people can reasonably afford to buy.
You are free to think that, but in the Bay Area, you'd be wrong. We've owned our current home outright for four years, and for each of those years, it has gone up in value $100k, which is more than DH earns. Our neighbor is building their dream house immediately next door. If it ever gets finished (we haven't seen their contractor in two weeks), we'll get another $100k bounce. It's an insane ride, but we're glad to be on it and not watching from the sidelines.

The reason that appreciation is so high is because there are a lot of high-paying jobs here. (We're "poor" in comparison. FWP, I know.) Plus, for some crazy reason, people still want to live here. First on the list is No Snow, followed by Endless Sunshine, then Magnificent Scenery.

Well I stand corrected. Certainly anything that has gone on for four years will go on forever.
That's a completely different argument.  If you'd like to move in that direction, I'll offer that I purchased a home in 1996 on a short sale, which more than doubled in price when I sold it four years later. The example given above was also purchased on a short sale. In another market, we've recently purchased two rental properties at their 15 years ago prices, because the market dumped when the Canadian dollar did.

Here's the point you missed: We could easily sell our home in the current market for at least $400k over what we paid for it, with multiple offers, and the gains would be tax-free. Just because it may not be the reality of your market doesn't make it completely real in others.

Counting on the market always going up is a fool's game. But making money in real estate is a proven way to create wealth, if done correctly.

I'm looking to purchase rental property in Canada. Can I ask where you bought yours?
Title: Re: My BIL's new house
Post by: Dicey on May 21, 2017, 03:13:16 AM
Hi cloudsail, they're not in Canada. Palm Desert, CA=Snowbird HQ. I bought my first house there in 2003. We picked up two more in the last two years for about the same price per sf that I paid for the first one. Still looking to pick up a couple more before the loonie rebounds. Nothing so far, but as the summer desert temperatures soar, prices tend to drop, so fingers crossed.

I should point out that these homes are located in a very large senior community. Canadians are not selling off these homes en masse, but as the owners pass away or age to the point where they stop traveling, they sell, because: Canadian Healthcare > American Healthcare.

At the moment, the pool of new Canadian buyers has shrunk considerably . Since CA still has plenty of winter sunshine, and the loonie *will* rebound, we see this as a good time to buy. They still rent quite easily.


We are not expecting to make a killing on them. These homes have good bones, but they're starting to get old enough that a little nipping and tucking is in order. Most people do not want to do this work, they want turnkey living. We love doing this stuff, so it will be something fun we can do together, at a relaxed pace, when DH retires.
Title: Re: My BIL's new house
Post by: valsecito on May 21, 2017, 04:03:43 AM
Kids in Toronto are dropping low 7 figures on old houses with combined incomes in the $100-$150K range.    They can't get 30 year mortgages up here, so if interest rates jump a percentage point or two they will be pooched when they have to renew.     Leverage gone wild.

the local governments are jumping on the opportunity to tax the snot out of them too.  $20K+ in land transfer taxes, for example.
Somewhat off topic: you'd pay 20k of land transfer taxes on a 160k home purchase here (or 33.6k of VAT). Not including the rest of the fees, taxes and expenses, like mortgage registration fees, mortgage bank fees, notaries, property deed registration authorities, and more.

That might explain why flipping houses is not quite as popular around here...
Title: Re: My BIL's new house
Post by: cloudsail on May 21, 2017, 07:43:07 PM
Hi cloudsail, they're not in Canada. Palm Desert, CA=Snowbird HQ. I bought my first house there in 2003. We picked up two more in the last two years for about the same price per sf that I paid for the first one. Still looking to pick up a couple more before the loonie rebounds. Nothing so far, but as the summer desert temperatures soar, prices tend to drop, so fingers crossed.

I should point out that these homes are located in a very large senior community. Canadians are not selling off these homes en masse, but as the owners pass away or age to the point where they stop traveling, they sell, because: Canadian Healthcare > American Healthcare.

At the moment, the pool of new Canadian buyers has shrunk considerably . Since CA still has plenty of winter sunshine, and the loonie *will* rebound, we see this as a good time to buy. They still rent quite easily.


We are not expecting to make a killing on them. These homes have good bones, but they're starting to get old enough that a little nipping and tucking is in order. Most people do not want to do this work, they want turnkey living. We love doing this stuff, so it will be something fun we can do together, at a relaxed pace, when DH retires.

Ah I see. Thanks for the explanation! I'm specifically looking for places in Canada because we came into some inheritance in CDN that we don't know what to do with. Hmmm, maybe I should start a thread.
Title: Re: My BIL's new house
Post by: Jrr85 on May 22, 2017, 09:34:18 AM
I personally think people are grossly overestimating property appreciation in HCOL areas, and that outside of the few places where the independently wealthy choose to move to, you can't continue to have property appreciation that outstrips income growth in the area.  But I do think expected appreciation impacts what people can reasonably afford to buy.
You are free to think that, but in the Bay Area, you'd be wrong. We've owned our current home outright for four years, and for each of those years, it has gone up in value $100k, which is more than DH earns. Our neighbor is building their dream house immediately next door. If it ever gets finished (we haven't seen their contractor in two weeks), we'll get another $100k bounce. It's an insane ride, but we're glad to be on it and not watching from the sidelines.

The reason that appreciation is so high is because there are a lot of high-paying jobs here. (We're "poor" in comparison. FWP, I know.) Plus, for some crazy reason, people still want to live here. First on the list is No Snow, followed by Endless Sunshine, then Magnificent Scenery.

Well I stand corrected. Certainly anything that has gone on for four years will go on forever.
That's a completely different argument. If you'd like to move in that direction, I'll offer that I purchased a home in 1996 on a short sale, which more than doubled in price when I sold it four years later. The example given above was also purchased on a short sale. In another market, we've recently purchased two rental properties at their 15 years ago prices, because the market dumped when the Canadian dollar did.

Here's the point you missed: We could easily sell our home in the current market for at least $400k over what we paid for it, with multiple offers, and the gains would be tax-free. Just because it may not be the reality of your market doesn't make it completely real in others.

Counting on the market always going up is a fool's game. But making money in real estate is a proven way to create wealth, if done correctly.

Actually, it's the exact same argument.  Although it looks like maybe it's a wrong argument. 

Prices can only go up at a rate that people can and will pay.  I was operating under the premise that when you have places that independently wealthy people want to move to (or just park buy real estate to park cash), you can have prices go up much faster than wages indefinitely (bay area, Manhattan, vacation areas, etc).  And even outside of those areas, local rich people/people with inheritances can push the prices in favorable areas faster than wage growth. 

But I thought that without those forces, prices can only go up with wages, and that most of the housing boom on a nationwide basis was due to the fact that we have been in a prolonged period where interest rates have been dropping, financing has been made available at higher and higher leverage, and people have been willing to spend more of their resources on housing up and down the income range. 

But now that I look at it, as long as we are willing to devote the lionshare of income growth to housing, maybe the leverage allows housing prices to continually grow faster than wages???  I just plugged some stuff into a spreadsheet, and it looks like a 2% real wage increase, if we devote 80% of it to housing, allows price growth of about 4% (of course this ignores any restraint that down payment requirements would put on pricing growth)?  But the housing growth is a lower percentage each year at least through 13 years, so maybe it will eventually get down to match the wage growth? 

I've totally confused myself at this point.  I get why leverage would allow home price growth faster than wage growth, but I'm confused as to why that growth would be decreasing each year rather than having a steady relationship between the wage growth percentage and price growth percentage. 


 
Title: Re: My BIL's new house
Post by: talltexan on May 22, 2017, 12:09:36 PM
Read through the heated discussion here with interest. We have a combined gross of $140k and own a 3/2, 900 square foot condo that we bought for $364k in 2015. Ideally we would have loved to buy for $200k or less, but that doesn't exist in Honolulu. It hasn't been a stretch for us so far.

One thing I will say: I LOVE it when family/friends buy big houses. Gives us one more fun place to visit. Some of them even let us throw parties at their places. Lots of fun for us, no giant mortgage or upkeep!

Indeed the extra space had several conveniences when I visited my BiL. What was inconvenient was the lack of AC, but I don't think the delays in fixing the AC had anything to do with financial strain because my BiL couldn't afford the house. Meanwhile, my BiL will be missing a family vacation this January, because they are retrenching financially.
Title: Re: My BIL's new house
Post by: Alim Nassor on June 15, 2017, 12:16:46 AM
I've always heard the rule of thumb that your house "should be" ~3x your annual income.  So $380k on $120k would follow that rule. 

Beyond that, is it smart?  Way too many variables to say yes or no.

"The now-defunct Washington Mutual Bank suggested up to 4-5 times: As a broad generalization, most people can afford to purchase a house worth about three times their total (gross) annual income, assuming a 20% down payment and a moderate amount of other long-term debts, such as car or student loan payments.Jul 22, 2015"

https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=how%20many%20times%20annual%20income%20for%20house

We were told that a few times when house hunting, my reply was "What fucking planet are you on?"  I never paid even close to 2x for a house.
Title: Re: My BIL's new house
Post by: Alim Nassor on June 15, 2017, 12:31:14 AM
$120k salary for a $380k home doesn't sound bad at all.

Wow, I guess even when I was un-mustachian, I was mustachian.    That sounds insane to me.   Last new house I bought we paid 126k for.  Brand new custom built for us on 2 acres of beautiful forested land, in 2011.   Granite, hickory custom cabinets, Jacuzzi tub, hardwood floors, etc.  I did quite a bit of the interior work myself to cut costs. Our income at the time was about 150k, and I really disliked spending that on a house.  Since we decided to try to FIRE a few years ago, we sold that beautiful place and bought a little house in town for 70k and put 10k more into it.    I owe nothing else, and hope to FIRE in about 11 months.
Title: Re: My BIL's new house
Post by: talltexan on June 15, 2017, 07:14:57 AM
Alim-
I share your values of restraint. But is moving $46,000 from home equity into investments moving up your retirement date by more than one year?
Title: Re: My BIL's new house
Post by: TheGrimSqueaker on June 15, 2017, 10:35:08 AM
I've always heard the rule of thumb that your house "should be" ~3x your annual income.  So $380k on $120k would follow that rule. 

Beyond that, is it smart?  Way too many variables to say yes or no.

"The now-defunct Washington Mutual Bank suggested up to 4-5 times: As a broad generalization, most people can afford to purchase a house worth about three times their total (gross) annual income, assuming a 20% down payment and a moderate amount of other long-term debts, such as car or student loan payments.Jul 22, 2015"

https://www.google.com/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF-8#q=how%20many%20times%20annual%20income%20for%20house

We were told that a few times when house hunting, my reply was "What fucking planet are you on?"  I never paid even close to 2x for a house.

I believe I remember reading, in "The Millionaire Next Door", a few paragraphs discussing the relationship between net worth, mortgage, and annual income. If my memory serves me correctly, Stanley and Danko stated that next to none of the self-made millionaires or multimillionaires they interviewed *ever* had a mortgage worth more than twice their annual realized income. Some of them had very nice houses worth several times their annual realized income, but those who did found ways to get their houses that didn't involve big mortgages. Many, for example, benefited by buying in future HCOL areas before a big real estate boom or keeping a basic family home until later in life and then capitalizing on increased property values. Some were DIY'ers.
Title: Re: My BIL's new house
Post by: SeaEhm on June 15, 2017, 06:33:37 PM
Some of the responses here smell like people live in very low cost of living areas. 

When one lives in an area where apples are priced from $1-3, buying the $1 apple doesn't sound too bad to them.  Only on the internet do they encounter people who have apples available to them for $0.10.  And in some cases, those people paying $0.10 love to tell them how stupid they are for paying a dollar.
Title: Re: My BIL's new house
Post by: Alim Nassor on June 15, 2017, 08:25:00 PM
Alim-
I share your values of restraint. But is moving $46,000 from home equity into investments moving up your retirement date by more than one year?

It's more than just that.  This house is almost paid for, the other had a 30 year mortgage with 28 years left on it,  I neglected to mention that the place I worked for shut down, and my next job was for less money.   Plus that gave me the impetus t consider FIRE, something I had never really done before.
Title: Re: My BIL's new house
Post by: Alim Nassor on June 15, 2017, 08:27:18 PM
Some of the responses here smell like people live in very low cost of living areas. 

When one lives in an area where apples are priced from $1-3, buying the $1 apple doesn't sound too bad to them.  Only on the internet do they encounter people who have apples available to them for $0.10.  And in some cases, those people paying $0.10 love to tell them how stupid they are for paying a dollar.

I live in North Texas.  I could have chosen to spend as much on a house as any bank would lend me, but I chose not to.  Plenty of houses in the 500,000 to 1 million price range around.
Title: Re: My BIL's new house
Post by: SeaEhm on June 15, 2017, 08:30:04 PM
Some of the responses here smell like people live in very low cost of living areas. 

When one lives in an area where apples are priced from $1-3, buying the $1 apple doesn't sound too bad to them.  Only on the internet do they encounter people who have apples available to them for $0.10.  And in some cases, those people paying $0.10 love to tell them how stupid they are for paying a dollar.

I live in North Texas.  I could have chosen to spend as much on a house as any bank would lend me, but I chose not to.  Plenty of houses in the 500,000 to 1 million price range around.

So you have apples that range from $0.10 to $1.25?
Title: Re: My BIL's new house
Post by: Alim Nassor on June 15, 2017, 08:32:37 PM
Some of the responses here smell like people live in very low cost of living areas. 

When one lives in an area where apples are priced from $1-3, buying the $1 apple doesn't sound too bad to them.  Only on the internet do they encounter people who have apples available to them for $0.10.  And in some cases, those people paying $0.10 love to tell them how stupid they are for paying a dollar.

I live in North Texas.  I could have chosen to spend as much on a house as any bank would lend me, but I chose not to.  Plenty of houses in the 500,000 to 1 million price range around.

So you have apples that range from $0.10 to $1.25?

Seems that way.  Living in a HCOL area is a choice, just like buying the 10 cent apple.
Title: Re: My BIL's new house
Post by: SeaEhm on June 15, 2017, 11:24:19 PM
Some of the responses here smell like people live in very low cost of living areas. 

When one lives in an area where apples are priced from $1-3, buying the $1 apple doesn't sound too bad to them.  Only on the internet do they encounter people who have apples available to them for $0.10.  And in some cases, those people paying $0.10 love to tell them how stupid they are for paying a dollar.

I live in North Texas.  I could have chosen to spend as much on a house as any bank would lend me, but I chose not to.  Plenty of houses in the 500,000 to 1 million price range around.

So you have apples that range from $0.10 to $1.25?

Seems that way.  Living in a HCOL area is a choice, just like buying the 10 cent apple.

That it is... That it is... Often times, HCOL of living areas have not only a wide selection of apples, but also includes many other fruits.  Some people just love apples and I respect that.  I, too, often think "do I really need all this fruit available to me?"  An apple or two is really all that I need. However, I am greedy and like the possibility of eating a kiwi if I ever cared to buy one.

Title: Re: My BIL's new house
Post by: Alim Nassor on June 16, 2017, 12:44:45 AM
Some of the responses here smell like people live in very low cost of living areas. 

When one lives in an area where apples are priced from $1-3, buying the $1 apple doesn't sound too bad to them.  Only on the internet do they encounter people who have apples available to them for $0.10.  And in some cases, those people paying $0.10 love to tell them how stupid they are for paying a dollar.

I live in North Texas.  I could have chosen to spend as much on a house as any bank would lend me, but I chose not to.  Plenty of houses in the 500,000 to 1 million price range around.

So you have apples that range from $0.10 to $1.25?

Seems that way.  Living in a HCOL area is a choice, just like buying the 10 cent apple.

That it is... That it is... Often times, HCOL of living areas have not only a wide selection of apples, but also includes many other fruits.  Some people just love apples and I respect that.  I, too, often think "do I really need all this fruit available to me?"  An apple or two is really all that I need. However, I am greedy and like the possibility of eating a kiwi if I ever cared to buy one.

My taste runs more to the tropical, and since I bought the 10 cent apple, I can afford an occasional foray to the lands of bananas and coconuts.
Title: Re: My BIL's new house
Post by: Dicey on June 16, 2017, 08:21:16 AM
Yes, but you still live somewhere where there are decent ten-cent apples, which makes it a hellUvalde* lot easier.  (*That's an auto fill for "helluva", which is kinda funny, so stet.)

Sure, I can move, but my friends and family are here and I have deep roots in my community. What rankles is the perception of smugness, as if folks in LCOLAs are more virtuous than folks who simply don't have access to the same options - er, fruit. Frankly, it's harder to reach FIRE with high housing costs, but that doesn't mean it can't be done. Look at all those badass Aussies, especially the Sydneysiders.
Title: Re: My BIL's new house
Post by: talltexan on June 16, 2017, 08:57:40 AM
the problem with conflating Fruits and Housing is that Housing is--frequently--the single largest lifestyle expense for households, while Fruit is rounding error.

But HCOLA areas got that way because the labor market opportunities pay better. So you're choosing a bundle of Job + seemingly overpriced real estate. Assuming you depend on the job for your income.
Title: Re: My BIL's new house
Post by: dougules on June 16, 2017, 10:50:14 AM
Some of the responses here smell like people live in very low cost of living areas. 

When one lives in an area where apples are priced from $1-3, buying the $1 apple doesn't sound too bad to them.  Only on the internet do they encounter people who have apples available to them for $0.10.  And in some cases, those people paying $0.10 love to tell them how stupid they are for paying a dollar.

I live in North Texas.  I could have chosen to spend as much on a house as any bank would lend me, but I chose not to.  Plenty of houses in the 500,000 to 1 million price range around.

So you have apples that range from $0.10 to $1.25?

And where are you going to want to be if you run a fruit stand?
Title: Re: My BIL's new house
Post by: Alim Nassor on June 16, 2017, 08:00:31 PM
Yes, but you still live somewhere where there are decent ten-cent apples, which makes it a hellUvalde* lot easier.  (*That's an auto fill for "helluva", which is kinda funny, so stet.)

Sure, I can move, but my friends and family are here and I have deep roots in my community. What rankles is the perception of smugness, as if folks in LCOLAs are more virtuous than folks who simply don't have access to the same options - er, fruit. Frankly, it's harder to reach FIRE with high housing costs, but that doesn't mean it can't be done. Look at all those badass Aussies, especially the Sydneysiders.

I'm sorry, I wasn't trying to be smug or condescending, it's that housing prices like that are a complete other world to me.  I couldn't ever dream of buying a half million dollar or higher house.   Highest priced place I ever lived was a 4 bedroom 2 story log home on 23 acres.  I sold it for 192k back in 2000.  I was only into it for about 120k.
Title: Re: My BIL's new house
Post by: Dicey on June 17, 2017, 12:07:32 AM
Yes, but you still live somewhere where there are decent ten-cent apples, which makes it a hellUvalde* lot easier.  (*That's an auto fill for "helluva", which is kinda funny, so stet.)

Sure, I can move, but my friends and family are here and I have deep roots in my community. What rankles is the perception of smugness, as if folks in LCOLAs are more virtuous than folks who simply don't have access to the same options - er, fruit. Frankly, it's harder to reach FIRE with high housing costs, but that doesn't mean it can't be done. Look at all those badass Aussies, especially the Sydneysiders.

I'm sorry, I wasn't trying to be smug or condescending, it's that housing prices like that are a complete other world to me.  I couldn't ever dream of buying a half million dollar or higher house.   Highest priced place I ever lived was a 4 bedroom 2 story log home on 23 acres.  I sold it for 192k back in 2000.  I was only into it for about 120k.
You apologized, but then you did it again. Huh?

I get that's a completely different world. It's just that: different. Not better, not worse, just different. It is also nothing by which to judge someone's character.

Anecdote: I bought an 880 sf condo in December 1996 for $120k. I sold it in August of 2001 for $260k. I doubled my money in less than five years. It sold again in February of 2017 for $533k. Oh yes, it's an apartment conversion. Welcome to the Bay Area. Prices are nuts, but so is the appreciation.
Title: Re: My BIL's new house
Post by: Alim Nassor on June 17, 2017, 02:39:37 AM
Yes, but you still live somewhere where there are decent ten-cent apples, which makes it a hellUvalde* lot easier.  (*That's an auto fill for "helluva", which is kinda funny, so stet.)

Sure, I can move, but my friends and family are here and I have deep roots in my community. What rankles is the perception of smugness, as if folks in LCOLAs are more virtuous than folks who simply don't have access to the same options - er, fruit. Frankly, it's harder to reach FIRE with high housing costs, but that doesn't mean it can't be done. Look at all those badass Aussies, especially the Sydneysiders.

I'm sorry, I wasn't trying to be smug or condescending, it's that housing prices like that are a complete other world to me.  I couldn't ever dream of buying a half million dollar or higher house.   Highest priced place I ever lived was a 4 bedroom 2 story log home on 23 acres.  I sold it for 192k back in 2000.  I was only into it for about 120k.
You apologized, but then you did it again. Huh?

I get that's a completely different world. It's just that: different. Not better, not worse, just different. It is also nothing by which to judge someone's character.

Anecdote: I bought an 880 sf condo in December 1996 for $120k. I sold it in August of 2001 for $260k. I doubled my money in less than five years. It sold again in February of 2017 for $533k. Oh yes, it's an apartment conversion. Welcome to the Bay Area. Prices are nuts, but so is the appreciation.

No, I didn't do it again.  Do you really think saying I couldn't ever dream of buying a house that expensive is smug?  Maybe I should have said I couldn't ever afford to buy one that high.  That's what I meant and I thought that was clear.  Sorry.
Title: Re: My BIL's new house
Post by: SeaEhm on June 17, 2017, 01:34:49 PM
Some of the responses here smell like people live in very low cost of living areas. 

When one lives in an area where apples are priced from $1-3, buying the $1 apple doesn't sound too bad to them.  Only on the internet do they encounter people who have apples available to them for $0.10.  And in some cases, those people paying $0.10 love to tell them how stupid they are for paying a dollar.

I live in North Texas.  I could have chosen to spend as much on a house as any bank would lend me, but I chose not to.  Plenty of houses in the 500,000 to 1 million price range around.

So you have apples that range from $0.10 to $1.25?

And where are you going to want to be if you run a fruit stand?

With the more expensive and variety of fruit. You can outsource help in neighboring areas to help run the more inexpensive fruit stands.  You cannot outsource the other lifestyle.


At Alim, I didn't take your comment as smug.  I actually laughed when you mentioned an occasional foray into the land of coconuts and bananas. 

When read literally, it just sounds so funny.  :)

hopefully the coconuts are delivered by African swallows. 

(last statement will be a reach, but someone might get it)
Title: Re: My BIL's new house
Post by: valsecito on June 17, 2017, 01:40:30 PM
hopefully the coconuts are delivered by African swallows. 
African or European?
Title: Re: My BIL's new house
Post by: paddedhat on June 17, 2017, 05:48:28 PM
Ladend or unladend?
Title: Re: My BIL's new house
Post by: jinga nation on June 19, 2017, 08:53:22 AM
Mayday!
Pythons invading!
Title: Re: My BIL's new house
Post by: paddedhat on June 19, 2017, 05:09:43 PM
It's just a flesh wound.
Title: Re: My BIL's new house
Post by: talltexan on June 20, 2017, 09:00:58 AM
The amazing thing about all these Monty Python references is that we did watch "Monty Python and the Quest for the Holy Grail" during our visit there. Perhaps you guys should join us for the next one!