The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: webguy on August 31, 2016, 03:54:01 PM
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Hi guys,
I need advice. My wife and I are currently looking for a new house. Our current house is about 1800sqft and has 3 bedrooms. I work from home full time and need an office, and so technically it's only a 2 bedroom. We have a young daughter with a second baby on the way due in 7 months. We plan to have 3 kids. My wife is a full time stay at home mom and so we use our house a lot as we are both home most of the day. We would like a bigger home as our current house has a funky layout (it's a split level and our master bedroom is in the basement) and doesn't have space for some things we would like (I'm a musician and would like space to play, my wife likes to do crafts, we have family who visit and currently have no space to house them, etc). After looking around and viewing several houses we found a house that we really like, however, our two concerns about this home are:
Size
We've been looking around for 4-5 bedrooms houses. Most of them are around the 3500-4000sqft range, which feels like a good size based on the layout that we'd like. We looked at a house today that we really liked, however it's 5000sqft! We love the house. It's in our ideal location, is close to a great public lake, parks, and trails, and is in a nice family friendly neighborhood. It has a great layout and loads of room. It has 3 levels; upstairs (with 4 bedrooms), main level (with living spaces, kitchen, office, playroom, etc), and a huge open basement. It feels like a lot of space, but we're trying to decide if it's too much or if we would actually be useful to have that much space. We live in Minnesota and so during the Winters here people tend to stay inside a lot due to the freezing temps from end of November-March. Having a lot of open space to run around might be really nice and we can envision turning the basement space into an awesome indoor play area with play houses and fun activities for the kids to do. I also like the idea of having a pool table or table tennis table for when friends come over.
Question 1: My first question is to people who have a big house. Do you find yourself using the space, or does a lot of it end up being wasted?
Cost
I currently have a high income and so were approved for a mortgage for a purchase price up to $1M, but we are looking at houses in the $400-$600,000 range. I was hoping to stay under $500,000 as that's a comfortable number based on our current finances. (We currently have about $800k in investments, $220k cash, and $100k home equity. And this year I will earn about $800k before taxes. My income is variable as I run my own business and isn't guaranteed long term). Our current home cost $235k. The house we are considering buying is listed at $579k. That's a lot of money! Especially as we're frugal people and don't spend a lot of money on stuff (current expenses are around the $50k/year mark). While we could afford the purchase price pretty easily with our current finances, I worry about ongoing costs. For example, the property taxes are $8k/year, compared to about $3k at our current home and about $5k on most of the houses we've looked at. It's also 5000sqft and so we need to consider utilities and maintenance.
Question 2: My second question is related to the costs of owning a large home. I'm less worried about the initial purchase price and more worried about ongoing maintenance costs and expenses. Does it cost a lot in utilities to heat/cool etc? What other ongoing costs should I consider? If you own a big home then do you consider those costs to be worth it?
We could really use some advice as it's a big decision and I don't have any friends I can talk to about this as none of them know how much money we earn and they would think I was joking if I said I was considering spending over half a million bucks on a house.
Thanks!
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Just to clarify, you will make $800k this year?
If that's the case, a $500k house, or some extra utilities cost to heat it are totally irrelevant. You can easily afford it, and you can still retire next year, probably.
I have a big (4500 sq foot) house in a cold (Park City) place.
-It will cost you more to heat, yes. Hard to say exactly how much as it will depend on aspect, design, insulation, etc - so it would be worth asking the owners if you can see their utility bills at some point.
-We do not use all the space, even with a SAHM and 2 very rowdy kids. But we are outdoors people and are out skiing/sledding/etc in the winter. If you are more of an indoor person you may use it all. We're turning our basement into an apartment, because it just sits empty.
-There is a lot of plumbing, a lot of siding, a lot of roof, etc. Maintenance costs will be higher than for a smaller house, but not proportional to the extra size. I'd say assume 50% higher ongoing costs to maintain the house versus your current place.
-W
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When it comes to the electric bills it really depends on when the house was built. We live in Texas where it is hot hot hot, but with our new construction large home we have yet to see an electric bill over $190. That's keeping the a/c at 74 during the day. Our electric bills actually average out to $130 a month over the year. Of course being a new home it has all the latest greatest energy efficient stuff.
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So what's your net worth if you spend around 50k a year and make around 800k a year?
With that being your income and your living expenses it's hard to take this post seriously. At your income and spending, you should be able to pay cash for a 500k house and save enough to retire at a 4% withdrawal rate after 3 years time...
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My parents own a large house (~6000 sqft). It is a pain and expensive to maintain and costs a ton to heat/cool despite being in a fairly mild climate. Since there is more of everything (Windows, walls, roof, floor) it costs more to repair/replace worn items. I would not buy more house than you need. Too much time is wasted taking care of rooms no one uses.
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...and it's not just heating/cooling. I grew up in a pretty damn big house. They moved in 6 months before I was born.
* Furnishing. I think I was about 10 before the house was completely furnished.
* cleaning. More windows to wash. More vacuuming. More dusting. Eventually you have to start thinking seriously about a maid.
* remodeling. Everything wears out. Even really nice wallpaper, when exposed to children, might last 30 years (and that is a stretch). You've got lots of it to replace. And if you're into this sort of thing, it also goes in and out of style. Do you care?
* plumbing/hvac/etc - You've got twice as much of it. Replacing water heaters are a little expensive. Replacing 2 is more so. Same with air conditioners, etc.
* more roofing... more painting... more everything
You get the gist. From the OP, you probably can afford it. If that's what you want: have a ball. If it is going to kill you a little bit every time another little expense washes in... then this is not for you.
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My parents own a large house (~6000 sqft). It is a pain and expensive to maintain and costs a ton to heat/cool despite being in a fairly mild climate. Since there is more of everything (Windows, walls, roof, floor) it costs more to repair/replace worn items. I would not buy more house than you need. Too much time is wasted taking care of rooms no one uses.
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I agree with this, but it sounds as though OP has found a house that he can easily afford, and that will meet his family's needs very nicely both now and in the future. I think he should buy it. (Contingent on all the usual inspections and whatever.)
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So what's your net worth if you spend around 50k a year and make around 800k a year?
With that being your income and your living expenses it's hard to take this post seriously. At your income and spending, you should be able to pay cash for a 500k house and save enough to retire at a 4% withdrawal rate after 3 years time...
To clarify, I don't make $800k/year. I'm making $800k this year. That's before taxes. It's probably closer to $500k after taxes. I own a software development business and the income isn't guaranteed long-term due to the nature of the business. 4 years ago I was earning $70k at a full-time job. The income will hopefully stay high but there's no guarantees - it could dry up tomorrow - but I'm working hard to try to sustain it as long as possible so I can keep stashing cash. Our net worth is currently $1.1M which includes cash, investments, and home equity. We could pay cash for the house technically, but I don't see the point when we can get a 15 year mortgage for under 3%.
...and it's not just heating/cooling. I grew up in a pretty damn big house. They moved in 6 months before I was born.
* Furnishing. I think I was about 10 before the house was completely furnished.
* cleaning. More windows to wash. More vacuuming. More dusting. Eventually you have to start thinking seriously about a maid.
* remodeling. Everything wears out. Even really nice wallpaper, when exposed to children, might last 30 years (and that is a stretch). You've got lots of it to replace. And if you're into this sort of thing, it also goes in and out of style. Do you care?
* plumbing/hvac/etc - You've got twice as much of it. Replacing water heaters are a little expensive. Replacing 2 is more so. Same with air conditioners, etc.
* more roofing... more painting... more everything
You get the gist. From the OP, you probably can afford it. If that's what you want: have a ball. If it is going to kill you a little bit every time another little expense washes in... then this is not for you.
Thanks, this is really useful information. The ongoing costs is what I'm worried about more than the initial purchase price and so this is really helpful.
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Ok, I think it might be time to take a step back and think about your overall goals - because at your current spending level, you'll be FI after next year, no questions asked. You're arguably FI now.
You might have some goals that involve more money. Maybe you want to move to another location to raise your kids, or traveling around the world first class, or a Scrooge McDuck money pool. I'm not judging any of those things, but barring some sort of wild spending dreams in your future... you need to decide what you want to do with the rest of your life before you decide to buy an expensive house. Because you might want to buy a big house somewhere else, or just rent a house, or travel to a few places and rent for 6 months at a time to see how you like it, etc.
So if I were you, I'd not only not buy the house, I'd stop looking at houses. I'd sit down with my partner and have a serious talk about what you want your future to look like. Then the house/no house decision will be easy.
-W
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Ok, I think it might be time to take a step back and think about your overall goals - because at your current spending level, you'll be FI after next year, no questions asked. You're arguably FI now.
You might have some goals that involve more money. Maybe you want to move to another location to raise your kids, or traveling around the world first class, or a Scrooge McDuck money pool. I'm not judging any of those things, but barring some sort of wild spending dreams in your future... you need to decide what you want to do with the rest of your life before you decide to buy an expensive house. Because you might want to buy a big house somewhere else, or just rent a house, or travel to a few places and rent for 6 months at a time to see how you like it, etc.
So if I were you, I'd not only not buy the house, I'd stop looking at houses. I'd sit down with my partner and have a serious talk about what you want your future to look like. Then the house/no house decision will be easy.
-W
I agree. With that much income and that little spending, FI is SO achievable...and kids can easily share bedrooms for quite a few years.
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I don't really know what you want to know exactly. You own a house now, so you know what to expect with a bigger one...pretty much what you said: higher taxes, higher maintenance, higher heating/cooling costs, tied up equity that could otherwise be invested, etc. All of that means obviously having to rely on your income for longer.
I agree with the advice given: make the home you're in now work until you get more stashed away. Buying a house 3x the size of what you have already doesn't make any sense at all.
When you absolutely have to buy, go with the smallest you can get by with due to the higher locked in costs.
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From ages 5-14 I lived in a 5,550sq ft house. Given the ages, I certainly wasn't privvy to specific numbers, but I can speak to use: depending on the year, there were 3 of us (core Bio kids), oftentimes 4, and sometimes up to 7 kids (blended fam). For several months, a relative's family lived with us to, bringing it to 3 adults and 8 kids at one point- only 2 of us were girls, and there were 3 certain ADHD diagnoses... so a very high energy crew. Only when we were in the 6+ kids range did everything really get used. A huge upstairs area was often empty, and for a couple years, was rented out as an office to a local company (family friend). That being said, we're in a pretty mild climate and very outdoor focused people. The size of the backyard and number of bikes in the garage had WAY more bearing on our lives than anything else. Usually, we'd all end up stuffed into the one big kitchen/living great room anyway. Oh! Except the bathrooms- having 3.5 baths was a LIFESAVER with that many kids around.
Just weighing in from that perspective, not sure if it'll be much help.
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Just to be clear, this is not what I was advising the OP. A big house might very well be an excellent idea for quality of life/overall happiness and a great way to spend money wisely. Or it might not. OP has plenty of money to afford a $500k house and STILL be FI in a year or two at most by any reasonable standard. It's not as if he's going to have to slave away in a salt mine for 40 years to afford it.
Without some big-picture goals/decisions figured out, it's impossible to make a smart decision about the house, though.
-W
I agree with the advice given: make the home you're in now work until you get more stashed away. Buying a house 3x the size of what you have already doesn't make any sense at all.
When you absolutely have to buy, go with the smallest you can get by with due to the higher locked in costs.
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I have a large home, and a large family (5 kids) and (had) a home business. For our family, this was the amount of space we needed to live comfortably. I agree that it's a lot to clean (my main complaint), but I put my kids to work. Our house is built of ICF with foam in the ceiling and holds it's temperature. Our house is cheaper to heat/cool than houses 1/2 it's size or less. We are all 7 in our home for a lot of the day- every room gets used, some kids even have to share a bedroom ;) It sounds like you can afford the house (the taxes seem high! I live in a LCOL area and mine are much cheaper). I think you need to stop looking and start a new conversation with your wife:
1. Where do we see ourselves in 5 years- homeschool the kids? Public school? More than 3? Want to travel? Elderly relatives to care for? Will you still be working?
2. What do you feel is a good budget for RE? Will the taxes fit your budget?
3. What amount of space will allow us to live comfortably as our family grows and changes? (don't want to be buying again in 5 years when you have 3 kids and feel cramped)
I would want a dedicated office space apart from the main kid-playing area (quiet area), a good space for indoor play- an open basement with room for kids to run and play, big kitchen if you cook a lot (we do- 3 meals a day for 7 people, it's a lot of food to hold and I Only shop once per week so need plenty of storage space for food), and plenty of bathroom space (but not too much, you don't want extra unused bathrooms to clean).
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Our family went through a somewhat similar situation about 5 years ago. Moved from 1,100 sq ft to 3,200 sq ft, although we had 4 kids at the time. Here are my thoughts:
1) kids can (and, IMO, should) share bedrooms. It was only when we had 3 boys sharing a 10x11 bedroom, with our daughter in bedroom #3, that things started to feel cramped. When it was only 2 boys and 1 girl, they all shared one bedroom, and it worked just fine. Granted, as they get older, it's good to give them a bit more space, but that's several years away.
2) layout and number of rooms is more important than overall square footage. We nearly tripled our floor space, but only added one bedroom, half a bathroom, and two living spaces. We love the layout of our bigger home, but we've found that once you hit 4 bedrooms and 2,400 sq ft, more square footage just gets you bigger rooms, rather than more functionality.
3) yes, you can afford it. That's not in question. The question is what are you willing to pay for?
4) our guest bedroom doubles as DW's craft room, and also where the baby takes naps. It only gets regularly used for one of the three :)
5) if your basement is finished and is included in the square footage of your house, then it's likely about the size of our home (our basement is not finished, nor included). Our family is now 8 people, and the 3,200 sqft is *plenty,* even though DW homeschools our kids.
6) your needs will change over time. Don't just look at your current needs, but as Secret Agent Mom said, think about where you'll be in 5, 10, or 15 years.
7) maintenance and ongoing costs: for us, maintenance is about the same--same number and type of appliances to break, HVAC systems, etc. Utilities will, of course, go up. We're in the Chicago area, and we average about $150/mo for electricity throughout the year (peaking in summer and winter) and about $100/mo for gas (peak in winter, almost nothing in the summer). As for taxes, you'll be paying about $22/day in property taxes.
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I lived in a big house for a substantial part of my life, but that came in when I was around 16. Parents decided to expand the house to provide more space for us. Before that we were in a two bedroom house with a huge open front yard which later got built on. The house we have now is too big for either one of my parents since all three of us are out working or studying. It does make life easy when we all get together but that is few weeks in a year.
Maintenance is a hassle there is a maid and I don't think my mom would be able to comfortably take on the chores if the maid was let go esp. as her age increases. It's obvious you can afford the house though I would think of a few things like:
- Do you plan on downsizing once your kids are on their own?
Would you have time to maintain your house with three kids running around without any hired help?
If you decide to travel with your kids for a long time how easy do you think it will be to sell the house or rent it?
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1. A house at this size, and this price, and which is laughably out of reach for all the people you know well, could be difficult to sell. Which is partly about getting your money back on it, but is much more about being trapped in a house which no longer works for you while having to keep it up to show standard and put the rest of your lives off for however long it takes to sell. Which in the case of a couple of friends of mine is coming up to 2 years, even in the UK's supposedly hot housing market - and yes, they could both sell easily for a lot less than they are asking but would have to radically change their plans to do so and for various reasons aren't willing to do that).
2. A number of years ago I saw a TV programme about a rich California family spending the summer in a pioneer cabin somewhere in the American west. They were very obviously happier in the one room cabin than in their big white house on the coast where every member of the family dispersed to a different part of the house and the mom was left alone all day in this big kitchen/diner/family room that rarely saw all the family together. So be aware that by buying a big house with lots of floors and rooms you could be hastening the day when your family atomises into different parts that rarely spend time together.
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I'm a big fan of separating work from home. More focus on work while there, less interruptions, more productive, etc. = more income.
If there is stuff available in the area, consider renting someplace to do your work and avoid the moving hassle and added expense of a larger home.
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we just moved to ~3800 square foot house was one of the smallest lake front homes in our budget for the cheapest lake community in our city. i wish it were smaller. we have no kids the layout leads to alot of unused space. our electric bills are about 50% higher than our previous 1800 sq ft ranch. formal dining room used once since we've moved in. we have an eat in nook in our kitchen we also have room for a sitting area in the kitchen. leaving the family room upstairs mostly unused. then we have a family room downstairs. etc. its a ton of space. when we have kids next year or 2 maybe we will be greatful for it but right now its a lot of house that sits empty. but furnishing isnt expensive its called craigslist. pretty sure everything we have could be resold for a profit.
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The questions I would ask for any size house in Minnesota:
1) Is it energy efficient?
2) What is the R value of the insulation?
3) What were the monthly heating costs last winter?
Otherwise, agree that large houses are very hard to keep clean and everyone always ends up in the kitchen anyway.
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1. A house at this size, and this price, and which is laughably out of reach for all the people you know well, could be difficult to sell. Which is partly about getting your money back on it, but is much more about being trapped in a house which no longer works for you while having to keep it up to show standard and put the rest of your lives off for however long it takes to sell. Which in the case of a couple of friends of mine is coming up to 2 years, even in the UK's supposedly hot housing market - and yes, they could both sell easily for a lot less than they are asking but would have to radically change their plans to do so and for various reasons aren't willing to do that).
2. A number of years ago I saw a TV programme about a rich California family spending the summer in a pioneer cabin somewhere in the American west. They were very obviously happier in the one room cabin than in their big white house on the coast where every member of the family dispersed to a different part of the house and the mom was left alone all day in this big kitchen/diner/family room that rarely saw all the family together. So be aware that by buying a big house with lots of floors and rooms you could be hastening the day when your family atomises into different parts that rarely spend time together.
Yeah, it did take nearly a year for my parents' house to sell- granted, that was around the time housing markets were starting to slow. But it showed well (cover of a local real estate magazine), but still took a long time.
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1. A house at this size, and this price, and which is laughably out of reach for all the people you know well, could be difficult to sell. Which is partly about getting your money back on it, but is much more about being trapped in a house which no longer works for you while having to keep it up to show standard and put the rest of your lives off for however long it takes to sell. Which in the case of a couple of friends of mine is coming up to 2 years, even in the UK's supposedly hot housing market - and yes, they could both sell easily for a lot less than they are asking but would have to radically change their plans to do so and for various reasons aren't willing to do that).
2. A number of years ago I saw a TV programme about a rich California family spending the summer in a pioneer cabin somewhere in the American west. They were very obviously happier in the one room cabin than in their big white house on the coast where every member of the family dispersed to a different part of the house and the mom was left alone all day in this big kitchen/diner/family room that rarely saw all the family together. So be aware that by buying a big house with lots of floors and rooms you could be hastening the day when your family atomises into different parts that rarely spend time together.
Yeah, it did take nearly a year for my parents' house to sell- granted, that was around the time housing markets were starting to slow. But it showed well (cover of a local real estate magazine), but still took a long time.
We just sold my childhood home of ~4500sqft a couple of weeks ago to settle my dad's estate. It is/was an amazing house. It had monster moldings everywhere (even in the closets!), high end finishes (for the 1960s), huge mature trees, large lot and was built like a brick shithouse. It showed well and actually sold pretty fast. The clincher is: the price it sold for was paltry compared to similar construction/finishes. In fact, the price it sold for was approximately equal to what I paid to build a ~2500 sqft house that was not nearly as high end.
The problem? Well, what is a popular location today is likely to be an old, uninteresting neighborhood full of retired people after about 50 years.
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Hi guys,
I need advice. My wife and I are currently looking for a new house. Our current house is about 1800sqft and has 3 bedrooms. I work from home full time and need an office, and so technically it's only a 2 bedroom. We have a young daughter with a second baby on the way due in 7 months. We plan to have 3 kids. My wife is a full time stay at home mom and so we use our house a lot as we are both home most of the day. We would like a bigger home as our current house has a funky layout (it's a split level and our master bedroom is in the basement) and doesn't have space for some things we would like (I'm a musician and would like space to play, my wife likes to do crafts, we have family who visit and currently have no space to house them, etc). After looking around and viewing several houses we found a house that we really like, however, our two concerns about this home are:
Size
We've been looking around for 4-5 bedrooms houses. Most of them are around the 3500-4000sqft range, which feels like a good size based on the layout that we'd like. We looked at a house today that we really liked, however it's 5000sqft! We love the house. It's in our ideal location, is close to a great public lake, parks, and trails, and is in a nice family friendly neighborhood. It has a great layout and loads of room. It has 3 levels; upstairs (with 4 bedrooms), main level (with living spaces, kitchen, office, playroom, etc), and a huge open basement. It feels like a lot of space, but we're trying to decide if it's too much or if we would actually be useful to have that much space. We live in Minnesota and so during the Winters here people tend to stay inside a lot due to the freezing temps from end of November-March. Having a lot of open space to run around might be really nice and we can envision turning the basement space into an awesome indoor play area with play houses and fun activities for the kids to do. I also like the idea of having a pool table or table tennis table for when friends come over.
Question 1: My first question is to people who have a big house. Do you find yourself using the space, or does a lot of it end up being wasted?
Cost
I currently have a high income and so were approved for a mortgage for a purchase price up to $1M, but we are looking at houses in the $400-$600,000 range. I was hoping to stay under $500,000 as that's a comfortable number based on our current finances. (We currently have about $800k in investments, $220k cash, and $100k home equity. And this year I will earn about $800k before taxes. My income is variable as I run my own business and isn't guaranteed long term). Our current home cost $235k. The house we are considering buying is listed at $579k. That's a lot of money! Especially as we're frugal people and don't spend a lot of money on stuff (current expenses are around the $50k/year mark). While we could afford the purchase price pretty easily with our current finances, I worry about ongoing costs. For example, the property taxes are $8k/year, compared to about $3k at our current home and about $5k on most of the houses we've looked at. It's also 5000sqft and so we need to consider utilities and maintenance.
Question 2: My second question is related to the costs of owning a large home. I'm less worried about the initial purchase price and more worried about ongoing maintenance costs and expenses. Does it cost a lot in utilities to heat/cool etc? What other ongoing costs should I consider? If you own a big home then do you consider those costs to be worth it?
We could really use some advice as it's a big decision and I don't have any friends I can talk to about this as none of them know how much money we earn and they would think I was joking if I said I was considering spending over half a million bucks on a house.
Thanks!
This doesn't really answer your question, but how long do you intend to work? If you like what you do and intend to work for another ten years, then a bigger home is probably something of a no brainer.
But if you might retire if you keep up your $800k income for another four or five years, then I would stay put. You don't say how young your daughter is, but if it's within a few years, I would let them share a room. Keep the baby in a bassinet in the master until she sleeps through the night, and then move her to her sister's room. My kids share a room and love it.
This set up probably won't be desirable for 3 kids, but by the time the third kid is around, you might be retired and not need to use an office. You may still want to upgrade, but you can upgrade with your retired lifestyle in mind, rather than a relatively short term work situation.
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I think I'd consider a home with a separate guest cottage, which you can use as office, music studio, & guest room.
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Hi guys,
I need advice.
Question 1: My first question is to people who have a big house. Do you find yourself using the space, or does a lot of it end up being wasted?
Question 2: My second question is related to the costs of owning a large home. I'm less worried about the initial purchase price and more worried about ongoing maintenance costs and expenses. Does it cost a lot in utilities to heat/cool etc? What other ongoing costs should I consider? If you own a big home then do you consider those costs to be worth it?
We could really use some advice as it's a big decision and I don't have any friends I can talk to about this as none of them know how much money we earn and they would think I was joking if I said I was considering spending over half a million bucks on a house.
Thanks!
Q1. Size
I have lived in a 3000 sq.ft home, and now in a 3500 sq.ft home.
In the first one, it only worked because we had a live in nanny and still used one bedroom just for storage...
In the second, the entire family rooms is a "walk through" space... we are thinking of getting rid of furniture and putting in a games table that will be used maybe 1x per month... (DH uses his 550 sq.ft shop, however)
It is not just about the size, but, yes, space is definitely wasted.... Adults only tend to use a common living space, kitchen, possibly a dining room, and one other individual hobby room (one office or hobby space per adult.)... No matter how large the home is or the number of spaces.
Once we have the ability to keep our interests / crap / space of our own, we can't inhabit two spaces at once. I think this is why bachelor suites work for those that never invite others over...
Q2. Costs -- costs explode with sq.ft.
The largest is when you want to repaint, recarpet, add christmas lights etc. most of us absorb the monthly costs, groan at annual maintenance, but keeping up a whole home to finished, high standard -- those costs just explode with size.
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Having a huge unfinished (or even finished) basement is nice. Our last house had one, all unfinished and open. In the winter, we put trikes and a mini trampoline and scooters down there, and the kids could run around like banshees when the weather was terrible. This was especially lovely to have in basement format, because we didn't heat/cool it (it stays about 60 degrees in the winter, fine for kids to run around in) and didn't really ever need to clean it (no guests were down there, I swept the floor a few times a year and that was it).
Having a huge upstairs space, I extremely disliked. More to clean, more to repair.
Thus I prefer a ranch house so you get a nice big basement, but not a zillion square feet to maintain.
Yes 4 bedrooms seems reasonable if you need a home office. Maybe put a guest room in the basement (ignore it, don't go in it, and it really won't ever have to be cleaned except for fresh sheets and a quick dust right before guests). For the office, I would say it is highly ridiculous to have a separate craft room. Make room in the office for a desk or table for crafts. Have that be the grown-up project/work/no kids room.
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...and it's not just heating/cooling. I grew up in a pretty damn big house. They moved in 6 months before I was born.
* Furnishing. I think I was about 10 before the house was completely furnished.
* cleaning. More windows to wash. More vacuuming. More dusting. Eventually you have to start thinking seriously about a maid.
* remodeling. Everything wears out. Even really nice wallpaper, when exposed to children, might last 30 years (and that is a stretch). You've got lots of it to replace. And if you're into this sort of thing, it also goes in and out of style. Do you care?
* plumbing/hvac/etc - You've got twice as much of it. Replacing water heaters are a little expensive. Replacing 2 is more so. Same with air conditioners, etc.
* more roofing... more painting... more everything
You get the gist. From the OP, you probably can afford it. If that's what you want: have a ball. If it is going to kill you a little bit every time another little expense washes in... then this is not for you.
+1 I have family members who live in 3-4000sq foot houses in New England. The utility bills are completely insane, and they are always complaining about them...even couples who turn down the heat/off the AC when everyone is out of the house during the workday. One couple who bought a huge 4000sq footer to "grow into" as a family can't stand the costs now and are looking to sell less than 3yrs in (who knows if they will be able to break even...we'll see). For what it's worth, I grew up in a 3000sq foot house in a family of 6 with a sahm and pets, and it felt like enough space. I think 5000sq feet is totally crazy and unnecessary for a family of 5 living in a cold climate. Surely there must be some nice 3000sq footers with 4 beds in your area?
You clearly can afford it…but yes, 5000sq feet is going to be a complete B to manage in terms of expenses. The big houses immediately lose their luster once you realize that they essentially trap you into a never ending cycle of higher costs.
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Where I live, you can call the utility companies and ask for the average bills for a property. You just give them the address and tell them you are thinking about purchasing the house and want to know what you are getting into. I've done this several times and never had an issue getting the information. Of course, this only works if the property is currently occupied.
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Where I live, you can call the utility companies and ask for the average bills for a property. You just give them the address and tell them you are thinking about purchasing the house and want to know what you are getting into. I've done this several times and never had an issue getting the information. Of course, this only works if the property is currently occupied.
Sorry, I keep referring back to my childhood homestead.... but it's my reference point. The folks that bought my dad's house did this and were ecstatic. It costs ALMOST NOTHING to heat and cool this house! Um, sure. My dad lived there the last 5 years by himself. He closed off areas. He was a workaholic and worked full time right up until he died, so he wasn't home that much. He was a cheapskate and cold natured. In the summer, the AC was at 80 or higher and he was comfortable. In the winter, he sat under an electric blanket.
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We looked at a big old rental house and checked utilities. 600$ a month to heat.
HARD PASS.
Definitely don't buy a big house without checking utilities.
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My house is too big (3500 sq feet). We use 1 bedroom as a guest bedroom, 1 as a home office, and 1 as an exercise room (treadmill, bike, etc). I actually can't wait to downsize someday............ but we are a 2 working career outside the home family with a child. Our house is underutilized, to say the least.
However, you seem to have more kids and higher needs for the space than I do. I think you should buy it if it is perfect in every way. You can easily afford the house and the bills that come with it.
I live in a moderate climate and our electric bills are all reasonable. However, our house is newer with good insulation, highly efficient windows, etc.
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OP, I get the impression that you have one year of really high income and you're letting your emotions decide to spend all the money to fix a problem. You said yourself your income is variable. Buying a house that only works with a high income is setting yourself up for failure. Sounds like you're close to FI anyway, and your needs may change radically if you FIRE. For one, you probably wouldn't need a home office.
So, instead of buying this massively huge house that will never be clean, go find a smaller house that has the LAYOUT you need. The most functional, easily livable, flexible house I've ever seen was 1200 sq ft and 5 bedrooms. Layout is going to trump size in 99% of cases.
In the meantime, kids can share a room, and you're planning for a 3rd kid you may not have (people change their minds sometimes!). Guests can stay in hotels if they object to the air mattress. Crafts can be done wherever you stick them. My sewing machine is on the upstairs landing - it's not even a room!
You say that your friends would think you buying a $500k house would be a joke. Maybe that should really tell you something.
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We have moved from a 4000 sq feet house to about 2500 sq feet. Two adults, two children, all of us are homebodies, I have an office and DH has a "music studio" (=messy area full of stuff). When we had twice as much space, we rented out a bedroom with an ensuite bath and large kitchen in the basement, had two large rooms on the second floor that only was used to collect stuff, and filled the living room with stuff. In fact, we almost felt like hoarders in the end, and still we didn't have enough furniture to use all the rooms. We have had more visitors in the new house than in the old one, and it is no problem at all. The kids are very happy to share their rooms with grandparents or cousins, and we have a nice sofa bed in my office. The only thing we are missing is the option to rent out parts of the house (=tax free income).
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Your income is absurd, congratulations!
Beware of failing to properly deprive your kids as they grow up. Underdeprived children are quite the scourge on personal finances and the rest of society. With that in mind, why not do bunk beds?
My brother has 3 kids from 4-16 in a <2000 sqft house that is 4 bedrooms. One room is used for sewing and crafts, leaving the two older kids in the second biggest bedroom, and the 4 year old in the smallest. They spend a lot of time outside in summer, and stay busy with school in winter, so why would they need a couple thousand square feet more? In my opinion this should be your baseline, everything beyond that is pure luxury of your own choosing.
We have 1 kid in a 2100 sqft house and have filled it up. I have no doubt that if I lived in a 4000 sqft house I would fill it up, and likely be no happier. I also have little doubt that we would be just about as happy in a 1500 sqft house as long as the kitchen didn't suck.
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The reasons I mentioned looking for a home with a guest cottage is that it would be more versatile than all the square feet in one home. Being separate you can keep the temp setting at a less expensive setting while you aren't using it. Music sounds wouldn't bother sleeping kids. Guests wouldn't be directly in your living space. I could easily become a rental if you don't need it later. Or if you don't need the big home it could be the rental, while you & the Mrs. live in the cottage. It would also be nice to have if you're remodeling the main house sometime. Could be a place for an elderly parent to live sometime in the future.
Lots of versatility.
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I live in a 12K sqft house, granted there's always something that needs repair/fixing/cutting/mowing it can be lightbulbs, walls, the garden, houseware, drainage (luckily high ceilings so it's fresher than other houses and we only use fans), you'll probably need domestic help to keep it up clean and tidy.
The bigger house you have, the bigger the expense. you seem to be very well-off but other things to consider:
would there be any renovations?
more house means more lightning = more electricity, your bills will go up, are you ready for that change?
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i disagree you will not need domestic help in at 3-4000 sq ft house. esp. if you arent using half of it til you have kids
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It's important to reflect on your long term goals with Mrs. Webguy before you jump into a big house. We had a 3500 sq ft McMansion for seven years (total overkill for a nuclear family of 3) and were so glad to sell it when we moved. The rule of thumb is 1% of purchase price per year in maintenance costs. You'll really be spending a lot to furnish it. Make sure you and Mrs Webguy are on the same page with your renovation and furnishing budget.
You're 30 years old, and your success may be temporary. I think your instinct to stash as much as you can now while you're earning well, is right. Be careful about lifestyle inflation and make sure Mrs Webguy is on board with your philosophy.
I'd also recommend taking a hard look at your business and evaluating your risk. Model out a worst case scenario. What does that look like for you? Could you still afford to make mortgage payments and afford upkeep on the big house? Ideally, a worst case scenario means something like 200k a year instead of 800k, not going back to 70k working for The Man. If you have a very small client list (or a client list of one), if you depend on specific contacts, or your success is based on maintaining a high consulting rate in a field with lots of competitors who will catch up to you in the next year or two, it's best to plan on the gravy train running out of steam sooner rather than later, and getting a good exit plan established.
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i disagree you will not need domestic help in at 3-4000 sq ft house. esp. if you arent using half of it til you have kids
I was suggesting something else to think about, needing domestic help or not, that's all up to OP
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Suddenly making more money, and then deciding to buy a bigger place because you can "afford it" is pretty much lifestyle inflation in action.
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I live in a 12K sqft house, granted there's always something that needs repair/fixing/cutting/mowing it can be lightbulbs, walls, the garden, houseware, drainage (luckily high ceilings so it's fresher than other houses and we only use fans), you'll probably need domestic help to keep it up clean and tidy.
The bigger house you have, the bigger the expense. you seem to be very well-off but other things to consider:
would there be any renovations?
more house means more lightning = more electricity, your bills will go up, are you ready for that change?
Is it an old family castle or do you have a gigantic family?
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Thanks for the replies so far, it's really great to get other people's perspective and is giving us lots of things to think about. In regards to utilities for the home, our realtor sent us a great breakdown from the current owner for the entire year of 2015. Here's the summary of it:
Monthly average for 2015:
Electric: $ 263.92
Gas: $ 108.40
City (Water, etc): $ 64.22
Total per month: $ 436.53
The highest month of electricity usage was August ($331), and the highest gas usage was January ($307). The realtor also said:
"Apparently there are 3 efficient furnaces and multiple zones to heat and cool more efficiently. The original builder owns a heating and cooling company so he set it up nicely."
We're on the fence, because we love the location, neighborhood and layout of the house. It's just really big! I'm sure we'd be just as happy in a 3000sqft house, but we haven't found any of those that we like which are in this location and have a good layout that works for us. We're worried that if we pass on this house then another one which checks all of our boxes might not come up in this area for a really long time. I'm also very adverse to ongoing expenses - we don't have cable or gym memberships and live like we don't earn much money - and so committing to long term expenses like this is a little scary. Even after paying off the mortgage we'd still be on the hook for $8k/year property taxes, $6k/year utilities, + any maintenance (using 1% let's say $5k/year). That's $19k/year.
Suddenly making more money, and then deciding to buy a bigger place because you can "afford it" is pretty much lifestyle inflation in action.
Lol, this is so true. We're usually very anti-lifestyle inflation, we just need to move to a different home and would really like to get one that meets all of our needs, and as we use our home a lot we feel like it's a good use of our money. Unfortunately, staying in this area means paying quite a bit more money to have a house that meets all of our needs both now and into the future.
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I'm in Minnesota. Based on your description of this house--its size and price point--I'm guessing it is in a mid-to outer-ring suburb and that it was built in the last 20 years. Houses of this type are sort of interchangeable and homogeneous: there are some differences of course, but mostly they are of the same style and layout. Architectural uniqueness is uncommon. The sameness of these houses can be either a feature or a bug depending on your tastes, but my guess is that if you are even considering these houses at all it must be a feature. With that in mind, you should know that there are tons of houses in the MPLS/St. Paul metro area (assuming that is where you are) that meet your specifications, including many that are even better for your family than this one because they are not quite as big.
You are in a fantastic situation: you don't need to buy a house, you have a very high income, you don't have a preference for unusual or niche architecture. You can afford, both in terms of money and time, to wait for a house that is absolutely perfect. Don't squander the fantastic position you are in for a house that is mostly-but-not-completely okay just because it happened to pop into your field of vision at this point in time.
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I'm in Minnesota. Based on your description of this house--its size and price point--I'm guessing it is in a mid-to outer-ring suburb and that it was built in the last 20 years. Houses of this type are sort of interchangeable and homogeneous: there are some differences of course, but mostly they are of the same style and layout. Architectural uniqueness is uncommon. The sameness of these houses can be either a feature or a bug depending on your tastes, but my guess is that if you are even considering these houses at all it must be a feature. With that in mind, you should know that there are tons of houses in the MPLS/St. Paul metro area (assuming that is where you are) that meet your specifications, including many that are even better for your family than this one because they are not quite as big.
You are in a fantastic situation: you don't need to buy a house, you have a very high income, you don't have a preference for unusual or niche architecture. You can afford, both in terms of money and time, to wait for a house that is absolutely perfect. Don't squander the fantastic position you are in for a house that is mostly-but-not-completely okay just because it happened to pop into your field of vision at this point in time.
Excellent advice.
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I'm in Southern California. I make $90K, and live in a 1200sq ft 2 br condo. I really need an office and would LOVE to buy a standalone home, but upgrading to a 3-br 1800sqft home with a garage would cost $500K for a fixer upper, 600K for a ready to move in house. I think I'll keep working from my laptop on the living room couch...
I wish I had your problems...
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I live in a 12K sqft house, granted there's always something that needs repair/fixing/cutting/mowing it can be lightbulbs, walls, the garden, houseware, drainage (luckily high ceilings so it's fresher than other houses and we only use fans), you'll probably need domestic help to keep it up clean and tidy.
The bigger house you have, the bigger the expense. you seem to be very well-off but other things to consider:
would there be any renovations?
more house means more lightning = more electricity, your bills will go up, are you ready for that change?
Is it an old family castle or do you have a gigantic family?
I have to admit that when I aw thi I fell over and wallowed the eth key on my keyboard.
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I'm in Minnesota. Based on your description of this house--its size and price point--I'm guessing it is in a mid-to outer-ring suburb and that it was built in the last 20 years. Houses of this type are sort of interchangeable and homogeneous: there are some differences of course, but mostly they are of the same style and layout. Architectural uniqueness is uncommon. The sameness of these houses can be either a feature or a bug depending on your tastes, but my guess is that if you are even considering these houses at all it must be a feature. With that in mind, you should know that there are tons of houses in the MPLS/St. Paul metro area (assuming that is where you are) that meet your specifications, including many that are even better for your family than this one because they are not quite as big.
You are in a fantastic situation: you don't need to buy a house, you have a very high income, you don't have a preference for unusual or niche architecture. You can afford, both in terms of money and time, to wait for a house that is absolutely perfect. Don't squander the fantastic position you are in for a house that is mostly-but-not-completely okay just because it happened to pop into your field of vision at this point in time.
Well-said. I tell myself similar things when I start getting tempted to update my car. It's a pretty fluid market, and new stuff is always appearing.
Personally, I think you're crazy for thinking you need a 5-bedroom house. Heck, even a 4-bedroom house would be more than sufficient. You and your kid(s) take up 2 bedrooms, leaving 2-3 more bedrooms that you have to maintain (and pay taxes on) for the rare occasions that you have guests. Now add the living areas.
It sounds like you need to determine what you actually need, er you want, er...is actually important to you in a house. Not what you might do someday, but things you try to do now, but don't work or are awkward because of the space you have. E.g. if you do your own car maintenance, but you're changing the oil in the driveway in January because you don't have a garage, put "garage" on the list. If you have nowhere for guests to sleep right now, and it's important enough to you to provide bedrooms, then take a look at how many guests you typically host, and decide based on that.
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With that size house I'm afraid you may have to stop posting here and spend your time at bogleheads.
Just kidding (well half joking). A house that size where I live would cost over a million CDN, forget currency exchange cause everything is just more expensive here. 500k seems pretty low for a McMansion. Most houses are 2x4s and R19 fiberglass batts, it just seems crazy to buy a 5000 square foot match box like thatt. With your income you can have the house paid in 2 years but you now have 6k a year in utilities and who knows what in taxes (what are the taxes exactly?).
Can you swing those expenses and retire when you want? You must want to retire early if you are here. You have 1.1 million net worth, that will drop by about 400k buying this house so you now need to work longer to make that back. So when do you want to retire? Not sure I saw your response to this question . . .
EDIT: oops missed total expenses 20k a year to live in that house!!!! 100K over 5 years to live in that place!!??? AHHHWWW HEEEEL NOO! That's nuts!
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EDIT: oops missed total expenses 20k a year to live in that house!!!! 100K over 5 years to live in that place!!??? AHHHWWW HEEEEL NOO! That's nuts!
Depends where you live. Most houses in Seattle cost ~10k/year in taxes alone. Hence why I have to sell and move away when I retire. Anyone from New Jersey on here? They have the highest RE taxes in the nation IIRC.
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Thanks for the replies so far, it's really great to get other people's perspective and is giving us lots of things to think about. In regards to utilities for the home, our realtor sent us a great breakdown from the current owner for the entire year of 2015. Here's the summary of it:
Monthly average for 2015:
Electric: $ 263.92
Gas: $ 108.40
City (Water, etc): $ 64.22
Total per month: $ 436.53
The highest month of electricity usage was August ($331), and the highest gas usage was January ($307). The realtor also said:
"Apparently there are 3 efficient furnaces and multiple zones to heat and cool more efficiently. The original builder owns a heating and cooling company so he set it up nicely."
We're on the fence, because we love the location, neighborhood and layout of the house. It's just really big! I'm sure we'd be just as happy in a 3000sqft house, but we haven't found any of those that we like which are in this location and have a good layout that works for us. We're worried that if we pass on this house then another one which checks all of our boxes might not come up in this area for a really long time. I'm also very adverse to ongoing expenses - we don't have cable or gym memberships and live like we don't earn much money - and so committing to long term expenses like this is a little scary. Even after paying off the mortgage we'd still be on the hook for $8k/year property taxes, $6k/year utilities, + any maintenance (using 1% let's say $5k/year). That's $19k/year.
Suddenly making more money, and then deciding to buy a bigger place because you can "afford it" is pretty much lifestyle inflation in action.
Lol, this is so true. We're usually very anti-lifestyle inflation, we just need to move to a different home and would really like to get one that meets all of our needs, and as we use our home a lot we feel like it's a good use of our money. Unfortunately, staying in this area means paying quite a bit more money to have a house that meets all of our needs both now and into the future.
I won't repeat what everyone has said here about the size, but just point out that you don't actually want this house! You want a house in the same area, but that's about it! And since you're not in a hurry, why rush it?? Houses are always going up for sale -- you will find a better one. I am a renter who moves a lot, and I wish I could tell you the number of times I either (1) jumped on a mediocre place too soon, or (2) had a place I decided on fall through only to find something 5x better a month later! I think you're patience will be well rewarded, even if it takes a year or more, vs spending 20-30 years in a house that is too big and too expensive for your comfort. Follow your gut!
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For what it's worth, here's my family's (n=1) experience on house sizes.
The first house that my husband & I lived in as a married couple was adorable. It was a 1930's home in an established neighborhood with loads of charm. It was 1500 sq ft, which seemed perfect for the two of us. Once we had our daughter, the house started to feel a bit small.... less due to our daughter and more due to the fact that we then had a daughter and two large dogs, one of whom could not be trusted around the kiddo. The house didn't have a good way to allow effective segregation of the dogs, it had the steep/narrow stairs and wasted hallway space typical of older homes, and we decided that we needed to go bigger.
We moved from that house in a 5bd/3ba 2500 square foot house. Yes, really. At first, it seemed great.... we had an office, a guest room, a bedroom for our kiddo and her future sibling. We also had extra space in the form of a sunroom, a weird sitting area off the living room, and a weird hallway. And the biggest guest bathroom you've ever seen. We loved it... for about a year. And then it started to feel like every spare moment was spent cleaning that big, stupid house. The house needed some repairs/updates, but the size of the house made it crazy. For example, we wanted to repaint the whole thing.... but the living room ceiling was about 30 ft high, so we would have needed to hire it out because we weren't prepared to take on that sort of task. We had rooms that went unused and basically just collected junk.... which meant that periodically cleaning those rooms out was a huge PITA.
We downsized to a 3bd/2ba 2000 sq ft house. This house is just right. We still only have one kiddo (trying for a year with no success for #2, although admittedly not being very aggressive in our attempts, and starting to worry that maybe I'm too old). The third room is a guest room / office. If we have a 2nd kid, the 3rd room will go to the 2nd kid, the desk will move into the master bedroom (specifically looked for a master big enough to make that work) and the kiddos will share a room when we have company in order to give up a bed for guests. (Or I'll someday successfully convince my husband to let us enclose the never-used formal dining room to create a guest room / office, which is unlikely.) Our bills are lower, we can repaint the house ourselves when we're ready to tackle that, and I can vacuum the entire house in about 30 minutes. Love it. I honestly think we could have gone even a bit smaller, but this house was the best fit for our criteria (close to his parents' house for free babysitting, right school district, in a neighborhood, right price).
Again, we're just one family.... but we definitely learned our lesson that less is more when it comes to houses. (We also downsized from 5 acres to 0.5 acres.... and with what we save on lawnmower gas/maintenance, we pay a guy to mow our lawn for us. Best decision ever!!!)
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OK actually -- I will chime in about the space.
I grew up in a 4 BR house with Mom + me + 2 sisters. 4BR, but only one living room, plus one smaller entryway den, plus kitchen, plus dining area. Whole house was maybe 2000 sqft? Like others have said, appropriate rooms are so much more important than space. It was really really[/] nice having our own rooms when we were all rabid teenage girls, but there was no need for any of our rooms to be over 11x11, nor for us to *each* have a room PLUS a game room PLUS mom's craft room etc etc etc. Additional common space relieves the need for everyone to have their own room, and everyone having their own room relieves the need for additional common space. If everyone has their 'own' room, it is perfectly easy for siblings to share for a night or weekend while a family member is in town. Also things like office/play/music/crafts can overlap... very easily. As I'm sure others have said, its not about how many different spaces you want, but how many different things you want to be doing at the same time in different rooms.
I think you'll be much, much happier in a smaller house.
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EDIT: oops missed total expenses 20k a year to live in that house!!!! 100K over 5 years to live in that place!!??? AHHHWWW HEEEEL NOO! That's nuts!
Depends where you live. Most houses in Seattle cost ~10k/year in taxes alone. Hence why I have to sell and move away when I retire. Anyone from New Jersey on here? They have the highest RE taxes in the nation IIRC.
You're right that the OP should pay attention to the taxes. I looked at the last few years when I owned a big house and property taxes were the biggest ongoing expense. And the property taxes where I lived in CA were nowhere near the most expensive in the nation.
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EDIT: oops missed total expenses 20k a year to live in that house!!!! 100K over 5 years to live in that place!!??? AHHHWWW HEEEEL NOO! That's nuts!
Depends where you live. Most houses in Seattle cost ~10k/year in taxes alone. Hence why I have to sell and move away when I retire. Anyone from New Jersey on here? They have the highest RE taxes in the nation IIRC.
It doesn't really depend on were you live - rent!!
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I grew up (family of 5) in a nearly 6000sqft (very old) house in the midwest. I don't know exactly what my parents paid for it, but given what I approximately know, it was still under 200k in today's dollars. A few thoughts:
- Sharing rooms, especially for very small children, is very very doable. But if you make them share beds, it's eventually going to go off the rails. A set of twin beds or bunkbeds is cheaper than an entire new house. Eventually, it was nice to have our own rooms, but it wasn't really important till the oldest hit 11.
- Despite it being an enormous house, there was only one full bathroom due to the age of the house. Our 5 person family shared 1.5 bathrooms, including through the teenage years, with no problem. It possibly helped that 3 kids were spread across 4 years, so by the time the youngest hit high school, oldest was off to college.
- Cleaning was always an issue. In part because of the age, but mostly because of the size. Do not under any circumstances underestimate house much time and effort cleaning a house that large takes. When we were at our busiest, we had a cleaning lady come in every two weeks to do general cleaning. When she retired, my mom got all anxious about 'trusting' someone new, and the house has been a dust-bunny sanctuary every since.
- Heating was atrociously expensive, even with keeping it very very cold. The house didn't have AC, which saved a boatload on general energy costs, but probably is less practical for houses that are not giant stone temperature sinks.
- Having all the space was nice, but we never used all of it. Having that much space is also great for just accumulating lots of junk.
- Something was always broken or needing fixing up or painting or or or. With three kids and both parents working and not a ridiculously high income, my parents mostly gave up. To this day, there is kitchen trim (remodeled before they moved in, when I was a baby) still in the basement that has never been put back around the windows. YMMV depending on the age of the house and the quality of the build and your DIY inclinations and how much free time you'll have (ie if you FIRE), but the people who are pointing out ongoing repairs and maintenance are entirely correct.
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EDIT: oops missed total expenses 20k a year to live in that house!!!! 100K over 5 years to live in that place!!??? AHHHWWW HEEEEL NOO! That's nuts!
Depends where you live. Most houses in Seattle cost ~10k/year in taxes alone. Hence why I have to sell and move away when I retire. Anyone from New Jersey on here? They have the highest RE taxes in the nation IIRC.
The bolded statement is a bit of an exaggeration. Property taxes in Seattle are roughly 1% of assessed value, which is typically 10-20% lower than market value (depending on when your last assessment was). So to be paying 10k in property taxes you would be living in a home with an assessed value of around $1million. The current median home value in Seattle is somewhere between roughly 480-666k, depending on which source you refer to, so "most" homeowners in Seattle are probably paying roughly $5-7k/year in property taxes. This will go up a bit if the transit levy passes, but by hundreds, not thousands, of dollars.
Washington state also has several different programs that allow for exemption or deferral of property taxes for those above age 60/61, retired due to disability, and/or earning under $57k/year -- the deferral programs do require eventual repayment of the taxes when the property is sold.
http://dor.wa.gov/Content/FindTaxesAndRates/PropertyTax/IncentivePrograms.aspx
1%?! Man, you guys have it lucky. Here in the progressive paradise of Illinois, we're at about 3.5%!
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We also have a sales tax of close to 10% on everything but food. And pretty hefty gas taxes. No state or city income tax, though.
10% is nothing most of europe is close to 20 while most of Canada is 13-15%.
When it comes to property taxes you always have a choice. Sales tax maybe not, but of course you can limit spending. You don't have to live in a neighbourhood that has such ridiculously high taxes.
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My brother has 3 kids (all under 10) and they all sleep in the same room even though they have a four bedroom house. It's actually nice and a good way for them all to bond and be close. I imagine when they get to be teenagers they'll need their own room though. I have a rather big house ~2000 soft three bedroom and only two of us. I wouldn't want anything bigger than this but I do like having a seperate office and guest room.
Our kids will squabble during the day, but once bed time arrives, they get along wonderfully.
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That's a tough one, WebGuy. Five years ago, I bought a house that is much bigger than I need (I could lose a whole floor and still have too much room). Like you, I have an office in my home, and I wanted it separated from my living space. That still is a good choice to me. I just couldn't live with the chaos of having business and tax documents spread around my living space. There are times when I'm in the middle of a project when I need to spread things around and until the project is finished, I don't want anyone moving my piles.
Now that I've lived here for 5 years, I'm still happy and feel it was the right move for me at the time. However, the closer I get to FI, the more I am actually starting to think about what I WANT to do when I actually retire. And when it looks exciting, I realize I could do those things sooner or even now, if I didn't have this house to worry about. Live light, travel light, move light. You have a young family and you'll probably stay put for years and years, so that may not be necessary to live light yet.
One thing I wasn't sure of in your original post: is the basement finished? Is it counted as part of the 5000 SF?
When I was a child, we had a house with an unfinished basement and we roller-skated down there on rainy days. My dad had a workshop down there and the laundry was down there too.
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EDIT: oops missed total expenses 20k a year to live in that house!!!! 100K over 5 years to live in that place!!??? AHHHWWW HEEEEL NOO! That's nuts!
Depends where you live. Most houses in Seattle cost ~10k/year in taxes alone. Hence why I have to sell and move away when I retire. Anyone from New Jersey on here? They have the highest RE taxes in the nation IIRC.
The bolded statement is a bit of an exaggeration. Property taxes in Seattle are roughly 1% of assessed value, which is typically 10-20% lower than market value (depending on when your last assessment was). So to be paying 10k in property taxes you would be living in a home with an assessed value of around $1million. The current median home value in Seattle is somewhere between roughly 480-666k, depending on which source you refer to, so "most" homeowners in Seattle are probably paying roughly $5-7k/year in property taxes. This will go up a bit if the transit levy passes, but by hundreds, not thousands, of dollars.
Washington state also has several different programs that allow for exemption or deferral of property taxes for those above age 60/61, retired due to disability, and/or earning under $57k/year -- the deferral programs do require eventual repayment of the taxes when the property is sold.
http://dor.wa.gov/Content/FindTaxesAndRates/PropertyTax/IncentivePrograms.aspx
Here are some NJ examples:
$340k list price - $9,541/yr (http://www.zillow.com/homes/fsbo/Clifton-NJ/63391102_zpid/24120_rid/globalrelevanceex_sort/40.879305,-74.144133,40.851264,-74.183529_rect/14_zm/0_mmm/)
$325k list price - $9,541/yr (http://www.zillow.com/homes/for_sale/Clifton-NJ/fsba,fsbo_lt/63150617_zpid/24120_rid/globalrelevanceex_sort/40.877386,-74.161261,40.870377,-74.17111_rect/16_zm/0_mmm/)
$200k list price - $7,249/yr (http://www.zillow.com/homes/for_sale/Clifton-NJ/fsba,fsbo_lt/39724521_zpid/24120_rid/globalrelevanceex_sort/40.877386,-74.161261,40.870377,-74.17111_rect/16_zm/0_mmm/) <- that seems ridiculously cheap for the house; if I were to guess I'd say it's not livable.
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Thanks for the advice everyone. I love asking for advice on here as there's such a great mix of people and perspectives. Mrs webguy and I really appreciate all of the responses as it really helped us to figure out the best decision for our family.
We've decided to pass on this particular house and are going to keep looking until the perfect place comes along, which will likely be quite a bit smaller. We can make our current house work with two small children if need be, and so can afford to wait until after the baby is born and don't need to rush into buying one now which is nice. I feel good about this decision as I was feeling uneasy about making such a big purchase and going from an 1800 sqft house to a 5000 sqft one. We actually laughed when we drove back to our current house after viewing the big one as it was such a huge difference in size and our current house looks like a matchbox comparatively! But the more we thought about it, we actually like the size of our current house, we just need a bit more room as our family continues to grow and a better layout.
Thanks again for providing good common sense advice as always and keeping us grounded!
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Glad to hear you're staying put. You can always rent (and deduct) office space once you have a need for that next bedroom. That being said, my boys are so close having shared a room their whole lives. We now live in a house large enough for each to have their own room, but they still prefer to share.
As a SAHP, bigger house just means more to clean. I pine for the days when I could vacuum my whole house while only using two plugs.
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I'm not voting either way, just seeking more info. Dovetailing on gaja's comments, as they seem to be the only other person who's mentioned it, what about making part of the house into a rental unit? Would zoning laws allow it and could it be done at a reasonable cost/return basis? The versatility and added income could be mighty enticing.
Also, depending on your lifestyle, there are other reasons to have a larger home. I'm from a big, not wealthy, family and we lived in a large-ish suburban home. Ours was often a community gathering place. In high school, many a homecoming float was built in our yard. My parents liked knowing where we were and deviously used their hospitality as a way to meet our friends, teachers and classmates.
Both of my parents have passed away now. At each Memorial Service, there were lots of old friends sharing stories of how much it meant to them to be welcomed at our house. Priceless.
BTW, Dad retired at 50, so I guess he was an early mustachian prototype.
Well now, I guess these recaptured memories count as a vote, don't theYou?
ETA - Whoops, didn't see there was a page 2. Glad you've made a decision you're happy with.