We have three little kids (4,2,2) in daycare which accounts for half of our monthly expenses. We live in a small, pleasant home in the perfect neighborhood. It is 1.5 miles to DH's office/daycare and 2.0 miles to my office. My husband bikes the kids to daycare in a cargo bike and we can walk to grocery stores, cafe's, the high school and can see our kids future elementary school from the driveway. A perfect walkable neighborhood where homes are sought after and sell fast.
Our neighbor's home is going on the market. It NEEDS WORK but it has good bones, a better mountain view, and is larger than our home (+1,500SF). Our current home is great for three little kids and we would be happy here through the elementary years, but once we have three teenagers I suspect this home will get tight. It is already snug as its mid-century design did not include much closet space and there is no basement.
The neighbors house is expected to sell in "as is" condition for $400K. Being the neighbor I know it needs a roof, sewer lateral, new kitchen, new garage doors, new floors.....more?..... A similar sized move-in-ready house in the neighborhood sold for $690K. Our house is appraised at $375K now and we might get $400K if we update the circa 1960 kitchen. We bought this house 11 years ago for $230K. The neighbor bought her house in 2006 for $320K.
If we buy the neighbor's house I would want to stay in our current home until the renovations are complete. Three little kids is not practical in a construction zone. And, with two working parents, it would be in the best interest of our marriage and parenting to minimize DYI.
The thing is that with the daycare cost, buying a mortgage is not prudent. We typically have about $500 left each month after fully funding retirement accounts. We could drain our non-retirement investment with down payment plus carrying the house/reno while the kid are in daycare. But, when the twins turn 3 (Jan) our daycare cost will decrease by $700. When our DD goes to kindergarten (Sept '19) our daycare cost will reduce by and additional $900.
We could function in our paid off home until the kids are thorough the elementary school and build our savings. This is DH's preferred course of action, he HATES home improvements and would rather do outdoor things with the kids. But I keep thinking about the "opportunity" to get into a home that will appreciate and suit our needs over the long term. But rationally, buying a house we may need in 8 years seems like flagrant life-style inflation, especially considering we could bank an additional $3500/mo. Convince me that DH is right and this is not the right time for a "fixer upper investment."