Author Topic: Help me weigh my housing options  (Read 2792 times)

IndyPendent

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Help me weigh my housing options
« on: November 09, 2015, 08:50:29 AM »
Hey all,

I'm looking for some level-headed conversation about a decision my family and I are contemplating.

Our current housing situation: a beautiful, luxurious 3 bedroom 1400 square foot house on a postage stamp lot in the middle of a just-ok subdivision in Indianapolis. Current house price: ~130K. We've been working like mad to pay that sucker off and should have it wrapped up in about 4 months. This house was our 5-year house and we're coming up on 5 years about that same time.

What's good:
1) House price! Nowhere else can you get a house that you genuinely like for as cheaply as we have and still have good job opportunities. Indianapolis rocks! I've also put a bunch of time and effort into fixing up this house the way we wanted it and I'm ALMOST done....sigh. ;)
2) Our current neighbors. We genuinely love our next-door neighbors on every side. That's rare.
3) Almost paid off! We are really looking forward to putting our savings into rocket-booster mode.

What's challenging:

1) Kids, and working from home. I recently changed jobs and now I work from our third bedroom/office. I built a killer murphy bed and the space is perfect. No complaints about that, it's great. However, I am on the phone a lot and with a 3 year old (and potentially more kids down the road), the noise level makes it challenging to maintain a professional environment. On a scale of 1-10, this problem is a 3 or 4. Not a deal breaker.

2) Kids, and no room to roam. This hits my childhood memories. My daughter has nowhere to just run around and be a kid unless we take her somewhere (we try to do this regularly, but you know kids and their incessant energy. I want to encourage it all the time!). On the farm growing, up, I was happily kicked outside by myself many days. I'd like to be able to do the same for her. Scale of 1-10, this one is a 6, increasing to 7 or 8 with age.

3) Crime is encroaching. This one is debatable, depending on your fear mongering state. A couple times a year, someone in our neighborhood gets their house or cars broken into. It's clearly kids from around the area, but it scares the residents and my family. With me working from home, my wife and daughter are generally safe, but it gives me pause about the long term viability of staying here. We live in an area between a rough area and a nicer area, but the rough area is growing in this direction. Scale of 1-10, this is a 7.

Our potential opportunity:

We've found a 5 acre parcel with an old farmhouse on the edge of the adjacent rural county. It's closer to many of the things we do regularly (church, in-laws, friends). The house itself isn't as awesome as the one we currently love and given that my wife and I are project people, we'd likely be spending the next 10 years fixing the place up. Reset button on our honey-do list. Sigh. ;)

What's good:

1) The property! It's a long, narrow lot, but there's lots of room to roam. We met the next door neighbors and I don't anticipate any troubles there. My daughter would be free to run around, along with any other kiddos that come along.

2) HUGE brand-new pole barn. Instant workshop, weight room, and potential office space (it's unfinished but plumbing, electrical, etc is all connected). This barn is huge. All metal, so long-term maintenance should be minimal. There's a smaller barn original to the farmhouse that is in decent shape and could immediately host chickens, which thrills my wife to no end.

3) Forever house. We're ready to have a settled mindset with respect to housing, and our current house was never considered a forever house. If we bought this one (or whatever next one we buy), it'll be with that long-term mindset.

What's challenging:

1) The house itself. I don't know enough yet about the maintenance condition, but it looks like it will need some help. It's old, which means there are unknowns. Just off the top of my head I see about 10-15K in maintenance. On top of that, the layout is f.u.n.k.y. A major renovation is not out of the question down the road, especially if it's our forever house. Think tearing roofs off, adding vertical space, relocating a kitchen. I'm not a construction guy so this is outsourced and expensive. Minimum 50-60k? Probably more, maybe someone here knows.

2) The need for different equipment. It's got a one acre lawn, which means a push-mower becomes challenging. Feel free to challenge me on this one and call me a wuss. The long driveway and access to barns means that somehow a plow needs to happen. Logically a larger property is more expensive to maintain, so increased COL.

3) Money: The asking price is 2x what our current house costs. Just lowered, but in the upper 200K range. Takes our savings rate (projected) from 46-47% gross/66% net to about 42% gross/60% net. Higher maintenance costs, as I would now have three structures to deal with. Likely higher utility costs. Puts early retirement back several years, as the included equity in the savings rate doesn't produce income. This part makes me sick to think about, as I've really struggled with how slow it seems to be to get anywhere in the savings realm.

That's probably enough to start. Here's the real issue: We have two distinct dreams that are not compatible. On the one hand, we want to have as low a COL as possible and we are SO CLOSE to paying off this house. On the other hand, our dream is to have a place like that and give our family a place to be established and a sense of permanence. Financially, they lead us down different paths.

The good news is that this is a win-win decision: we’re in a great place financially, have plenty in savings/surplus each month, and neither of these decisions put us in a bind financially.

So how do you make these decisions? Do you ruthlessly deny yourself for the sake of long-term goals? Do you go for the dreams, knowing they set you back on ER goals?

mozar

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Re: Help me weigh my housing options
« Reply #1 on: November 09, 2015, 09:52:47 AM »
You have thought out almost everything, but one thing you didn't mention is time. Maintaining a large property will decrease your time spent with your family. Are you OK with that? And what would this do for your SO's commute?

IndyPendent

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Re: Help me weigh my housing options
« Reply #2 on: November 09, 2015, 09:54:41 AM »
Great questions!

1) Time with family is probably a wash. I work from home, and we do maintenance projects together (gardens, yard work, etc) We're project people, and we both love it. It's how we bond.

2) S.O. is a SAHM. Not an issue.

Goldielocks

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Re: Help me weigh my housing options
« Reply #3 on: November 09, 2015, 11:17:10 AM »
I think you know what you want, but here are few more things to consider about a rural property, include in your costing:

All of these will hit you in the first year.

1) Extra transportation costs.  Do the math, then add 25%.   It is surprising how much it is if you don't do the math first, it caught my extended family off guard, they never thought they would be driving in to town 10 times per week  (kids activities / dr/ school / shopping, etc).
2)  Check water / septic and underground and know those costs to bring these up to a 15 to 20 year lifespan on move in.   Digging up and replacing a septic tank is quite expensive.
3) Confirm trash, water, and property taxes -- you could be in for a surprise to find a third party cost that you don't have now.
4) INTERNET -- what is the internet connection like?  How much will it cost to bring you up to the fast speed you likely need for your work from home?


And consider buying a trampoline for while you are still in your current place.  When our very active son was 4-6 years, we had a postage stamp yard and bought the 8ft diameter (small) trampoline from Walmart, with net, near window for us to see.   We would often just tell him - go bounce outside.  Bounce for 15 minutes, then back in, everyone happy.


ShoulderThingThatGoesUp

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Re: Help me weigh my housing options
« Reply #4 on: November 09, 2015, 11:30:06 AM »
Working-from-home father of young child with SAH wife high-five.

I am in a very similar situation to you, but it sounds like you have more kids (our first is turning two this month). We plan to keep our 100-year-old, 3-bedroom, clean working class neighborhood house forever. I work in a spare bedroom now, but we're thinking of having another child in 2017 and likely some relatives will stay with us for an extended period at that point. Our solution is to finish a second-story back porch off the master bedroom that is cute but we don't use much and needs repair anyways. That will likely be around $10,000, which coincidentally would be the realtor fees and transfer tax on selling this house. So assuming it adds no value to the home, it's still the better way to go.

We are within walking distance of 4 or ambitiously 6 good playgrounds for our daughter, and middle-school-age children are safely given free rein in our neighborhood. If that is not the culture of your neighborhood then I can more understand wanting to move. In our case there's nowhere else local that seems to have such a safe assortment of things for children to do within walking distance. So it's worth me asking - have you really explored your neighborhood for blocks around your house and found nothing good?

As for crime, people naturally exaggerate dangers to themselves. I don't know if you are wrong or right to be concerned.

IndyPendent

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Re: Help me weigh my housing options
« Reply #5 on: November 10, 2015, 06:23:55 AM »
I think you know what you want, but here are few more things to consider about a rural property, include in your costing:

All of these will hit you in the first year.
[...]

And consider buying a trampoline [...]



Great thoughts, and I love the trampoline suggestion. I'll definitely look into that!

IndyPendent

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Re: Help me weigh my housing options
« Reply #6 on: November 10, 2015, 06:28:48 AM »
Working-from-home father of young child with SAH wife high-five.

I am in a very similar situation to you, but it sounds like you have more kids (our first is turning two this month). We plan to keep our 100-year-old, 3-bedroom, clean working class neighborhood house forever. I work in a spare bedroom now, but we're thinking of having another child in 2017 and likely some relatives will stay with us for an extended period at that point. Our solution is to finish a second-story back porch off the master bedroom that is cute but we don't use much and needs repair anyways. That will likely be around $10,000, which coincidentally would be the realtor fees and transfer tax on selling this house. So assuming it adds no value to the home, it's still the better way to go.

We are within walking distance of 4 or ambitiously 6 good playgrounds for our daughter, and middle-school-age children are safely given free rein in our neighborhood. If that is not the culture of your neighborhood then I can more understand wanting to move. In our case there's nowhere else local that seems to have such a safe assortment of things for children to do within walking distance. So it's worth me asking - have you really explored your neighborhood for blocks around your house and found nothing good?

As for crime, people naturally exaggerate dangers to themselves. I don't know if you are wrong or right to be concerned.

All good thoughts. We do have a playground that we regularly walk to, and we try to do that as much as we can. I will not, however, be comfortable sending her out to that playground (about a half mile away) without her mother or I.

It looks like this particular property is a no-go for us. We toured the property inside and it needs a lot more maintenance just from my amateur eye--and the layout is even worse than anticipated. It's easily in the 100K renovation range, which puts the total cost way above the true value of the property. It was initially a bit disappointing, but our overwhelming feeling was strangely relief. I think that's telling.


norabird

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Re: Help me weigh my housing options
« Reply #7 on: November 10, 2015, 07:33:36 AM »
The right [place may come along; fortunately you can stay put where you are with no issues. Your DD will love her childhood even if it is different from yours/the one you envisioned for her.

chubbybunny

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Re: Help me weigh my housing options
« Reply #8 on: November 10, 2015, 08:04:18 AM »
If you get the urge again, please consider location of nearest fire department and fire hydrant, hospital, etc.  If you want to move away from your current neighborhood because of safety/crime concerns, please also consider the safety issues of living farther from these facilities. 

I love my house outside of town, but when my youngest was a baby she developed breathing problems.  Those 40 minute drives to the pediatric ER were terrifying.

ShoulderThingThatGoesUp

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Re: Help me weigh my housing options
« Reply #9 on: November 10, 2015, 08:05:25 AM »
Also, the yard maintenance on a big lot takes an enormous amount of time away from time spent with family.