Author Topic: Housing and life options, need independent evaluation.  (Read 3292 times)

AlanStache

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Housing and life options, need independent evaluation.
« on: June 17, 2015, 03:52:46 PM »
Looking at some big changes in my life and wanted a second (third, fourth, fifth...) opinion on the basic outline.  Not looking for help with little things ie cheaper cell plains.  I have only mortgage debt, gross income >100k, no kids, 35 years old.

Currently living ~30min from work in a condo I share with a parent.  Is mine, they pay no rent but help plenty around the place.  I pay most all the bills too.  Parent started a small business ~9 months ago, store is taking off and starting to do well.  Parent cant take real money out of it yet but the store is more than covering store expenses and building up inventory.  I have ~20k invested in the store as a personal loan.  Parent has said they will live where ever I put them up and that they would like to pay rent once they can, I believe this.  Parent could get social security at 62 in 1.5 years.

Girlfriend is looking to move back to my area, I want a house and to greatly reduce my commute so am thinking I will buy a house near work.  Current draft of a plan is to keep the condo and let parent continue living there while gf and I live in the house.  Condo is near parents store.  After a few years maybe sell condo and build parent a detached house behind the house GF and I share.  GF and I want some time without parent right there to make sure we-together are good.

GF may not have job lined up when she moves but has looked and jobs are available in her field in the area.  Her field does not pay well, ~30k.  She has ~12k in cc debt at 7% and 9%, dont know the ratio.  There are some options for her to earn more after some school, but I think it might be best to kill the cc first.  Basic idea would be for her to as aggressively as possible pay off cc while I cover food/housing for us.

GF and I have discussed all this, after she is on her feet she would contribute to the house expenses.  Parent is aware I want a house and to eliminate the commute so this wont be a shock, but specifics of this have not been brought up.

Outline of numbers:
Condo: $95k left on mortgage, worth ~$120k, 15 year fixed at 3.3%  (prices continued to fall until recently)
mortgage+ condo fees + utilities +  insurance + tax: 1440$/mon

House: probably would buy something under 200k, with 20% down.
Assuming similar utilities etc, basic monthly cost: 1250$/mon

Other expenses: Food (three people), car insurance, gas, stuff: ~700/mon.  this is at best a swag

Total monthly expenses: $1440 + $1250 + $700: 3400$/mon
Take home: 4400$/mon (while still maxing 401k)
So month to month I will still have a good (by non-MMM standards) savings rate.
After putting 20% down on a house I would still have ~20k in a taxable investment account.  But would anticipate moving expenses, home start up expenses, GF moving expenses, etc. pulling that down some.  Have over 100k in 401k. 

I would love to be rid of the condo for about 8 reasons but parent has to live somewhere and cant yet cover personal expenses from store income.  Have looked at the numbers for paying parents rent on a place and selling condo, could reduce monthly expenses but I loose the equity, was no clear money wise best answer.  Parent also cant do stairs to well so renting options would be limited.

GF and I could could rent a place near my work but that would run over 1k/mon so would not really come out ahead.  (The numbers on investment properties can make sense in the area.)  I dont want to rent, I want a place that is mine and rates are still low but rising.  If GF was not in picture I would already have bought near work and sold condo.

I dont like the idea of having two mortgages.  I have not looked at rates given my condo debt, if the rates are higher than I expect that might force a reevaluation.  Does anyone have any info on this?

I have been with my employer over 10 years and am as secure as one can be outside a union or the govt.

Sorry for the length, I think included most of the key details.  And insight would be appreciated, thanks much!

Bracken_Joy

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Re: Housing and life options, need independent evaluation.
« Reply #1 on: June 17, 2015, 04:15:43 PM »
Would you qualify for a second mortgage? I know that's a pretty basic question, but obviously one that shapes plans quite a bit! Further, what about your worse case scenario- GF never becomes employed and contributes to expenses, and/or parent's store fails, and/or you and GF break up. Can you still maintain both property costs in this case?

Retired To Win

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Re: Housing and life options, need independent evaluation.
« Reply #2 on: June 17, 2015, 04:24:16 PM »
As far as holding 2 properties go, you may already know that you'll be able to include BOTH sets of interest and real estate taxes as itemized deductions on your 1040 fed return. If you didn't know, then there you go.

AlanStache

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Re: Housing and life options, need independent evaluation.
« Reply #3 on: June 17, 2015, 06:09:30 PM »
Would you qualify for a second mortgage? I know that's a pretty basic question, but obviously one that shapes plans quite a bit! Further, what about your worse case scenario- GF never becomes employed and contributes to expenses, and/or parent's store fails, and/or you and GF break up. Can you still maintain both property costs in this case?

No have not talked to a mortgage broker, but plenty of people get 250k (condo balance + house) loans with my income (credit score is over 800) but that would be on one property... but yes something to be confirmed. 

Worst case supporting GF+parent:  manageable, would have a more modest but still positive savings rate.  Would consider detached house option earlier but I can afford both.  Supporting both saving rate would be above 20% including 401k-good by normal standards but not around these parts.

Worst case-GF and I brake up: sell condo, parent gets to commute.

AlanStache

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Re: Housing and life options, need independent evaluation.
« Reply #4 on: June 17, 2015, 06:11:47 PM »
As far as holding 2 properties go, you may already know that you'll be able to include BOTH sets of interest and real estate taxes as itemized deductions on your 1040 fed return. If you didn't know, then there you go.

I thought you could only include interest from your primary residence?  Even better with both-thanks. :-)  I already itemize, lasts years return was pushing 1/2 inch thick printed out. 

cripes7

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Re: Housing and life options, need independent evaluation.
« Reply #5 on: June 18, 2015, 08:41:53 PM »
What about buying a duplex, or house with a basement apt for your parent? Sell the condo, have one payment and if your parent would like to rent elsewhere, you can make the duplex or apt income producing.

AlanStache

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Re: Housing and life options, need independent evaluation.
« Reply #6 on: June 19, 2015, 12:00:50 PM »
What about buying a duplex, or house with a basement apt for your parent? Sell the condo, have one payment and if your parent would like to rent elsewhere, you can make the duplex or apt income producing.

Welcome cripes7!!!  Thanks for commenting.

Maybe, will have to look into that more.  There are not may homes with basements around here and parent does not do will with stairs.  But yeah the longer term idea was to get a granny flat.  I travel a lot for work at times so would have to make arrangements to deal with any emergencies within rented space.  Buying an apartment is working looking into-so long as I can get a garage!