Mustachian family living in HCOL area? How to?

[Habilis]

Single parent, two kids. I live in a HCOL real-estate area, living in a 1BR apartment for the last 3 years. It's ok, but kids are getting older and I would like more space for them and me! A 2BR apartment or 2 bedrooms in a 3-4BR house with roommates would be great (garage, backyard, garden would be a bonus).

How to do this in the most Mustachian way?

My 1BR apartment is $1,600 per month, 2BR apartments are $2k/mo, 3BR houses are $3k/mo. I live 3mi from work and kids' school, bike ocassionally or drive ($0.75 per roundtrip). There are more affordable rents 45min north or south, but this adds commute time/expense, removes kids and I from local community where we have good child care support from friends. This does not seem like a good trade.

Thought about house hacking. A 3BR house here is $800k minimum and would return $1k/mo rent per room or $3k monthly rent. Using the 1% rule a good rental property investment should return 1% of purchase price in monthly rent: $800k x 1% = $8k per month. Not happening in this area! I'm considering real estate investment in other markets where the 1% rule is possible and properties cash flow.

Idea 1: keep renting the 1BR, save up a down payment, invest in real estate that cashflows in a better market to fund a 2BR apartment rental or 3BR house rental with roommates.
Idea 2: find a new job that pays more so I can afford the 2BR apartment
Idea 3: find a partner and move into a 2BR apartment or 3-4BR house with roommates, partner contributes some of the rent (obviously not the primary reason to find a partner, but it is a benefit!)

Other ideas?

Would love your insight and assistance.

Thanks,

Habilis

[chasesfish]

How much are you saving per month and what's the quality of life in your current job?   Depending on those, the additional cost may be a reasonable lifestyle choice.  Living in a 1br apt with two kids plus biking tells me you're already pretty frugal.

[Habilis]

35% savings rate, currently. Maxing 401k, HSA, Roth. After-tax savings is going to paying off debts accumulated during the marriage and alimony will both be complete by the end of 2019, then savings rate will go up.

Quality of the life with the job is good: it pays well, ethical company, good people, pleasant work environment, supportive boss, moderate travel (which I enjoy), good benefits, autonomy, ability to work from home as needed, bonus structure increasing this year. It is not my life purpose or passion but I am still working out what that is, so for now it is a good place to be.

I certainly could just pony up the additional $400 to rent the $2k/mo 2BR, and I may do just that. But as a Mustachian I would really like to find a way to maintain or even lower my cost of housing instead of increasing it.

Thank you,

Habilis

[frugaliknowit]

What is your timeframe for living in this area?  We all want flexibility, but would you say 10+ years?  If not, rent the 2BR for $2k.

If it is 10+ years, have you looked at 2BR condos, preferably in an "out of favor" building (if that exists).  They might have ugly facades, not so attractive/fancy lobbies, but potentially good bones.  They tend to give you more space for your money and lower taxes.

[MrThatsDifferent]

I respect what you’re trying to do, it’s not easy. All 3 of you in the same room isn’t ideal. I’m constantly reminded that: sometimes, you can’t have it all. I would definitely pony up the extra money and get the 2 bedroom. I don’t think that is un-mustachian at all. If you were truly that focused on being as mustachian as possible, you’d move. Single parents in HCOLs struggle, as do many other families with both parents working. If you’ve convinced yourself you must stay there, then set it up as best you can, which means those kids get their own space and you get some privacy.

So, your focus is getting more money and that means earning raises, getting a better job, side-hustles, asking the other parent for more support or availing yourself of any government assistance. All of those are mustachian as well. Find a new partner because you’ve fallen in love and that partner loves your kids, not because the economics are good.

[Abe]

Consider moving to a lower cost of living area which has jobs in a similar industry. Another option since you can mostly work from home is move away and still keep this job. In general it seems the pay increases in HCOL areas are not commiserate with the extra housing expense. Your rental prices seem to be quite a bit lower than mortgage rates for an equivalent sized house (3 br @ 800k = $4k mortgage vs $3k rent). This suggests you are unlikely to find a situation where buying will outweigh renting.

[Freedomin5]

I would hesitate on renting a 3-bedroom with a roommate. You really have to selective with your roommate especially because you have kids. I’m probably just jaded, but I’ve heard too many horror stories. Even if the roommate doesn’t do anything to your kids, what if roommate wants to bring their friends/significant other to the apartment? You can’t control who they bring over. What if they want to have loud sex with their significant other? You can’t tell them to get a room.m

If I had kids, I would only consider a roommate as an option if the roommate was my sister or my best friend whom I’ve known for over 20 years.

In your case, it probably go with a 2 bedroom in the same neighborhood, especially because it sounds like you have a good support system and routine already set up. Thinking about what would be best for your kids is more important than saving a few hundred dollars each month.

[Habilis]

What is your timeframe for living in this area?  We all want flexibility, but would you say 10+ years?  If not, rent the 2BR for $2k.

If it is 10+ years, have you looked at 2BR condos, preferably in an "out of favor" building (if that exists).  They might have ugly facades, not so attractive/fancy lobbies, but potentially good bones.  They tend to give you more space for your money and lower taxes.

Given the age of my kids it is possible I will be here 10 years, but I can't be certain. I agree, it makes sense to look at the 2BR condos as you suggest, thank you for the suggestion!

Habilis

[Habilis]

I respect what you’re trying to do, it’s not easy. All 3 of you in the same room isn’t ideal. I’m constantly reminded that: sometimes, you can’t have it all. I would definitely pony up the extra money and get the 2 bedroom. I don’t think that is un-mustachian at all. If you were truly that focused on being as mustachian as possible, you’d move. Single parents in HCOLs struggle, as do many other families with both parents working. If you’ve convinced yourself you must stay there, then set it up as best you can, which means those kids get their own space and you get some privacy.

So, your focus is getting more money and that means earning raises, getting a better job, side-hustles, asking the other parent for more support or availing yourself of any government assistance. All of those are mustachian as well. Find a new partner because you’ve fallen in love and that partner loves your kids, not because the economics are good.

Moving to another location is definitely on the table, I would put it in the medium term (next 1-3 years) vs. I would like to find a better and more affordable living situation in the short-term.

Moving involves coordinating my ex-spouse, which is harder than an intact couple figuring out a move, but people do these things and so can I.

Yes, I definitely would not partner up for the wrong reasons, but there's no denying that two people taking up 1 bedroom and contributing two salaries is a good formula!

Thank you for your help,

Habilis

[Habilis]

Are you in Seattle?  It is still possible to get a 3br townhouse in certain parts of the city proper for under 3k.  I rented one last year for $2340 -- place next door was just listed for $2600.  Typical layout might be a bit awkward for little kids, unless they can share one of the upstairs bedroom while you take the other -- that would leave the first floor bedroom/bath available for a roommate or Air BnB. 

Another option would be to put out the word with families at your kids school and see if anyone would be up for sharing a bigger house.  I have seen large 5br houses for rent for between 3-4k in the cheaper northend neighborhoods.  There may be other single parent families in a similar situation who would be interested in exploring the options.  And if the kids are already friends, that makes it easier.  Also good options for sharing childcare duties so that the adults can have a social life or pick up a side gig.

Not Seattle, but it sounds like a similar market.

Sharing a house with another family is an option I've considered, I haven't found the right family/parent but putting out there again is a very good idea. Community for the win!

[LessIsLess]

35% savings rate, currently. Maxing 401k, HSA, Roth. After-tax savings is going to paying off debts accumulated during the marriage and alimony will both be complete by the end of 2019, then savings rate will go up.

Rent a 2 bed apartment, then appeal to the judge for a reduction or termination of alimony.