Author Topic: Should i buy a bigger home relatively HCOL + 4 kids  (Read 4937 times)

NotAnymore

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Should i buy a bigger home relatively HCOL + 4 kids
« on: March 31, 2018, 10:47:44 AM »
Hey there, been reading a lot, but first time poster.  I usually find answers that are similar to my situation and go with that, but in this case I think I need some more help. We're debating moving from a 350k house to an energy efficient 650k house for more space for our kids to grow and out of town family to visit. We're pulling our hair out with 2 adults, 4 kids with 2 bathrooms and 3 bedrooms. We are weighing the costs of trading some financial freedom with less stress in a bigger home.

I live and work in a relatively high HCOL area (Boca Raton, FL). Wife and I are in our mid 30's and have 4 younger kids in public school. Wife stays home and takes care of house / food / kids, etc.

Yearly Income:
128k salary (no state income tax, annual raises are consistently ~5%)
15-30% bonus
12k trust (pledged for the next four years if we buy a bigger house)
6k rental income after expenses (projected if we move to a bigger house)

Assets:
~200k cash
40k in 401k (just started company w/ 401k, but near maxing w/ match now)
60k in Roth IRA
350k 1600 sqft house (owe 290k of 302k @ 3.25% refi 1 yr ago, no PMI)
3 & 6 yr old cars with lower mileage.

No debt aside from mortage. Monthly housing costs right now including utilities are ~$2300 /mo. Job situation is now pretty stable.

Current house is a 3/2 ~1600 sqft in an A Rated school district and 15 min from work. It's older and the energy efficiency is non-existant, non-gated community, but we've added nice upgrades over the past 10 years including new kitchen, baths, floors, and a pool / spa. We are thinking of renting it, and then coming back to it to retire.

My wife and I like a higher quality home (nice yards, views, and communities, some upgrades, etc), so there may be some additional house cost factor there and we are willing to spend a bit more because of that.

There's a new home community in a close by A-rated school district, very energy efficient, impact glass windows, latest hurricane building standards, natural gas, low HoA, gated, low maintenance, but the houses are not cheap 600-650k. It would be around 3500 sqft and 5bdr, 5bath.

Some of the surrounding areas have either higher taxes, CDD deb taxes, high HoA fees, crappy schools, or generally are not a good area, but the homes could be 450-550k. For comparison purposes a re-sale in the next town over could have an additional 1-2k year in taxes / CDD, 150/mo increased electric, no natural gas, higher insurance costs, and 100-300/mo more in HoA. There's also high maintenance costs when homes are 20+ years old including replacing roofs and A/c systems. Older homes were not built to latest hurricane codes and that explains some of the increased insurance costs (5-6k/yr compared to 2-3k yr).

So the way we see it we have 4 options (maybe you can find more)

1. Stay in our current house and deal with it, maybe wait 5-10 yrs?
2. Buy the new construction for ~650k (they pay 10k in closing costs) and put 20% down and not worry about maintenance (save it), move in December 2018.
3. Buy a resale for 500-550k (but pay 400-500 more / mo for the above mentioned expenses + increased insurance for the next ~10 years)
4. Rent a bigger house for $3500+ / mo.

If we pick either 2 or 3, the costs are generally offset with the rental income (barring major maintenance to existing home) and the trust pledge (at least for the next four years). Housing costs and interest rates are going up and I want to do something before it's too crazy for fear that it might be another 5-10 years before the cycle comes back down. We could also sell our current home, but we like it and may come back to retire or after kids move out.

So all that said... what should we do?

Thank you in advance for looking at my situation with me.
« Last Edit: March 31, 2018, 12:01:56 PM by NotAnymore »

Mikila

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #1 on: March 31, 2018, 11:46:37 AM »
I wouldn't move, if I were you. *probably*

Is it really the size of your current house that is stressing you out or something else?  If it were me, I would be analyzing the situation to figure out precisely what the main stressors are- and it may simply be that you have 4 young children who don't always get along, and you are hoping more space will alleviate that problem.  Or whatever the stressors may be- Before moving to an enormous house that costs twice as much, maybe try some other ways to minimize the stress.

Throwing scads of money at this stress problem may help, to a greater or lessor extent, but I don't think you will know that until you analyze the present cause of your stress.





crispy

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #2 on: March 31, 2018, 12:30:34 PM »
Are there absolutely no other options in an A-rated school district less than 650k or just no house you want? I understand wanting more space in your situation, but I would look for middle ground. A much bigger house in a gated community will come with it's own stress such as higher maintenance costs and more time spent cleaning and maintaining the yard.

LifeHappens

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #3 on: March 31, 2018, 12:36:56 PM »
You are asking for this forum to approve a serious level of lifestyle inflation. Generally we're not into that. You also want to buy a house nearly 4x your current annual income (even more if you take out your bonus).

For two people in their mid-30s you are way, way behind on retirement savings, even by conventional standards. It doesn't look like you've started to save anything for your children's education, so you are behind in that as well if that is part of your plans. You are way too cash heavy.

Sorry, but I just can't see how you can afford a $650k house right now.

NotAnymore

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #4 on: March 31, 2018, 12:39:17 PM »
Thanks for the replies.

I currently live in a HoA community $130/mo and then pay $50/mo to have our grass cut, but it's not gated. Some HoAs (including the new construction one) take care of your landscaping maintenance, this new one is $160.

NotAnymore

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #5 on: March 31, 2018, 01:24:23 PM »
You are asking for this forum to approve a serious level of lifestyle inflation. Generally we're not into that. You also want to buy a house nearly 4x your current annual income (even more if you take out your bonus).

For two people in their mid-30s you are way, way behind on retirement savings, even by conventional standards. It doesn't look like you've started to save anything for your children's education, so you are behind in that as well if that is part of your plans. You are way too cash heavy.

Sorry, but I just can't see how you can afford a $650k house right now.

Thanks for being honest. Guidelines that are based on percentages or multipliers don't seem to make 100% sense in my situation at least.

I co-founded and worked for a small business for the last 10 years with 3 other partners that we sold last year. I went on to work for the company that bought us (very stable 40+yr old company). The cash reserves is primarily from a windfall from the sale. We didn't have a 401k plan previously, but the new company does, which could help explain some things regarding the cash on hand, not much in retirement situation.

Why the 650k house makes somewhat sense to me: The NET difference in monthly expenses is about zero (for 4 years) taking into account the rental income and trust pledge. We increase our income by 6-9k/yr by adding the rental and creating somewhat of a tax shelter by hiring my wife to manage the property (and she can then contribute that into a solo-401k as well and also pay into SS). There's a trust fund in my family that has agreed to pay 1k/mo tax free for 4 years in order to help pay for increased housing expenses (could this be better used, definitely but I don't make the rules, maybe I can get that into a 529 plan instead). Once the trust payments fall off, my salary could be north of 150k and then the difference will be non existent.

Does that change your opinion at all LifeHappens?

DrMoney

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #6 on: March 31, 2018, 01:52:44 PM »
Geographically, I'm very close by. There are plenty of bigger houses (even in Boca) that are in great schools districts that are way less than 650K. Also, home prices are incredibly inflated here, so if you were going to look for something with more space, I'd wait.

NotAnymore

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #7 on: March 31, 2018, 01:58:34 PM »
Geographically, I'm very close by. There are plenty of bigger houses (even in Boca) that are in great schools districts that are way less than 650K. Also, home prices are incredibly inflated here, so if you were going to look for something with more space, I'd wait.

Yes they seem pretty inflated. 650k is for something brand new or somewhere 500-550k for a resale.

former player

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #8 on: March 31, 2018, 02:51:27 PM »
How old are your children?  Changing school district for all four seems like a bit of an undertaking, and not one I'd want without careful consideration.  Different journeys to school, different curriculae, leaving old friends and having to make new ones - it's a lot of upheaval in a kid's life.  Also, depending how old the kids are, it may not be that many years before they start leaving home.  To be reasonably certain of getting a return on a new build house how many years would you need to keep it?  10?   By that time your home will be emptying out again.   You can't dislike your current house too much if you are thinking of retiring to it, so moving somewhere else for just a few years just to come back again may not be worth it.

How often would you have guests?  Most people overestimate this significantly.

How seriously have you looked at how your current house works for and against you?  1600 square feet is not a small house by any standards.  If the layout isn't working for you, think about adjusting it, starting with small things (moving furniture, changing the purpose of rooms, swapping bedrooms, etc.) and moving on to various sorts of remodelling and extending.  Start a list of issues and add to it every time something happens that makes you pull your hair out, then at the end of the week sit down together and work out what the basic problem is and all the solutions you can think of.  Additional space is probably not the answer to most of them, and where it is a shed at the end of the garden could work nearly as well as a whole new house.

My suspicion based on your post is that "more space" is mostly the easy way out of doing the thinking that would make your current place work better allied to a desire for lifestyle inflation.  You've done well with the startup and your current income, so a material reward such as a big brand new house seems natural to you.  It's not going to fly on the MMM forum, though.  And the points made by LifeHappens about your lack of retirement and college funds is a good one.

LifeHappens

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #9 on: March 31, 2018, 03:06:54 PM »
My suspicion based on your post is that "more space" is mostly the easy way out of doing the thinking that would make your current place work better allied to a desire for lifestyle inflation.  You've done well with the startup and your current income, so a material reward such as a big brand new house seems natural to you. It's not going to fly on the MMM forum, though.  And the points made by LifeHappens about your lack of retirement and college funds is a good one.
I agree. From the details you've shared it seems you are longing for some serious lifestyle inflation. You've done a great job to get to your income level, but that's still a lot of mortgage to support. The way you've listed your mortgage and equity, it looks like you would not walk away with any cash upon the sale of your current home. Sure, you could use some of that $200k for your down payment, but that still leaves you way behind on retirement.

The other thing that would personally keep me up at night is job security. You are making good money now, but how secure is that job, really? You are planning to make $150,000 base salary in four years, but is that a done deal? To me it sounds like you are counting chickens prematurely.

MrThatsDifferent

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #10 on: March 31, 2018, 03:22:44 PM »
Is there a 5th option? You add on a extra bedroom and bath to your current place? Would the trust pay for that? It seems like that is all you need. I guess my thinking is that youíve got 4 kids and 1 income, you probably need to save and invest as much money as you can for a family of 6, so why take on the extra expenses if there isnít a gun to your head? Iíd put that cask to better use invested in Vanguard instead of the bank, outside of an emergency fund.

blinx7

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #11 on: March 31, 2018, 03:26:41 PM »
3500 sf is too large.

I have 2100 sf and wouldn't move with 4. 

I may move from 1600 sf.

Could you save $$$ with a 2500 sf home?

Kids can share bedrooms.  Everyone can share bathrooms. 

Dictionary Time

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #12 on: March 31, 2018, 03:41:32 PM »
I know how it feels to want more space.  We have 3 "kids" and 2 adults in around 1400 square feet.  But the kids are older teens now, and they take up way less space.  And, of course, they'll leave the nest sooner.

When they were little, there were toys and games and art supplies and legos and papers everywhere.  And we really wanted something bigger.  But as they've aged, that stuff pares down.  And it really has been in our financial benefit that we never pulled the trigger.  Now we are still in our starter house.  Because the mortgage is so tiny we can send more to college.

I know it's not easy, but if you can white-knuckle through this craving, you will be a lot better off in the long run.

Suggestions: Declutter.  Maybe invest in some integrated storage.  Don't watch HGTV.  Figure out what would be the biggest bang for your buck and spend a little in your current place.


MrThatsDifferent

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #13 on: March 31, 2018, 03:51:53 PM »
The kids donít need their own room until puberty really and even then itís that big of a deal. I shared a room with my younger brother until I left for college, then shared rooms for the next 3 years. Remember bigger space, more crap. Resist.

NotAnymore

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #14 on: March 31, 2018, 05:18:19 PM »
How old are your children?  Changing school district for all four seems like a bit of an undertaking, and not one I'd want without careful consideration.  Different journeys to school, different curriculae, leaving old friends and having to make new ones - it's a lot of upheaval in a kid's life.  Also, depending how old the kids are, it may not be that many years before they start leaving home.  To be reasonably certain of getting a return on a new build house how many years would you need to keep it?  10?   By that time your home will be emptying out again.   You can't dislike your current house too much if you are thinking of retiring to it, so moving somewhere else for just a few years just to come back again may not be worth it.

How often would you have guests?  Most people overestimate this significantly.

How seriously have you looked at how your current house works for and against you?  1600 square feet is not a small house by any standards.  If the layout isn't working for you, think about adjusting it, starting with small things (moving furniture, changing the purpose of rooms, swapping bedrooms, etc.) and moving on to various sorts of remodelling and extending.  Start a list of issues and add to it every time something happens that makes you pull your hair out, then at the end of the week sit down together and work out what the basic problem is and all the solutions you can think of.  Additional space is probably not the answer to most of them, and where it is a shed at the end of the garden could work nearly as well as a whole new house.

My suspicion based on your post is that "more space" is mostly the easy way out of doing the thinking that would make your current place work better allied to a desire for lifestyle inflation.  You've done well with the startup and your current income, so a material reward such as a big brand new house seems natural to you.  It's not going to fly on the MMM forum, though.  And the points made by LifeHappens about your lack of retirement and college funds is a good one.

All in elementary school. 3rd grade and below. I moved a lot as a kid so I know the pain, but at these ages it's not as bad. I think we would keep the house for 13-18 yrs depending on their age and whether they goto a local college or not.

Guests... twice a year for 2 weeks at a time. (I agree with all arguments about not having dedicated space for guests, it's just then there's 6 people sharing one bathroom).

Extending isn't really an option. I have no space to extend out (zero lot line, backyard is a patio and swimming pool), and I got quotes from a couple of contractors in the 150k-250k range to go up for approx 600-1200 extra sqft (but also would likely remove a bedroom downstairs for the staircase). I could add a room inside our 2 car garage, but that is usually a waste of money and would negatively impact a resale if it came down to it. I could probably add a shed though!

Yes, your suspicion is somewhat on point. It is definitely an easy way out of having to figure out how to deal with this scenario as well as a small bump in lifestyle. Thanks for the compliments.

One thought about increasing our retirement funds is my wife having an employer that has a 401k plan. It's going to be very difficult for that with the kid situation unless she is self-employed and/or part time. Turning our current home into a rental will allow her to have a "property manager job" and then pay into her own 401k as well as SS. Does that have any merit or is it me reaching?

NotAnymore

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #15 on: March 31, 2018, 05:27:41 PM »
Is there a 5th option? You add on a extra bedroom and bath to your current place? Would the trust pay for that? It seems like that is all you need. I guess my thinking is that youíve got 4 kids and 1 income, you probably need to save and invest as much money as you can for a family of 6, so why take on the extra expenses if there isnít a gun to your head? Iíd put that cask to better use invested in Vanguard instead of the bank, outside of an emergency fund.

Extending isn't an option really unfortunately, can only go up and it's very costly to do that. My backyard is a swimming pool and patio, and I have one sideyard which is 10 ft wide.

NotAnymore

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #16 on: March 31, 2018, 05:30:45 PM »
I know how it feels to want more space.  We have 3 "kids" and 2 adults in around 1400 square feet.  But the kids are older teens now, and they take up way less space.  And, of course, they'll leave the nest sooner.

When they were little, there were toys and games and art supplies and legos and papers everywhere.  And we really wanted something bigger.  But as they've aged, that stuff pares down.  And it really has been in our financial benefit that we never pulled the trigger.  Now we are still in our starter house.  Because the mortgage is so tiny we can send more to college.

I know it's not easy, but if you can white-knuckle through this craving, you will be a lot better off in the long run.

Suggestions: Declutter.  Maybe invest in some integrated storage.  Don't watch HGTV.  Figure out what would be the biggest bang for your buck and spend a little in your current place.

Thanks for the advice. They are little and (toys and games and art supplies and legos and papers everywhere) is exactly what we have in our house now. HGTV is definitely a problem. We could use a declutter and more integrated storage. We have a lot of ikea furniture with storage, but could probably take  it to the next level.

Carrie

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #17 on: March 31, 2018, 05:41:43 PM »
Compromise: how much for a 4br/3ba, 2400 sf?
On your income $650k is steep. That would leave very little room for any other financial goals.
In the meantime, frugalize your life by cutting your own grass, squeezing every penny - start maxing out IRAs and some college funds. Declutter belongings and rearrange furniture to make do until the perfect medium sized house comes along.

kimmarg

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #18 on: March 31, 2018, 05:47:01 PM »
I know how it feels to want more space.  We have 3 "kids" and 2 adults in around 1400 square feet.  But the kids are older teens now, and they take up way less space.  And, of course, they'll leave the nest sooner.

When they were little, there were toys and games and art supplies and legos and papers everywhere.  And we really wanted something bigger.  But as they've aged, that stuff pares down.  And it really has been in our financial benefit that we never pulled the trigger.  Now we are still in our starter house.  Because the mortgage is so tiny we can send more to college.

I know it's not easy, but if you can white-knuckle through this craving, you will be a lot better off in the long run.

Suggestions: Declutter.  Maybe invest in some integrated storage.  Don't watch HGTV.  Figure out what would be the biggest bang for your buck and spend a little in your current place.

Thanks for the advice. They are little and (toys and games and art supplies and legos and papers everywhere) is exactly what we have in our house now. HGTV is definitely a problem. We could use a declutter and more integrated storage. We have a lot of ikea furniture with storage, but could probably take  it to the next level.

I have a 1 small kid in 1600 ft2 so I can only imagine the amount of stuff you could have spread everywhere. As others have noted, this too shall pass. Why not throw money at making your house work better for you? Heck even hire some professional organizer/storage type to do some custom closets/shelving. You could throw a LOT of money into improving your current situation and still come out FAR below a new house.

MrThatsDifferent

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #19 on: March 31, 2018, 07:52:49 PM »
How old are your children?  Changing school district for all four seems like a bit of an undertaking, and not one I'd want without careful consideration.  Different journeys to school, different curriculae, leaving old friends and having to make new ones - it's a lot of upheaval in a kid's life.  Also, depending how old the kids are, it may not be that many years before they start leaving home.  To be reasonably certain of getting a return on a new build house how many years would you need to keep it?  10?   By that time your home will be emptying out again.   You can't dislike your current house too much if you are thinking of retiring to it, so moving somewhere else for just a few years just to come back again may not be worth it.

How often would you have guests?  Most people overestimate this significantly.

How seriously have you looked at how your current house works for and against you?  1600 square feet is not a small house by any standards.  If the layout isn't working for you, think about adjusting it, starting with small things (moving furniture, changing the purpose of rooms, swapping bedrooms, etc.) and moving on to various sorts of remodelling and extending.  Start a list of issues and add to it every time something happens that makes you pull your hair out, then at the end of the week sit down together and work out what the basic problem is and all the solutions you can think of.  Additional space is probably not the answer to most of them, and where it is a shed at the end of the garden could work nearly as well as a whole new house.

My suspicion based on your post is that "more space" is mostly the easy way out of doing the thinking that would make your current place work better allied to a desire for lifestyle inflation.  You've done well with the startup and your current income, so a material reward such as a big brand new house seems natural to you.  It's not going to fly on the MMM forum, though.  And the points made by LifeHappens about your lack of retirement and college funds is a good one.

All in elementary school. 3rd grade and below. I moved a lot as a kid so I know the pain, but at these ages it's not as bad. I think we would keep the house for 13-18 yrs depending on their age and whether they goto a local college or not.

Guests... twice a year for 2 weeks at a time. (I agree with all arguments about not having dedicated space for guests, it's just then there's 6 people sharing one bathroom).

Extending isn't really an option. I have no space to extend out (zero lot line, backyard is a patio and swimming pool), and I got quotes from a couple of contractors in the 150k-250k range to go up for approx 600-1200 extra sqft (but also would likely remove a bedroom downstairs for the staircase). I could add a room inside our 2 car garage, but that is usually a waste of money and would negatively impact a resale if it came down to it. I could probably add a shed though!

Yes, your suspicion is somewhat on point. It is definitely an easy way out of having to figure out how to deal with this scenario as well as a small bump in lifestyle. Thanks for the compliments.

One thought about increasing our retirement funds is my wife having an employer that has a 401k plan. It's going to be very difficult for that with the kid situation unless she is self-employed and/or part time. Turning our current home into a rental will allow her to have a "property manager job" and then pay into her own 401k as well as SS. Does that have any merit or is it me reaching?

Well, you know youíre reaching, you donít need us to tell you that. I think weíre seeing a family of 6 on one income with much bigger expenses coming down the pike and tying that money up in a house may not be the best for future you or the family. Your dilemma is that you legitimately need a bit more space than what you have. Forget guests, they can Airbnb in the area. The declittering and dealing with the excess would help. Youíre also trying to find a way to leave that $48K on the table. Iíd revisit the extending up idea and keep hunting until you find someone with a clever idea. Maybe there are some junior architects that can help you look at the space and explore options? Donít give up! I guess you need to know that renovations would get you that money? If so, is any of it retroactive? Can you get reimbursed for the upgrades youíve already done? Maybe you can use it to purchase an investment unit that your wife can manage?

Itís outside th box thinking on how to get the most value without digging the biggest holes time. Unless your wife goes back to work, youíre gonna need every cent.

NotAnymore

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #20 on: April 01, 2018, 08:51:39 AM »
Compromise: how much for a 4br/3ba, 2400 sf?
On your income $650k is steep. That would leave very little room for any other financial goals.
In the meantime, frugalize your life by cutting your own grass, squeezing every penny - start maxing out IRAs and some college funds. Declutter belongings and rearrange furniture to make do until the perfect medium sized house comes along.

450 for something decent. I just figure if we're going to move we might as well optimal space for everyone to live and grow, hence looking for 5bdr 4 bath. Working on frugalizing everything else in the mean time but still doesn't change the raw multiplier/percentage of income math when it comes to housing expenses that everyone seems to use.


MayDay

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #21 on: April 01, 2018, 09:10:02 AM »
450 is a lot less than 650!

You don't have much saved for retirement. I know you didn't have a 401k before, but that is neither here nor there. You need to save more now, plus I would hope someone choosing a 650k house would help their kids with college. 4 kids in college is not going to be cheap. Just feeding 4 teenagers will be expensive. I know you think your income will go up but your expenses will go up as well as your kids grow.

We have higher income than you and just bought a 330k house. We are in a MCOL area. If we wanted a fancy house like you seem to,it would be 400-600 depending on area.

LifeHappens

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #22 on: April 01, 2018, 09:17:54 AM »
Compromise: how much for a 4br/3ba, 2400 sf?
On your income $650k is steep. That would leave very little room for any other financial goals.
In the meantime, frugalize your life by cutting your own grass, squeezing every penny - start maxing out IRAs and some college funds. Declutter belongings and rearrange furniture to make do until the perfect medium sized house comes along.

450 for something decent. I just figure if we're going to move we might as well optimal space for everyone to live and grow, hence looking for 5bdr 4 bath. Working on frugalizing everything else in the mean time but still doesn't change the raw multiplier/percentage of income math when it comes to housing expenses that everyone seems to use.
The reason those multipliers are used is because they work pretty well. Buying above 3x your annual income really does start to squeeze everywhere else pretty hard.

I grew up with parents who overbought and were house poor. It affected *everything* when I was a kid - food, extra activities, buying a reliable car, doing maintenance and repair when needed. Having that bill to pay every month or your family becomes homeless is no joke.

I understand you wanting more space for your family, but think long and hard before you commit to a mortgage that large.

Carrie

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #23 on: April 01, 2018, 10:57:51 AM »
I want to know who is going to clean 5 bathrooms? Will that get hired out? Going from 1600 to 3500 is huge - you'll have that much more square footage to clean, to heat & cool, and to maintain.

I still stand by 2400 (maybe 2600 sf) is a good size for a large family.  If you lived in a lower COL I could see going to 3000, but not when that costs such a huge percentage of your income.

It sounds like you're wanting to upgrade your lifestyle before you actually have the means to do it. Be patient, or buy a less extravagant house now. 

lhamo

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #24 on: April 01, 2018, 11:20:37 AM »
You need to spend $200k more so that family can stay with you 2 weeks/year?

You could pay for a LOT of 5 star hotel nights with $200k...


Thegoblinchief

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #25 on: April 01, 2018, 11:26:52 AM »
I homeschool 3 very active kids in a 2/1 thatís 740 sqft (plus a couple hundred sqft rec room in basement) in a climate where itís hard to go outside for several months of the year. Iíd seriously reevaluate what you consider necessary in a house.

NotAnymore

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #26 on: April 01, 2018, 11:32:14 AM »
You need to spend $200k more so that family can stay with you 2 weeks/year?

You could pay for a LOT of 5 star hotel nights with $200k...

Point taken. No longer considering going out of the way to accommodate any guests at this point.

NotAnymore

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #27 on: April 01, 2018, 11:41:14 AM »
I want to know who is going to clean 5 bathrooms? Will that get hired out? Going from 1600 to 3500 is huge - you'll have that much more square footage to clean, to heat & cool, and to maintain.

I still stand by 2400 (maybe 2600 sf) is a good size for a large family.  If you lived in a lower COL I could see going to 3000, but not when that costs such a huge percentage of your income.

It sounds like you're wanting to upgrade your lifestyle before you actually have the means to do it. Be patient, or buy a less extravagant house now.

Thanks. Yes more cleaning will keep us a bit busier. Heating a cooling in a newer home that is built with energy efficiency will actually lower my utility bills. (we don't use heat in south florida unless something is really wrong). Older homes cost much more to maintain. Case in point my electric bill is close to 300 / mo, these newer homes that are double my square footage are 120 - 150 / mo. Newer homes have lower insurance rates as well, especially here in south florida where you pay a significant amount of money based on the age of your roof and what hurricane code your house was built to. (impact glass is a big deduction for instance)

I guess it would make more sense to keep looking and thinking to find a newer home that is smaller in size.

former player

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #28 on: April 01, 2018, 12:34:59 PM »
Going from 2 bathrooms to 5 is two and a half times more bathroom cleaning.  That's not just "a bit busier".

I'd like to unpack your statement that older homes cost more to maintain.  They may cost more to run (different issue) but maintenance is an ongoing task whatever the age of the house.  If you think your new home costs less to maintain it's because you are not accounting properly for future maintenance needs - that new roof in 20 years should be accounted for at one-twentieth the cost each year.

On running costs of your current home what have you done to improve the insulation, air tightness and equipment efficiency?  Does your energy company or a local environmental charity run efficiency audits?  Have you got good shade arrangements for minimising direct sun on the house/windows in summer?

Cranky

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #29 on: April 01, 2018, 12:56:57 PM »
What energy efficiency is in the newer house? How much would it cost to do that in your present house?

You know whatís cheap in south Florida? Turning up the thermostat in the summer and sending the kids outside to play.

NotAnymore

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #30 on: April 01, 2018, 06:47:25 PM »
What energy efficiency is in the newer house? How much would it cost to do that in your present house?

You know whatís cheap in south Florida? Turning up the thermostat in the summer and sending the kids outside to play.

The new house has a HERS rating of 55, which is significantly less (better) than most other new home construction and leaps and bounds ahead of most all of the resales I've looked at.

Turning up the thermostat... oh boy. Mommy and Daddy have to live there too!

NotAnymore

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #31 on: April 01, 2018, 06:53:38 PM »
I'd like to unpack your statement that older homes cost more to maintain.  They may cost more to run (different issue) but maintenance is an ongoing task whatever the age of the house.  If you think your new home costs less to maintain it's because you are not accounting properly for future maintenance needs - that new roof in 20 years should be accounted for at one-twentieth the cost each year.

On running costs of your current home what have you done to improve the insulation, air tightness and equipment efficiency?  Does your energy company or a local environmental charity run efficiency audits?  Have you got good shade arrangements for minimising direct sun on the house/windows in summer?

Good call on the roof. The challenge I'm finding is that almost all resales are in need of a new roof, or will likely need one in the next 5 years. (our current house will likely need a roof soon too)

I've done close to nothing to improve energy efficiency in our current home. New windows would be a lot of money. If we rent out our current house then the energy bill suddenly becomes not my problem anymore. If we stay for the long hall we should consider some updates.

Cranky

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #32 on: April 02, 2018, 05:19:59 AM »
A new roof is a lot cheaper than moving.

And I replaced all my (really old) windows and saw no change in my utility bills - it takes a long, long time to make up that cost.

But seriously, what are you setting the thermostat at?

Another Reader

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #33 on: April 02, 2018, 05:57:20 AM »
I challenge your rental assumptions.  What is market rent for your current house?  How easy is it to rent in your area?  Do you understand the 50 percent rule?  Have you accounted for vacancy and collection losses, much higher maintenance and repair expenses, and the cost of the roof that must be done no matter who occupies the house?  My guess that with the recent refi you are going to have low or even negative cash flow.

You also recently sold your business.  You are now an employee and don't control your job.  You could be laid off if the new owners decide to go in a different direction.  What's your plan if that happens?

Your overall savings are quite low for your age and the number of kids you have.  I would focus on increasing my savings rate and insulating myself against changes in the job and the economy.  Want a bigger house?  The real estate market in Florida is notoriously cyclical.  Build up your financial position and buy up the next time real estate is on sale.

Dragonswan

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #34 on: April 02, 2018, 08:26:48 AM »
You can't afford a 650K house right now.  At best, you could use 100K of your cash (invest the rest for the love of God) as a down payment and purchase a house for 525-550K.  That would put your mortgage in a much safer 425-450K range.  If you can't get what you want for that amount of money, wait until you can or you make significantly more money.

frugaliknowit

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #35 on: April 02, 2018, 09:07:46 AM »
Besides the lifestyle inflation, which I don't like:

Your idea of renting out your current home is flawed for 2 reasons:

1.  You've got debt on it.  I'ts very risky to rent out a house with a high LTV ratio.  If you lose a tenant and your job at the same time, you'll be up sheezCreek!
2.  You are thinking you want to return to it to retire.  Bad plan.  A LOT will happen over those years.

NotAnymore

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #36 on: April 02, 2018, 09:14:51 AM »
I challenge your rental assumptions.  What is market rent for your current house?  How easy is it to rent in your area?  Do you understand the 50 percent rule?  Have you accounted for vacancy and collection losses, much higher maintenance and repair expenses, and the cost of the roof that must be done no matter who occupies the house?  My guess that with the recent refi you are going to have low or even negative cash flow.

You also recently sold your business.  You are now an employee and don't control your job.  You could be laid off if the new owners decide to go in a different direction.  What's your plan if that happens?

Your overall savings are quite low for your age and the number of kids you have.  I would focus on increasing my savings rate and insulating myself against changes in the job and the economy.  Want a bigger house?  The real estate market in Florida is notoriously cyclical.  Build up your financial position and buy up the next time real estate is on sale.

I did not use the 50% rule, I did some calculations however using rental cash flow calculators that factor in some costs (as well as excel).  I live in a desirable area and have an ideal property for renters (3/2 open floor plan, new kitchen, etc, pool home on a lake in a rated school district). I know someone that has several similar rentals in the area and consulted with him and my real estate agent on potential costs so I think I'm fairly close. I'm rolling the dice on the roof replacement, but have done several repairs since we've lived here (hopefully that will be good enough for now).

I feel much more comfortable now with my current company than with my last. My skills are pretty portable and don't feel that I would have a problem finding something in the 120k range in the future (maybe without the bonus upside potential though, and a longer commute is likely).

Yes retirement savings are low, I agree. I understand the cyclical nature of real-estate here, but we are still going up now and interest rates are still low and are projected to increase so I thought now we would be an okay time (or wait several years).

NotAnymore

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #37 on: April 02, 2018, 09:18:55 AM »
You can't afford a 650K house right now.  At best, you could use 100K of your cash (invest the rest for the love of God) as a down payment and purchase a house for 525-550K.  That would put your mortgage in a much safer 425-450K range.  If you can't get what you want for that amount of money, wait until you can or you make significantly more money.

Thanks for being blunt, heh. Some of the challenges I see with some of these older homes is that the taxes, fees and maintenance are very high and the actual cost to live there is higher than buying a newer home. If the up front downpayment + closing and monthly costs for a 650 house and 550 house was the same, which would you pick?

I'm beginning to think this may work if I find a resale in the low 400's and/or newer home in the low 500's.

Another Reader

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #38 on: April 02, 2018, 09:43:56 AM »
"I did not use the 50% rule, I did some calculations however using rental cash flow calculators that factor in some costs (as well as excel).  I live in a desirable area and have an ideal property for renters (3/2 open floor plan, new kitchen, etc, pool home on a lake in a rated school district). I know someone that has several similar rentals in the area and consulted with him and my real estate agent on potential costs so I think I'm fairly close. I'm rolling the dice on the roof replacement, but have done several repairs since we've lived here (hopefully that will be good enough for now). "

The OP's overconfidence is humorous.  I love people like him, because when things go south and they have to bail on their over leveraged, non performing properties, they create opportunities for investors like me.


Tuskalusa

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #39 on: April 02, 2018, 10:09:13 AM »
I understand your desire for more space. I can see the value of everyone having their own space, if you can afford it.

Have you thought about selling your current home and rolling the profit into your new home? I would think this move could keep your mortgage fairly similar to what you are paying now.  This also keeps your home finances within your control (less dependence on trust and rental income). Also, with four kids, it seems ambitious to manage a rental at this time.

Cashing out your home equity also reduces your dependence on the trust. You never know what might happen with a family commitment. It would be a shame to have something happen in the next 4 years that impacted this trust.

Finally, if you can get a similar house as a resale for $100k less, this feels like a strong option. 

Overall, I think you have the tools to accomplish a move to a larger house, through a combination of cashing in equity and looking for a more affordable option. This allows you not to stretch yourselves too thin. As your kids get older, you could face other expenses (braces, tutoring, activities, college, etc.), and you will want funds set aside for these types of things. Keeping a cash cushion is critical.

Dragonswan

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #40 on: April 02, 2018, 10:35:21 AM »
You can't afford a 650K house right now.  At best, you could use 100K of your cash (invest the rest for the love of God) as a down payment and purchase a house for 525-550K.  That would put your mortgage in a much safer 425-450K range.  If you can't get what you want for that amount of money, wait until you can or you make significantly more money.

Thanks for being blunt, heh. Some of the challenges I see with some of these older homes is that the taxes, fees and maintenance are very high and the actual cost to live there is higher than buying a newer home. If the up front downpayment + closing and monthly costs for a 650 house and 550 house was the same, which would you pick?

I'm beginning to think this may work if I find a resale in the low 400's and/or newer home in the low 500's.

I think you may be a little optimistic about the monthly costs being the same for both houses. I understand you think the difference in the mortgage will be made up by reduced maintenance and energy costs.  I would still pick the 550 house.  I was in a similar quandary before I bought my house.  I had a 2700 sqft house built with the high la de da energy ratings etc.  While the utility bills are low (average 165/month) the maintenance is still there.  Wind storm had me replacing shingles on the roof, but it didn't cost enough to exceed the deductible on the insurance, so didn't file a claim.  I have clay for soil (probably not an issue in FL) because years ago the topsoil was sold and the developer didn't worry about it.  So now I'm spending more than normal on fertilizer and pH treatments and over seeding every year just to have a lawn. Had a mishap with the washing machine and spent a couple thousand having that dealt with, because the cost was right at the insurance deductible, so no claim there. They raised the property taxes twice and are getting ready to do it again and it's only been 4 years, and the more expensive the house, the more it hurts. 

Even if you get lucky and nothing happens, you still have the startup expense of window treatments (for privacy and additional sunblock).  In a 650K house you're not going to use cheap plastic blinds or plantation shutters are you?  Are you?  No you're going to want wood blinds for all 30 of those gloriously large windows (because new houses have lots of light and airy...).  And just so we're clear, I'm single and make more than you with great job security and I still only bought a 430K house (in a HCOL area) because Murphy always has his foot in my backside and wiggle room in the budget (read live below means) is my true insurance policy.  So no, you can't afford the 650 house even if you think the monthly costs will be the same.  I don't mean to be harsh, but I don't want you to set yourself up for failure.

Easye418

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #41 on: April 02, 2018, 10:41:54 AM »
You are asking for this forum to approve a serious level of lifestyle inflation. Generally we're not into that. You also want to buy a house nearly 4x your current annual income (even more if you take out your bonus).

For two people in their mid-30s you are way, way behind on retirement savings, even by conventional standards. It doesn't look like you've started to save anything for your children's education, so you are behind in that as well if that is part of your plans. You are way too cash heavy.

Sorry, but I just can't see how you can afford a $650k house right now.

Nailed it. 

To OP, at the end of the day, you control your life, if that is what you feel like you should do AFTER careful planning and adjusting for your risk tolerance, then you are good. 

The forum doesn't like to stick their neck out when there isn't a necessity.  I don't live in FL but 650K at your salary just doesn't sound reasonable.  Maybe try finding something around $450K-$500K and using that 200K cash to bring down the mortgage to a level that is comfortable.

Just reading this gave me anxiety.  Thankfully Texas has been able to provide us a good COL with nice homes for a nice price. 

"I did not use the 50% rule, I did some calculations however using rental cash flow calculators that factor in some costs (as well as excel).  I live in a desirable area and have an ideal property for renters (3/2 open floor plan, new kitchen, etc, pool home on a lake in a rated school district). I know someone that has several similar rentals in the area and consulted with him and my real estate agent on potential costs so I think I'm fairly close. I'm rolling the dice on the roof replacement, but have done several repairs since we've lived here (hopefully that will be good enough for now). "

The OP's overconfidence is humorous.  I love people like him, because when things go south and they have to bail on their over leveraged, non performing properties, they create opportunities for investors like me.

Don't see the need to be arrogant.
« Last Edit: April 02, 2018, 10:49:03 AM by Easye418 »

Another Reader

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #42 on: April 02, 2018, 12:19:36 PM »
This is not arrogance, this is 35 years of experience.

The OP owns a $350k property with a $290k mortgage.  With a 6 percent commission and closing costs plus repairs of $10k, he has about $29k of net equity in his home.  Maybe less if the buyer's lender requires a roof.  He has a one time large cash payment sitting in the bank.  The $200k is primarily from the sale of the business.  IOW, other than the $100k in retirement accounts, the OP has saved very little money and is therefore spending most of what he earns already.  He sold the business, so he now has only employment income.  His is the only income.

He wants to take most of that one-time cash payment and invest it into an expensive house.  His rationalization is that the operating costs will be similar, an assertion I find difficult to accept, but whatever.

He claims he will have $6k net rental income from his old house once he moves.  The house needs a roof soon.  I would have to see the proposed operating statement with real numbers attached and some support for those numbers to accept that income.  Hand waving based on a real estate agent's opinion and some friends' experiences that are probably from the current market not averaged over historical markets is not convincing.  It should not be convincing to the OP either, and the fact that it is is a red flag.

Now assume we have a recession.  Property values drop 20 percent as do rents, and vacancy and collection loss increases.  The rented house still needs that roof and he is underwater.  OP loses his job and hiring is slow, so he is out of work for awhile.  With minimal cash reserves, he will have to liquidate his retirement savings to keep the houses.  Likely he will choose to jettison one house to stay afloat with the other.  That's how it worked last time around.  And the time before that.

Been there, watched the collapse, bought the orphan properties.  Call that arrogance if you like.

NotAnymore

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #43 on: April 02, 2018, 01:12:48 PM »
This is not arrogance, this is 35 years of experience.

The OP owns a $350k property with a $290k mortgage.  With a 6 percent commission and closing costs plus repairs of $10k, he has about $29k of net equity in his home.  Maybe less if the buyer's lender requires a roof.  He has a one time large cash payment sitting in the bank.  The $200k is primarily from the sale of the business.  IOW, other than the $100k in retirement accounts, the OP has saved very little money and is therefore spending most of what he earns already.  He sold the business, so he now has only employment income.  His is the only income.

He wants to take most of that one-time cash payment and invest it into an expensive house.  His rationalization is that the operating costs will be similar, an assertion I find difficult to accept, but whatever.

He claims he will have $6k net rental income from his old house once he moves.  The house needs a roof soon.  I would have to see the proposed operating statement with real numbers attached and some support for those numbers to accept that income.  Hand waving based on a real estate agent's opinion and some friends' experiences that are probably from the current market not averaged over historical markets is not convincing.  It should not be convincing to the OP either, and the fact that it is is a red flag.

Now assume we have a recession.  Property values drop 20 percent as do rents, and vacancy and collection loss increases.  The rented house still needs that roof and he is underwater.  OP loses his job and hiring is slow, so he is out of work for awhile.  With minimal cash reserves, he will have to liquidate his retirement savings to keep the houses.  Likely he will choose to jettison one house to stay afloat with the other.  That's how it worked last time around.  And the time before that.

Been there, watched the collapse, bought the orphan properties.  Call that arrogance if you like.

Boom! Thanks for the honesty.

shelbyautumn

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #44 on: April 02, 2018, 01:16:50 PM »
I'm going to tell you a story about my dad.

Background: I grew up in Southern California and I am the oldest of 3 kids (I'm 27). My (half)brothers are 18 and 16 and my (step)mom has stayed at home since my first brother was born. My dad has made between $100-250k yearly - it continually goes up.

We moved to a big house when I was in 7th grade (4 bd/3ba/2600 sqft). It was a stretchhhhh for my parents, but my mom loved the interior and my dad LOVED the yard. Now, 16 years later, my dad is 57 years old (turning 58 in July), will never retire, and is killing himself trying to find a way to pay $66k a year for my brother to go to his dream college. I graduated college debt free, so he wants my brothers to do the same (I went to a college that cost $24k a year total and he split it with my bio-mom, hardly equal, but whatever).

Now Iím going to tell you a story about my mom.

Background: My mom is married and I have two step-siblings (26 and 22). My step-dad earns around $150k and my mom earns around $300k. I did not live with my mom growing up, but I did always have a space to stay at her house. She is 48 Ė turning 49 this year.

My mom has ALWAYS purchased cheaper homes than my dad. Still beautiful, arguably more beautiful than his, but cheaper. Even with her higher income and a second income, she has been more conservative on the things she purchases. From the outside, it would look like my dad had more money than my mom. Fast forward to now, she paid for half of my college, my sisterís vet tech degree, and my brotherís culinary school degreeÖall in CASH. She outright owns her home in COSTA RICA, and has a 7 figure net-worth. Sheís waiting to retire until I have babies, even though she could be done working today.

Anyways, I'm trying to say plan for retirement and college and don't buy the fancy house. If my dad dies, my family is screwed (he does have a good life insurance policy, but it won't last forever). My (step)mom can't find a job right now (18 years out of the work force is hard to overcome) and she would be stuck in a too expensive house that still needs a lot of updates to be sold. If my mom dies, I get a 6 figure inheritance. Because she planned and she made smart choices.

I just looked at homes in Boca Raton. You can get the size home youíre looking for, for like $250k. Theyíre all ugly, so go ahead and dump an extra $100k into updates (I, too, enjoy beautiful homes). Realtor.com has schools rated at like 8-10 for all of the houses I looked at. That would be a $300k price difference (for my family, that would be the cost of my little brother going to his dream school).

You have choices here Ė I know which choice looks more attractive to me.

Easye418

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #45 on: April 02, 2018, 01:36:00 PM »
This is not arrogance, this is 35 years of experience

Been there, watched the collapse, bought the orphan properties.  Call that arrogance if you like.

I was just merely saying you can off with a smug attitude. Not a big deal, no tears from me. Just calling what I see.

partgypsy

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #46 on: April 02, 2018, 01:37:02 PM »
I am also fiscally conservative. I understand your need/desire for more space. If I was in your shoes, I would either a) add a floor/extra room to your house and make energy/amenity upgrades. Even if all the improvements cost 150K for those improvements, you are spending less money, and are in a location with good schools that you already said you would be happy to retire to. Or b) spend 450K on an "uglier" house that has more room. The bigger the house, the higher the housing costs, both in maintenance, cleaning and especially in property taxes. Aiming for a bigger home but not as big as you are imagining, would save you money in multiple ways. When you are talking about differences of a 100K+ in house costs, you are not going to be making that back with improvements in energy efficiency! Plus if you move to a gated community you are going to be paying monthly hoa fees.
Being a sole breadwinner with 5 dependents, you should also look to see if you have appropriate life insurance coverage.
« Last Edit: April 02, 2018, 02:10:59 PM by partgypsy »

Suze456

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #47 on: April 02, 2018, 02:04:22 PM »
Check out @5kids1condo for inspiration...maybe hobby/play area in the garage? In 10 years, your kids will probably start flying the nest...I see lots of couples  just rattling round in 5 bed houses. Would def recommend decluttering, whether it's Marie Kondo or similar, first.

jeroly

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #48 on: April 02, 2018, 02:12:14 PM »
I think that both the OP and the responders need to separate the financial issues that are intermingled here. (And have separate consideration of the actual impacts on quality of life)

1.  You shouldn't conflate the question around whether or not it's a good idea to turn the current house into a rental property, and just consider the sale/purchase issues.

2.  You shouldn't consider this 'trust income' unless there's a lot more going on here.   After all, you don't want to get into a situation after that 5 year income stream goes away a la the folks who got teaser loans during the real estate bubble, and have house payments that your cash flow can't sustain after the trust fund is gone.

2a - Does that trust really represent expectations for big, additional, future trusts/gifts/inheritances?  If so, then don't necessarily worry about the financial aspects of this housing change and do what works for you and your family.
2b - Is the trust income coming from parents and/or in-laws / other relatives?  If so consider whether it's coming with any strings, either explicit or psychological... will there be an expectation that there's a space in the house for them to stay at/retire to/have the 'right' to specify how it looks or gets remodeled? 

3.  Consider what to do with the old house separately - run the numbers assuming you'd sell, and then and only then run realistic numbers (making conservative assumptions around vacancy rate, property management costs, maintenance costs - which will be much higher for a rental as it may not be gently lived in - real estate price increases, etc.) and see if it makes sense to rent it vs selling it. 
3a - Consider that even if it's run by an external property manager, there will be time, energy, and stresses related to running the rental business, and that you should be compensated for your time.  If the 'property rental business' were paying your wife (I think you mentioned a plan to have her deal with it) say $20/hour, would it still be profitable?  If not you would at best be creating a money-losing business that is subsidized by her accepting very low wages.
3b - This becomes to some degree a part time job - is this a job that would be fun for you or are you setting yourself up for additional dependencies interfering with true FI?  If it's not either lucratively profitable on a per-hour payment basis when compared to expected returns in a 60/40 portfolio, or a lot of fun and/or fulfillment for your wife, then you shouldn't do it.

4.  Anectdotal evidence:  I went from a lifetime of apartment living (grew up in a 'junior 4' apartment - approx. 750 square feet for three people) to buying a 7BR, 2700sft Victorian at age 35 and while I loved the space, we (2 adults one child starting at age 4 until she moved out for college) really only used approximately 2000sft of it.  I'm now looking once again for housing as my GF, her 12-year-old son, and I look to combine households.  She has an approx. 1300sft house which while great for just the two of them, feels too small for all 3 of us, and we'd like to move to something upwards of 2000sft.  However, because of supply/demand in the HCOL the girlfriend wants to live in, many of the houses we've seen are more like 5000sft which feels super-luxe (and in many cases, just massive overkill in terms of space).  The prices are about 3x more that I'd ideally like to spend on housing but we can afford it when looking at our big picture, so if it makes her happy...
« Last Edit: April 02, 2018, 02:27:15 PM by jeroly »

Sibley

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Re: Should i buy a bigger home relatively HCOL + 4 kids
« Reply #49 on: April 02, 2018, 02:15:56 PM »
Your kids would be happier in the long run with a dad who's not stressed from money troubles. Your marriage will be healthier if you don't have excessive debt that you're stressing over.

Don't buy the $650k house. Shelbyautumn called it - you can find a house with the size you want for way less and then do some updates. While you're at it, get the kids involved in the work. It's good experience.

And while we're on the subject - doubling your space doesn't double the cleaning. It more like triples it. I really don't know why, but it does.