Author Topic: Should I buy now?  (Read 1234 times)

DZnStCruz

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Should I buy now?
« on: January 27, 2021, 08:27:59 PM »
Feedback and suggestions please.
Almost 40. No kids, no debt, not enough retirement.
I received an email from the company that manages my 401k in regards to my changes. I phoned the next business day since I hadnít made any changes.  The rep advised my former employer...whoops hadnít received the certified letter that from their perspective my disability leave wasnít an excused absence and Iíve been terminated.   That employer paid 38k gross.

Iíve continued to work part time in a low stress environment that earns 20k a year. I also am my disabled motherís caregiver.  In the past 10 years I havenít found another caregiver to meet her needs that I could afford and still have time to see her.  Iíve opted for flexibility and okay pay. 
All her other relatives live in the EU. She is in better health than 10 years ago, but still unable to drive, fly or do heavy chores.  If she improves sheíll move back to France, Iím down, my bf is too.  Until then I plan to be within a few hours drive. 

My bf and I rent a studio by the beach not far from my mom.  My portion is $1000.
On my 20k I qualify for 100-160k with multiple  lenders.  FHA and conventional with rates below 3%.
On the coast I could find a mobile home within that range or go 2-3 hours inland get a house on varying lot sizes and add an ADU.  Iíd like bf and I to use the ADU as a primary residence and rent the main house.  We would stay at the studio 1-3 nights a week depending on my momís needs, but figuring at least 8 nights a month. 

Iíd like to keep the apartment for 6 months at least. If thereís no tenant for 6 months give notice and Iíll come down solo crash at my momís.  (BF is welcome , but he is a loud, rough lovable Sasquatch of a man and momís place is tiny and dainty) If rented, keep apt reassess in another 6 months. 

BF thinks we shouldnít keep studio and stay at motel as needed  $100-$200 per night. 

I have 3 months of emergency savings that would cover mortgage, my portion of rent, estimated utilities for both locations.

13k for down and closing
15k for 401k (will not touch)

If rented should be near double mortgage, tax and insurance payment.   I would keep that in its own account for at least a year to go toward future repairs. I plan to get much more education. 

Iím looking for flexible remote or secluded other income opportunities and pull in an extra few hundred from side gigs, but basing my decision only on the 20k
Please share your thoughts. 

Thank you!

uniwelder

  • Pencil Stache
  • ****
  • Posts: 500
  • Age: 41
  • Location: Virginia
Re: Should I buy now?
« Reply #1 on: January 28, 2021, 07:40:29 AM »
There's a lot of information from your post and I'm having trouble piecing it all together.  Your numbers are way too tight for my comfort if I were in your shoes. 

The first thing I would do is get rid of your $2,000/month beach studio apartment and find something cheaper to rent that's not 2-3 hours away.  I'm not sure how you're qualifying for a 160k mortgage on 20k/year--- housing expense ($800/month with tax + insurance) would be about half your income.  That doesn't really give any room for error when sudden expenses come up.

Have you thought through the numbers when thinking about your dream of buying a home and adding an ADU?  The ADU will cost a reasonable amount of money to construct.  Where is that money coming from?

six-car-habit

  • Bristles
  • ***
  • Posts: 458
Re: Should I buy now?
« Reply #2 on: January 28, 2021, 12:06:59 PM »
  Ok, at some point in the past you made $38K at your job, which you were not able to keep.
 You stopped showing up at work for your regular paid hours, due to a an injury/ disability, and ultimately the employer decided they were not responsible for compensating you for time spent away from the worksite. And you found out they didn't want, or expect you back , in a non-direct way thru the 401K manager.  Allright - so you have $ 40K annual earning potential, at least, if you were willing to work 40 [ or more] hours a week.
     But currently and for the forseeable future - are happy with work / family / income balance at $20K/yr since it is part time and low stress ,+ allows you ample time to care for mom .

 Lets say you move 2 hours away. Now you are 80 or 100 miles away from Mom, so it'll cost you about 6 gallons of gas at 30mpg round trip, $3/ gal plus some tires eventually. That would be about $100/ month extra expense for the Mom-visits if you went 4-5 times a month.

  The buying the House elsewhere than adding an ADU idea ?  as mentined previous post, where does the money come from?  It would be very hard to get a mortgage that advanced an extra $30K over the assessed value - which i think a decent ADU would cost at a minimum - or was a "rehab" type loan where you could effectively put extra money into the existing structure right away - and have the interest rate be only 3%. 
  Also how do the numbers work where you effectively buy a house, also pay for its insurance/ taxes / partial utilities..... and are able to charge rent  for Twice that amount, on day 1 ??     That seems wildly optimistic.
  I don't think Samsquantch boyfriend is going to be visiting mom 5 times a month with you, so extending the lease on your current studio, is a huge waste of money.

  Providing you stay in town , or relatively close to mom, ocean coast pricing,  can you find a 'manufactured home' vs a 'mobile home' ?   Back in the 2002 timeframe, mortgage lenders/banks would not lend on a mobile home, even if it was tied to a foundation, if the mobile was built in 1976 and earleir. I imagine 20 years later the mobile home 'build date exclusion'  has precluded getting loans on units built in the 1980's as well.  You may get one under an "owner contract" type mortgage though {??}.   Also the old rule of thumb was 42% total monthly debt to income ratio. And if you were close to 40% , the applicant wasn't getting the best interest % rate offered.

  If you will not be persuaded out of buying, at least get into a well built and maintained house you can can afford with some $$ cushion, because you'll be wanting to jack up your savings rate, so your future 401K balance can truly supplement a future Social Security benefit ,[ SS benefit will be eaten up by the mortage and  RE tax payments that you may still be making in your early 70's.]

 

DZnStCruz

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: Should I buy now?
« Reply #3 on: January 28, 2021, 02:41:41 PM »
Thank you.  I used the wrong term.   I can purchase a manufactured home 1975 and newer up to 115k at 2.95% with 10% down.  If a 2 bedroom manufactured home becomes available my mom would occupy one room and I plan to occupy the other room 4 days a week.  SBF could visit, but would not be able to live there.

sbf really likes my momís cooking and he comes along anytime he can.  His mom lives between my mom and our studio, but sheís an anti masker so no plans to see her.  Weíve been doing porch drops for his mom.

Iím building an off grid ADU.  120 sq ft so that I donít have to get permits.  Hot water powered by propane and composting toilet.  Shed kit, salvaged items and trips to our local Restore the budget is 5k for this ADU.  We only need to buy the kit and maybe some pretty items.  Sorry forgot to list I had a 5k sinking fund for ADU balance is now $ 4,100

Thank you for figuring in the gas.  Iíll recalculate my figures.
In regards to moving to a cheaper place that isnít 2-3 hours away... 30 min north is San Jose, 30 Min south is Monterey/Carmel.   An hour East mostly single family homes or mobile home parks.  Cheapest for single person $700 plus utilities with a number of roommates. Next best offer was $850 plus utilities, no couples.  Still looking.  Ideally no other roommates during pandemic.   

FYI our studio is 1500.  SBF has 60k in debt.  We decided to put what we were each paying to rent rooms and designated parking in Salinas and King City for a nicer spot, closer to the beach and street parking.   


I can wait to stack a larger cushion, but not sure if that should be 6 months or a year or more of savings?
Where does the money come from? 2020 approximate AGI was with a FT and PT job 59,500. 

I also churn cards, haul stuff, refurbish furniture and clothes for resale. Thatís my fun money, but most months I just pad utilities for myself, SBF and my mom or charity.

SBF and I are not on the same page with money.

Also the goal would to pay this off within 15 years.   
Is there another question I should ask lenders? I have preapproval letters for under 3%
My FICO is just below my goal of 800: 797.  Does 2.95% for a manufactured home really seem too good to be true?  Please advise.

Dicey

  • Senior Mustachian
  • ********
  • Posts: 16419
  • Age: 63
  • Location: NorCal
Re: Should I buy now?
« Reply #4 on: January 28, 2021, 05:16:52 PM »
No, no, NO! The problem with those parks is the monthly dues. They are big and they never go down. There are some parks in your area where the owners own the ground their units rest on, but I'll bet they're much more expensive.

You have too much in flux in your life. Rent and stay nimble for a little while longer.

DZnStCruz

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: Should I buy now?
« Reply #5 on: January 29, 2021, 01:13:24 AM »
Thank you Dicey.  The parks that include land start at about 350k.  How much longer should I wait? Iím actually fine renting forever, my bf sees it as throwing away money.  I see renting as paying someone else to worry about repairs, but since I have the time and am marginally handy I thought it worth entertaining the idea.  Maybe Iíll revisit the idea in 6 more months. 

Thank you all for your feedback.   

uniwelder

  • Pencil Stache
  • ****
  • Posts: 500
  • Age: 41
  • Location: Virginia
Re: Should I buy now?
« Reply #6 on: January 29, 2021, 09:39:12 AM »
I'm getting confused by your financials.  In 2020, you got disability pay plus your part time job for a total of 60k.  Now you're making 20k going forward, plus some side money.  You have 17k in savings (13+4) and 18k in 401k.  Did all this savings happen in the last year?  If yes, that's great.  If not, then 1) where did all the money go and 2) can you afford to plan on continuing at 20K income?

You say you're building an off-grid ADU.  Does that mean you have the intention to build it, or you've already started construction somewhere?  I'm thinking it means you have the intention once you buy a house with some land.  Have you ever lived in a place that small (10x12) with your boyfriend or even just yourself?  You have a studio apartment, but that must be pretty spacious compared to your proposed ADU.


Malcat

  • Walrus Stache
  • *******
  • Posts: 7870
Re: Should I buy now?
« Reply #7 on: January 29, 2021, 10:49:24 AM »
This is very confusing and I can't make sense of any of it.

Why are you building an ADU? Where do you expect to keep it? What purpose does it serve? How will the sasquatch fit in an ADU? What does the "s" stand for in "sbf"?

If you two aren't at all on the same page in terms of finances, why are you looking to buy a house together? Are you planning on buying the house together? That isn't very clear.

Are you indefinitely planning to only make 20K/yr? What is your skill set? If you are disabled, is it limiting your ability to retrain in a different field?

You say you and your boyfriend are "down" with your mom moving back to France. What does that mean? Does that mean you're cool with your mom moving far away, or that you would both be cool living in France as well. Why does your mom need to be less disabled to live in France? Is her becoming abled-enough a likely thing to happen? If so, would you and your boyfriend stay put in your expensive beach area?

Why is mom staying in an expensive beach area? Is she willing to relocate somewhere lower cost along with you and your boyfriend so that your life can be more affordable while taking care of her????

I'm SO CONFUSED.

DZnStCruz

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: Should I buy now?
« Reply #8 on: February 02, 2021, 07:02:10 PM »
Thank you for your patience with me.  Hope this brings some clarification.
My ultimate goal is to be smarter.  Sasquatch boyfriend (SBF) and I currently live in 180 sqft.  Iím very flexible and only require clean shelter with some temperature control and comfy sleep area. I have lived in 120 sqft, but he has not.  Iím looking to purchase a home and rent it out while I (and SBF) live in an ADU we will build from a kit on the lot. 
I paid off my student loan debt March 2020.  I had some emergency savings and 401k, but most of my savings was in 2020.  Since I was unaware I was terminated I continued medical, physical therapy and emotional therapy, I paid hefty balances with those practitioners which left me with the savings numbers I shared. 

Over the past decade Iíve kept my part time job and most of the past 6 years I worked full time for the another company.  I usually gross 20k from pt and around 40k for full time.  2020 my total 60k came from pt, ft and the last few months disability payments.  Other monies for 2020 went toward gifting and replacing used cars and bits here and there to friends effected by the shut down, deaths. 

Going forward Iím on year 11 of pt at 20k. 
Applying for other jobs to increase  income, but I want  to be remote or in a very isolated setting.  My disability is only temporary and there are many options for my experience I just prefer to work remotely.  At my previous employer the staff have been reinfected with covid 19, some more than twice!
My skill set includes admin, A/R, A/P, Hazmat dispatch, fuel dispatch, hospitality, rooms and revenue inventory management, event coordinating , vehicle warranty /recall claims, auto sales auditor, DMV title processor, medical/dental assisting, drywall, mud/tape.

SBF is avoidant of his money situation. Iím direct. I feel calm after considering multiple problems and solutions.  We are not buying a home together at this time.  He would continue to contribute rent and utilities. 

Regarding my momís health. She has surprised her team of Drís time and time again.  She beat cancer, off dialysis, she can swallow, talk and walk again her reliance on supplemental oxygen has decreased over the years, but her requirement is still too great to fly at this time.  If and when she is able to fly the three of us would move to France. 

We have considered moving and with my mom to somewhere cheaper, but looking for excellent healthcare, moderate climate, lower violent crimes.  I have a list, but theyíre not much cheaper and a state or two away.  My primary concern is if I or SBF die or become incapacitated before we establish a community what will happen to my mom if we move more than a days drive...

yachi

  • Pencil Stache
  • ****
  • Posts: 727
Re: Should I buy now?
« Reply #9 on: February 03, 2021, 09:34:38 AM »
My primary concern is if I or SBF die or become incapacitated before we establish a community what will happen to my mom if we move more than a days drive...
Well this scenario is not all that likely given your mom's health history.  Even at average health your mom is way more likely to die first.*

What are your plans for health care in France?

The property purchase and construction could prevent your moving to France if you can't find a buyer for your property.

*The probability of a 40-year old female dying in the next year is 0.001429.  The probability of a 40 year old male dying in the next year is 0.002482.  The probability of either the 40-year old male or the 40 year old female dying in the next year is 0.003911.

I'm not sure of your mom's age, but the probability of a 58 year old woman dying in the next year is 0.009897.

So it's 2.5x more likely that a 58 year old of average health dies within the next year than that either you or SBF dies in the next year.

DZnStCruz

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: Should I buy now?
« Reply #10 on: February 03, 2021, 10:21:47 AM »
Hey Yachi,

Thank you for the numbers.  Healthcare in France is easier as my mother and I have French passports.  My bf would cash pay until he has residency and becomes eligible for PUMA. 

If we move to France we would decide to rent out or sell the house. 

uniwelder

  • Pencil Stache
  • ****
  • Posts: 500
  • Age: 41
  • Location: Virginia
Re: Should I buy now?
« Reply #11 on: February 03, 2021, 06:08:59 PM »
My primary concern is if I or SBF die or become incapacitated before we establish a community what will happen to my mom if we move more than a days drive...
Well this scenario is not all that likely given your mom's health history.  Even at average health your mom is way more likely to die first.*

What are your plans for health care in France?

The property purchase and construction could prevent your moving to France if you can't find a buyer for your property.

*The probability of a 40-year old female dying in the next year is 0.001429.  The probability of a 40 year old male dying in the next year is 0.002482.  The probability of either the 40-year old male or the 40 year old female dying in the next year is 0.003911.

I'm not sure of your mom's age, but the probability of a 58 year old woman dying in the next year is 0.009897.

So it's 2.5x more likely that a 58 year old of average health dies within the next year than that either you or SBF dies in the next year.

She might have a legitimate health concern herself--- recovering from some disability as stated.  Her mom is recovering and uses supplemental oxygen and not able to fly in a plane.  Could just be paranoid, but given what's been stated so far, maybe not.

uniwelder

  • Pencil Stache
  • ****
  • Posts: 500
  • Age: 41
  • Location: Virginia
Re: Should I buy now?
« Reply #12 on: February 03, 2021, 06:16:59 PM »
Hey Yachi,

Thank you for the numbers.  Healthcare in France is easier as my mother and I have French passports.  My bf would cash pay until he has residency and becomes eligible for PUMA. 

If we move to France we would decide to rent out or sell the house.

Sounds like your life has been revolving around waiting for your mom to get well enough so you can all go to France.  There must be other ways.  Drive cross country and take a cruise ship across the Atlantic?  If its been 10 years already, how much longer are you going to hold off?  Seems like its time to get there or die trying.  The way it sounds, it seems that may happen, unfortunately.

DZnStCruz

  • 5 O'Clock Shadow
  • *
  • Posts: 7
Re: Should I buy now?
« Reply #13 on: February 03, 2021, 10:44:27 PM »
Hi Uniwelder,

Celebrating my momís 64th today! Have been seriously considered moving to France for 3 years.  2010-2017 were very difficult years.  Every other year a hospital social worker was helping me prepare for her end of life services. One of her Drís call her cat lady because sheís had several lives 🥰


My health issues are mostly resolved with diet exercise.  I am more than a bit paranoid. After some hard lessons Iíve eliminated my debt and like to leave cushions and credits on my accounts just in case my loved ones outlive me.  The items I handle, Iíd like them to have a buffer to grieve and have time to take over the accounts.

We have thought about taking a transatlantic cruise; however, 10 days is a long time on a boat.  2 days is too long for me.  🤢
My mom has ear and balance issues too.

Itís okay if she doesnít make it back to France, but we have housing lined up if possible.