Author Topic: Seeking advice on housing  (Read 3016 times)

WhittlingProf

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Seeking advice on housing
« on: October 08, 2012, 12:57:22 PM »
Hello, all. I've been admiring the Mustachian way from afar for about a month now, and I'm attempting to emulate it more in my own life. My family --wife plus 8 week old son and 55 lb dog--is heading toward a crossroads, and I'm hoping for a little outsider perspective.

We moved to a suburb of Houston in June because my wife plans to start a grad school program at the University of Houston. We would prefer to live closer to downtown, but when we moved we were given the opportunity to rent a house at a nice rate with the option to buy in January. Basically, my brother in law's mother is selling the house from her father's estate and was willing to help us out. I didn't have a job yet when we moved, but now I am working downtown, which is almost 30 miles one way and 45 min to an hour. I realize this is not the way of the mustache, but to get something that works for the family within biking distance of my job would be 1000-1200+.

The short version is that I'm wondering if we should buy this house or try to move closer to Houston and rent. Here are the basic finances:

I bring home about 3500 per month. The wife is taking care of the kid now but will be in school part time in the spring and she might pick up a part time teaching gig. We'll be in Houston at least 6 or 7 years for the program.

The house would cost us 60-65k excluding any downpayment (we could potentially use 10k or so of her fellowship money in the spring). But it is worth somewhere between 80k and 90k. Our mortgage and taxes then, would be in the neighborhood of 750.

We currently have about 35k in student loans (about 12 k of that wont accrue interest while she's in school) and about 25k in an investment account. And about 7k on a credit card that's 0% until next year. If you'd like further details about how we got here, I could explain. But I realize I already deserve a few punches in the face.

So normally I would assume that we should move and take the commute out of our lives then pay down debt before considering a house purchase. But I think the price for the house, and its potential (I would also like to do some basic renovations that would increase its value without too much time/money investment) make this a little less clear. Would the equity in the house offset the cost if commuting?

Thanks in advance for your help groaning my money mustache. I'm barely in stubble at this point. Feel free to ask for more detail.

WhittlingProf

  • 5 O'Clock Shadow
  • *
  • Posts: 2
Re: Seeking advice on housing
« Reply #1 on: October 16, 2012, 02:02:18 PM »
Does anyone from Houston or a similar city have any advice for this situation.

flyfamily

  • 5 O'Clock Shadow
  • *
  • Posts: 25
Re: Seeking advice on housing
« Reply #2 on: October 16, 2012, 02:29:08 PM »
Personally, I would not purchase a home while carrying a debt load. 

For the sake, though, of expanding on your thought of this BIL's mother's house. How far is the commute for your wife to University of Houston. Is it also 30 minutes? Will you both have overlap of commute to take one car in if her school, your work is in the same general area? Is public transit an option from suburbs? Have you estimated out above the PITI for the actual cost adjustment for repairs, maintenance, renovations, wear & tear and fuel costs? See how close you get now to that $1000 rental mark for a downtown rental. And I say $1000, because that is what I'd work with on that figure. $1200 may be the rental you 'want' but $1000 would get you what you 'need', so I'd focus on that and add from the $750 PITI that you've estimated for BIL's mother's home.

With that in mind:
One angle that I would address are downtown garage type apartments (which can be really, really nice on the interior! and may get you close to greenspace/parks for dog & baby), 1 bedroom cottages or MIL suites that are on the property of larger historic homes (hugely popular in our region), or if a roomshare arrangement with someone else who is attending grad school with her may help alleviate costs. Maybe a full timer with a part time job that won't be home much? That may kick in 1/3 of the rent? However, I'm not familiar with Houston or it's downtown. Hopefully, someone will chime in with some advice specific to that area. Creative housing would get you down below your estimated rental cost and can still be a great rental in the very same area that you'd be looking in. Sometimes, even coming with some extra perks like a parking space, use of main house's amentities, or even on a better street aesthetically or otherwise.

In the meantime, cruise rental websites for the downtown area specifically, and see what comes up with more unique housing (aside from condos, apartments, and single famly)

With having a baby, one benefit, is that you are not in a position to have to worry (yet) about elementary school. So that gives you great flexibility.

« Last Edit: October 16, 2012, 02:32:03 PM by flyfamily »

madage

  • Bristles
  • ***
  • Posts: 405
  • Location: TX
Re: Seeking advice on housing
« Reply #3 on: October 16, 2012, 02:54:41 PM »
To start: I am not a Houston expert at all. I relocated to Pearland in 2011 and do not work in the city.

Seems to me you'll both be commuting into the city. As you know, Houston traffic is brutal and mass transit options are lacking. If, however, you live south of Houston you might look into parking at the light rail lot at Fannin South and taking that downtown. I commute (grr) away from the city, but that is the strategy I'd look into if I had to go into the city daily.

I would personally value a short, car-free commute at more than $500 per month. This, to me, would favor renting something in the city even over a great deal on a house in the 'burbs. Is there any chance you could agree to purchase the house and then rent it out? I realize this might introduce more hassle that you want right now, but it could generate a nice supplemental income stream.

trammatic

  • Stubble
  • **
  • Posts: 218
  • Location: Gettysburg
Re: Seeking advice on housing
« Reply #4 on: October 16, 2012, 07:00:30 PM »
30 miles each way @ 1 hr is roughly $30 of transportation ($.50 / mile) x 20 workdays is $600/month, not to even mention the 40 wasted hours each month.  Another whole work week for free.  The $600/month is $7200/year or $50,400 over the course of 7 years.  Yes, you'll own more of your house by then, but it's not the slam dunk it looked like up front.