Author Topic: Buy a bigger house for family in SD  (Read 773 times)

slomo85

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Buy a bigger house for family in SD
« on: May 29, 2018, 02:19:12 PM »
My partner and I have been going back and fourth for months over wether or not we should buy a larger house or not in the SD area.

Currently we live in a 515sqft one bed one bath condo. I purchased it for $160k 4yrs ago, and thanks to MMM frugality, I have already paid it off. It is worth about $240k now. Thing is, I purchased when I was single, and at this time it was more than enough for just myself. But now I'm married with a one year old and things are getting tight. We plan to stay in San Diego for the next 6 years due to work, but we both do not plan on living here forever.

The idea is, either stay put and save our $ into index funds or buy a larger house and live more comfortablely. Things we currently do not enjoy are:
-laundry machines that are outside and constantly consume quarters and break down and trying to "get in there" when no one else is using them
-Serving on the HOA board and trying to constantly help people that rent from owners, including budgeting while receiving no compensation and dealing with contractors ect...
-Following all the rules, etc...
-Cigarette and car smoke being sucked in the windows from neighbors.
-Can't make major improvements or changes
-Everyone being able to hear private conversations if we forget to close the windows

I know that we don't need anything fancy, if we were to buy a house it would simply need to be a 2 bedroom and a 1.5 bath. But the thing is, every month we wait, the more the housing prices climb. I feel like maybe we should wait, but something I learned here is that trying to time the market is not realistic. Also, we can sell our current condo and apply the sale to a new house, avoiding the capital gains tax.

Thoughts? Currently hosing in our search is in the $400k-$500k range. It's a bit scary, neither of us has ever had a number this high in debt. We are currently 100% debt free, school loans paid off, house paid off, car owned, ect...

I made a spreadsheet showing the different net worth calculations. I will attach it a bit later.

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« Last Edit: May 29, 2018, 02:25:06 PM by slomo85 »

CNM

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Re: Buy a bigger house for family in SD
« Reply #1 on: May 29, 2018, 02:32:21 PM »
How long do you think you'll stay in San Diego?

slomo85

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Re: Buy a bigger house for family in SD
« Reply #2 on: May 29, 2018, 04:06:24 PM »
How long do you think you'll stay in San Diego?
We need to stay for about 6 more years due to work.

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the_fixer

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Re: Buy a bigger house for family in SD
« Reply #3 on: May 29, 2018, 09:19:14 PM »
You could get off the HOA board and alleviate that one item.

Been there done that and understand the crap you have to deal with maybe step away from the board for a while

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tralfamadorian

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Re: Buy a bigger house for family in SD
« Reply #4 on: May 30, 2018, 07:33:16 AM »
-laundry machines that are outside and constantly consume quarters and break down and trying to "get in there" when no one else is using them

I've never had one but some MMM folks speak highly of these guys:
https://www.amazon.com/Haier-HLP21N-Pulsator-1-Cubic-Foot-Portable/dp/B002UYSHMM/


Also, we can sell our current condo and apply the sale to a new house, avoiding the capital gains tax.

Maybe I'm just misunderstanding your comment here but you don't need to apply the sale to a new property to get the tax benefits. On your personal residence you get up to $500k (MFJ) of capital gains tax free upon sale with no strings attached.

clarkfan1979

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Re: Buy a bigger house for family in SD
« Reply #5 on: May 31, 2018, 10:05:04 PM »
400K to 500K sounds like a deal for San Diego.

StacheDash

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Re: Buy a bigger house for family in SD
« Reply #6 on: June 01, 2018, 10:01:35 AM »
I think a more spacious living arrangement makes sense.  We have a 1 year old, too, and it is chaotic enough with the room we have.  You may be able to live with a 7 year old (that's how old your kid will be in six years) in 515sqft, but it doesn't sound pleasant.

Perhaps the biggest question: Are you planning to have any more kids in the next six years?

slomo85

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Re: Buy a bigger house for family in SD
« Reply #7 on: June 01, 2018, 10:21:36 AM »
-laundry machines that are outside and constantly consume quarters and break down and trying to "get in there" when no one else is using them

I've never had one but some MMM folks speak highly of these guys:
https://www.amazon.com/Haier-HLP21N-Pulsator-1-Cubic-Foot-Portable/dp/B002UYSHMM/


Also, we can sell our current condo and apply the sale to a new house, avoiding the capital gains tax.

Maybe I'm just misunderstanding your comment here but you don't need to apply the sale to a new property to get the tax benefits. On your personal residence you get up to $500k (MFJ) of capital gains tax free upon sale with no strings attached.

I just did a bit of research, it appears that you are absolutely correct, hot diggity! Thanks for this info, this opens new options for us. And the washer, I have researched them a little, thanks for the tip.

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« Last Edit: June 02, 2018, 10:30:16 AM by slomo85 »

slomo85

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Re: Buy a bigger house for family in SD
« Reply #8 on: June 01, 2018, 10:23:53 AM »
I think a more spacious living arrangement makes sense.  We have a 1 year old, too, and it is chaotic enough with the room we have.  You may be able to live with a 7 year old (that's how old your kid will be in six years) in 515sqft, but it doesn't sound pleasant.

Perhaps the biggest question: Are you planning to have any more kids in the next six years?
Yes, that is the big question. Although we do not plan on having more right now, I think we may have one more. I think we will need more space but still worry that it's the wrong time to buy... But we're trying to weigh quality of life with finances. Am I being to frugal? I think that's my worry.

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done@38

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Re: Buy a bigger house for family in SD
« Reply #9 on: June 10, 2018, 07:35:53 AM »
i own a house in San Diego (purchased in 2012), and it has set me up for an earlier FI life. I personally feel that if you can afford a bigger house, then do it! its an investment and could be a great one. look at your apt for example. Id use the apt as collateral and buy a bigger home. Rent the Apt out and let that income offset your mortgage payment. You could double on your P payment and have a huge portion of it paid off in 6 years. i understand the market could drop like on 08 and your tenants could suck and be a PITA, however the other side of the coin (more realistic IMO) is a quicker route to FI. Best of luck to ya!

BTW don't be afraid to look at north county. Escondido and surrounding areas is growing and doing really well.

radram

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Re: Buy a bigger house for family in SD
« Reply #10 on: June 10, 2018, 08:57:12 AM »
Maybe I'm just misunderstanding your comment here but you don't need to apply the sale to a new property to get the tax benefits. On your personal residence you get up to $500k (MFJ) of capital gains tax free upon sale with no strings attached.

Your larger point is clear and accurate, but he is not free of capital gains taxes because there are no strings, it is because he has met and exceeded those requirements(ownership 2 of last 5 years, use as a primary residence, and not having taken an exclusion the last 2 years).

radram

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Re: Buy a bigger house for family in SD
« Reply #11 on: June 10, 2018, 09:01:45 AM »
In my opinion, 6 years is not enough of a time horizon to commit to a move. You have a vast array of options. This is a blessing. Don't forget that as you ponder these questions.

A few other options you might not have thought of:

Sell your unit. Invest that money, and use the investment money to pay for the rent on a larger place that has exactly what you want. Invested wisely, it could come pretty close to churning out your monthly rent for the new place.
Rent out your unit, and use the money to pay rent on a larger place.


2 bedroom with 2 kids? would that be big enough, or would you then want to move again if a second child comes along?

slomo85

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Re: Buy a bigger house for family in SD
« Reply #12 on: June 13, 2018, 06:08:52 PM »