Long time lurker, first time poster. Getting more interested in RE as I hit the 4-0 & perhaps get closer to FI. Mostly unintentional as a result of no kids, the crazy stock market and not buying much. I'm posting in Real Estate mainly to try to get a forcing question to start on a FIRE plan. Probably better ways to think through it, but this is immediate and in my face. We've outgrown our cheap rental apartment (under market rent in Seattle). We want a house with some room for working from home, guests, the dog, hobbies and to breathe. Otherwise we probably split up as we're going nuts in our current space. But what next? Rent? Buy? Plan for FIRE & a future move? Opinions and pointed questions welcome.
Now for the context...Me: 40. No kids. Committed relationship but not yet married (different but understandably highly related topic). Kids are unlikely but maybe. Live in the PNW (Seattle). Flexible on location for future but family and friends all in HCOL cities (NYC, SF, DC, CHI, BOS, LA, LON, AUS, DEN, basically anywhere pricey). All things being equal would love to stay in Seattle or one of these HCOL areas for good (or at least part of the year while able). At the very least plan to be in Seattle the next 10 years while working, although could handle a move.
My resources:- 1.7M net worth
- 275k cash (~200k for down payment, ~75k for emergency / car replacement)
- 825k taxable
- 600k retirement
- 0 debt
- Investments are 85/15 mix - ~5% of the 85% in REITs
- S.O. has some school debt but resources to cancel it out if desired. Some retirement assets, but much savings, though.
Annual income/spending year - very rough numbers:- 165k income (some years higher, don't expect to be lower until I'm 50 or I get fired)
- 50k non-housing annual spending (zero budgeting at the moment but assume any dialing back on nice food/travel would get replaced by healthcare expense in the future)
- 18k rent (will go up - need a bigger place for domestic peace & working from home)
- 47k savings - mostly to 401k and roth backdoor
- 50k taxes
A select few of my (big financial) mistakes:- AUM fee-based investment adviser. Got that when I realized I had so much money not in the market during the past two bull markets (another mistake). 0.75% AUM. Still have them. Advice and personal consultation is useful, but I'm paying too much for it. Will go eventually.
- Not buying a house in Seattle several years ago. There were ok-ish reasons at the time, but mostly was lazy and hindsight is cruel on this front.
- No goal to motivate me. I don't budget, nor have a game plan. Work is interesting so I keep at it. I like fancy restaurants so I go out to eat. Looking at real estate question as a way to force some decisions.
Finally the question! Here's how I'm trying to think about the buy or not buy question - a bit too many variables below but trying to keep it straight. TLDR if you got bored with the above ;) Need to move at some point in the next several months as in an apartment that's too small, has maintenance issues and is causing real relationship strain. But move to what?
- Buy a house in Seattle. I can probably swing $1-$1.2M - would just have to work for a longer time and kiss RE goodbye. Buying is betting that housing prices and rents keep going crazy here so I need to lock something in, even at these rates. At this point feels like buying at the height of the market. Not to mention that buying is beyond painful with low inventory and bidding wars.
- A variant on #1 is to target something local in Seattle that has more MIL/duplex rental/airbnb potential so could possibly defray some of the bill and maybe find a path to stay local and RE? The SO doesn't want to share so that's something to work through. But more my vote since not her money and I need some protection if we split up.
- Rent given uncertainty and crazy housing market here. Risks getting priced out in the future or having a forced move due to owners cashing out, rent raises, whatever. Given the stock market right now I'm not sure that I'd dump all the saved cash in the market right now either.
- Start planning a longer-term move elsewhere then rinse/repeat the rent vs. buy question in a new LCOL spot or nomadic lifestyle?
Appreciate you sticking with this dump of writing until the end.