Hi all - your favorite village fool is back again!
I am again wondering if it might be the time for me to consider getting my first house.
I have $60k saved for a down payment (have additional $30k in savings not touching retirement funds that could be available but preferably not). I am considering looking for a roughly $200k-$250k house - which is reasonable if on the cheaper end for the geography that I am looking at - again because I am wanting to have a place for my father to live out the rest of his live long days.
Currently I am spending $700/month (his entire rent - utilities) so he can afford to have his own studio. I would rather be putting that money towards a longer term investment, however, right now the market is absolutely a sellers market. Home valuations are up and getting numerous offers often within days or hours of listing. There are big tech companies moving to the state and separately generally the state is where people settle down which is an additional factor pushing supply down.
What I am wondering is: At a high level - if this sellers housing market is a longer (say 5 year) trend, is it worthwhile to continue renting and try to wait out this trend (while also continuing to aggressively save) or does the timing not matter as much since this is not an investment property and it would still serve the purpose of allowing me not to throw away money at an apartment?
Look forward to any and all feedback or alternative ways to think about this
Since this was a high level question I kept the background vague but can provide additional details as needed!
[Old Post Archived as BUY OR PASS]
Hi all,
Really was wanting to get advice from this group.
I am considering purchasing my first house.
I want to be able to supply solid housing for my father. At the same time, my thinking has been that houses are expensive and it would be better to buy a property I could rent out. This way, at least in the short term, I can pay off the house as quickly as possible. The goal would to retain this property for myself and my father after it is paid off. So - it's not really a pure investment property.
I have found a property I think would work well for both of these purposes. It has a location I love and that I think has a lot of value. It is $180K and needs roughly $60K for renovation. I have $20K in mutual funds and I could borrow $20K from a 401K loan (could borrow more but prefer to keep that borrowing down). (I am 28yrs old and haven't saved a ton of money outside of my 401k) I would plan on putting 20% down and taking out a HomeStyle Renovation loan for the mortgage plus renovation costs.
The property I am looking at is close to my alma mater. I feel understand well what a student or young adult renter looks for in a property and think that I could make this property work for two renters in addition to my father. I don't really want to become a real estate investor/own a bunch of rental properties. I am really excited about this place because it is close to where I grew up, reasonably priced, in area with great schools, and has a rental demographic I think I understand well.
The goal would be to charge $600 and $700 for the each (preferably grad) student renter and $300 (cutting down my dad's rental costs by a third) for my father. This would leave me with a $800 short fall if I am going by the 1% rule for an investment property (which states that an investment property is worthwhile if the rent payment covers 1% of the property cost).
I still have more work to do breaking out associated costs with the property and refining my cashflow, but I expect being able to pay off the mortgage in 7 years (if I assume a 15 year mortgage rate) at most.
What I was wanting help with was:
What additional analysis/questions should I be asking in this process?
Is this a worthwhile investment?
Is it a good idea to borrow from my 401k or is that truly truly a last resort?
Welcoming all advice and face punches - please!
Edit - Added my surely busted a** spread sheet
https://drive.google.com/file/d/1sShzQz9h7XSN8f9T0iXeekpdYi7Agruf/view?usp=sharing (the Renting Calc tab is most relevant here)