First Time Home Buyer w/ Imposter's Syndrome

[ryand]

Hey all!

Looking for some advice from some fellow moustachians!  A little bit of background - 26 years old, single, working in the IT field making ~$120k annually.  I currently live out in Phoenix, AZ with the availability to work remote entirely with my current employer.  I have recently moved back from the east coast, and am staying with the parents (rent free) until I decide to pull the trigger on buying a house.  I have absolutely no debt, and ~$50k in savings.  My question is this:  I have recently been looking at a few homes, and a few that really "stuck" out to me were in the $350k range.  From an investment perspective, I feel the home is sound(specifically looking for homes with 1+ acres + electrical,water, etc.).  With this being my first official home that I will be purchasing,  is this too much of a home to entertain?  Do I save up the entirety of the 20% down to get rid of PMI?  What would other moustachians do in this situation, keeping in mind FI as the priority goal.

[Another Reader]

These days, $350k is not that much house in a good area out there.  Not sure why you want an acre unless you have horses or hobbies that require space.  Acre properties in that price range are likely to be far out or in older neighborhoods.  Older houses require more maintenance and improvements.  Some of the older neighborhoods have marginal schools as well.  Although you don't have kids today, schools are probably important to the future buyers of the property you buy today.

Given the traffic problems out there, in your shoes I would probably look for a house close to a lot of employers, in case you change jobs or become a contractor.  I would save up 20 percent down to avoid PMI and I would have some savings beyond that for repairs and maintenance and the possibility of a temporary interruption in your income from a job loss. 

[Enough]

If FI is your priority, you need to put your savings to work rather than tying them up in your dwelling. To answer your specific question, that means 20% down on the home and investing the rest in equities or RE. 

However, if you want to take it to the next level and shave a few years off your working career, you have the unique opportunity to live in a LCOL area with a HCOL salary by working remotely.  If you are not tied to where you are living right now, you could look at buying a similar home in a different area for much less.  Other options would be a form of house hacking, to make your housing costs neutral or even forego buying the home to really boost your investments for a year or more. Suggested reading: https://www.biggerpockets.com/renewsblog/2016/07/02/first-time-home-buying/

[Rionoskae]

I know this is off topic...

But What exactly do you do in IT to make 120k at 26 years old?


**Reason I ask: I'm also in IT and don't make anywhere near that!

[ryand]

Thanks for the replies everyone!  FWIW, the house is near very nice neighborhoods on the west side of Phoenix, so I'm not "too" worried about location persay, as the area is definitely becoming popular with a lot of "snowbirds".  I prefer the amount of land right now for hobby-like agricultural purposes (vineyards are becoming popular in the area, so might entertain that).  I am more or less thinking worst case scenario and trying to envision a scenario where I lose my job - I  would have to commute about an hour (most IT jobs are on the east side of Phoenix), as well as be jammed up for mortgage payments, as most of my savings would have gone towards the 20% down.  Just trying to get some insight as to what other moustachians would do in this situation, so it's definitely enlightening :)  Thanks again!

As far as work - I'm a senior in the security side of things. I have no idea why I get paid this much, but I also won't complain!  (Also hence the imposter's syndrome title :)) 

[Another Reader]

You can still buy a decent older house in Tempe for $250k.  Adequate schools.  8,000 to 10,000 sf lots are not uncommon.  Not enough for a full vineyard and no cheap irrigation water, but a good place to start.

[alexb2746]

I will also be looking at my first house next year... Are you looking into turnkey homes? Or have you looked into foreclosures or any homes that need some care? I've been doing some preliminary research on foreclosures and fixer-uppers and hoping to get a deal and maybe do some fun hard work. MMM has talked about carpentry multiple times.

 

[thedayisbrave]

Just remember that you will eventually have to mow (and continue to mow) that acre.  Ever since buying my own place with a fenced in yard (that I have to maintain.. whoops didn't think about that when buying), I am waaay more leery of large yards unless you know exactly what you are getting into.  My yard is TINY and I still procrastinate on yard work to a ridiculous level.  But I recognize that YMMV.

[zoltani]

Your post made me think of
https://www.youtube.com/watch?v=eqhUHyVpAwE

I have nothing else to offer, lol