Author Topic: Overpaying for a house that allows a walking commute - worth it?  (Read 4820 times)

drobots

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I'm under contract for a house that I already offered a bit more than I planned to on. After inspection I found out the roof needs to be replaced within about 5 years, so am asking for a credit from the sellers. They came back with a credit of $2k for a job that could easily be $10-15k, so I'm getting quotes to back up my request for a higher credit.

However, this house is perfect - I can walk to work, and my wife can walk to a train station for a short 20 minutes ride. We're within close biking distance of day care and a grocery store, and walking/biking from several parks. The turnover in this area is very low, so the likelihood of a house like this coming on the market again any time soon is very low. However, with all the work that needs to be done on the house (mostly face-lifts like updated kitchen, GFCI outlets, landscaping, etc.) on top of the already high price, it's unlikely we would ever recover what we need to put into it. That said, as soon as we sell our other house, we can pay off our mortgage and start investing our newly freed-up income into REITs or some other investment vehicle that will be better for us.

So my question, fellow mustachians - do I bite the bullet and just eat the $10-15k short term loss for a long term gain in lifestyle, and recover the loss through other investment vehicles? Or do I need to look at this from a purely black and white financial investment and walk away?

nereo

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Re: Overpaying for a house that allows a walking commute - worth it?
« Reply #1 on: October 06, 2015, 11:33:20 AM »
I'm under contract for a house that I already offered a bit more than I planned to on. After inspection I found out the roof needs to be replaced within about 5 years, so am asking for a credit from the sellers. They came back with a credit of $2k for a job that could easily be $10-15k, so I'm getting quotes to back up my request for a higher credit.

However, this house is perfect - I can walk to work, and my wife can walk to a train station for a short 20 minutes ride. We're within close biking distance of day care and a grocery store, and walking/biking from several parks. The turnover in this area is very low, so the likelihood of a house like this coming on the market again any time soon is very low. However, with all the work that needs to be done on the house (mostly face-lifts like updated kitchen, GFCI outlets, landscaping, etc.) on top of the already high price, it's unlikely we would ever recover what we need to put into it. That said, as soon as we sell our other house, we can pay off our mortgage and start investing our newly freed-up income into REITs or some other investment vehicle that will be better for us.

So my question, fellow mustachians - do I bite the bullet and just eat the $10-15k short term loss for a long term gain in lifestyle, and recover the loss through other investment vehicles? Or do I need to look at this from a purely black and white financial investment and walk away?
I don't understand why this still can't be an economical decision?  Living within walking distance to work is a very real benefit - by some estimates every mile you don't have to drive to work saves you $795/year.  If you can cut out a 10 mile commute by buying this house, you literally save enough money every year to pay for the roof within the firsts 12-15 months. 

Quality of life is a bit harder to measure, but if you are happier living here and healthier those are very real benefits that have economical take-a-ways too.

My only question is: what does the alternative look like?  would a similar home with a commute cost a few thousand$ less, or 100s of thousands$ less?  what's the breakdown there look like?

drobots

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Re: Overpaying for a house that allows a walking commute - worth it?
« Reply #2 on: October 06, 2015, 11:54:04 AM »
Thanks for the feedback - I like the thought of quantifying the non-house benefits (walking vs. driving) and thinking of that as cost savings. This house is around the $350k mark, which is a bit high for the area but not outrageous by any means. It's also one of very few old brick homes vs the more common wood frame homes (I'm a fan of the brick). Since the turnover in the area is so low, not buying this would probably mean moving farther out, driving more, possibly even two cars, which is something we really don't want to do.

Ricky

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Re: Overpaying for a house that allows a walking commute - worth it?
« Reply #3 on: October 06, 2015, 12:05:36 PM »
Well any number you give is us pretty meaningless without context. If you're looking for validation to buy something that doesn't make sense financially, we can't do that without...financials. Just know that for most people, a house is the most emotional asset you'll own. That can be a good or a bad thing. Bad in that you can overpay and it could hurt you financially. Good in that you could overpay and it benefit you in other ways like nereo mentioned.

Personally, I'd say if it heavily influences the quality of your life for the better, it would be worth it to me. Where you live is important. How much you spend is important but not as much if you can afford it IMO. About your job...I wouldn't buy a place just because it's close to work (unless it made sense as an actual investment and you were to rent it out and move in the future), I would rent. You won't be at that job forever, thus maybe not as happy at that house forever.

Daleth

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Re: Overpaying for a house that allows a walking commute - worth it?
« Reply #4 on: October 06, 2015, 02:29:12 PM »
Based on what you're saying, I would go for it, definitely.

mpcharles

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Re: Overpaying for a house that allows a walking commute - worth it?
« Reply #5 on: October 06, 2015, 05:49:55 PM »
My 2 cents. Buy it.

We purchased ours knowing it had a average roof. Started leaking in winter. Got numerous quotes from 5000-30000$ to fix.

Found a retired builder, he got up found a few broken and moved tiles, cost me $400.

Morale of story never trust a contractor. If it will improve your life go for it. If the rest of the house is good. Fixing the roof means at least you know it's done for a long time :)

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storx

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Re: Overpaying for a house that allows a walking commute - worth it?
« Reply #6 on: October 06, 2015, 08:26:37 PM »
Why not just do the roof yourself with a buddy.. its not a very hard thing to do.. I redid mine over a 2 day weekend with my neighbor.. spent 1 day tearing all the old roof off.. then the 2nd day putting the new roof back on.. I did it for a fraction of what the companies around me wanted and i gained some nice tools i didnt have before during the process like a air powered nailer..

drobots

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Re: Overpaying for a house that allows a walking commute - worth it?
« Reply #7 on: October 06, 2015, 09:59:55 PM »
I'm tempted to DIY - I've laid shingles before - but am not confident about my skills around roof penetrations, chimneys, and ridges. I'm sure this can be learned through some youtube videos but this is one job I don't mind hiring out. It's also an old house so there could be some plywood replacement involved and A LOT of new tools (including the basics like a ladder) that I would need. I got a pretty good quote today, and thought more about all the benefits and savings of not having to drive to work, so even with the unimpressive credit they are offering us we might go for it.

Thanks for the help!

storx

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Re: Overpaying for a house that allows a walking commute - worth it?
« Reply #8 on: October 07, 2015, 01:41:27 PM »
Idk, i was able to do mine with better shingles than the cheapest quote, the shingles i went with are guaranteed for life through homedepot, they just dont cover the labor if they need replacing.. its not a hard job and what you are talking about is simple, they make tubes of stuff you put around chimeny and such, then the shingles go over the edge gaurding, then you seal it up at the top with with more goo... was simple as putting silicone in a tub.. the hardest part of doing it yourself is just the physical demand of doing it.. outside of that.. its stupid easy

Bearded Man

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Re: Overpaying for a house that allows a walking commute - worth it?
« Reply #9 on: October 08, 2015, 07:57:20 AM »
I'd only buy it if you know you will both stay at these jobs a long time. Even then, I'd hold out and negotiate harder, especially if they have no other offers...

Even if you don't buy this one, if you wait a bit something else better will come along.

MayDay

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Re: Overpaying for a house that allows a walking commute - worth it?
« Reply #10 on: October 08, 2015, 11:16:38 AM »
Well, we just sold our house in June, which needed a new roof in 1-3 years, fully disclosed to the buyer, and all they asked for was a 2K roof credit (which we didn't end up giving to them!).

So I am kind of surprised they budged at all with 5 years until a new roof.  Asphalt shingles are typically 15 year, so fully 1/3 of houses need a new roof in 5 years or less.  Not a big deal to me as a potential buyer unless it is actively leaking or otherwise needs fairly immediate attention.

Of course all real estate is local, but the other house we sold in a totally different market also had an old roof and not a single potential buyer mentioned the roof. 

Bearded Man

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Re: Overpaying for a house that allows a walking commute - worth it?
« Reply #11 on: October 08, 2015, 04:20:37 PM »
Buyer of my last house failed to disclose on form 17 that the master bath tub leaked. My inspector only caught it because he uses infrared thermal imaging, but the signs were there that they knew about it, tried to fix it, didn't work, and just stopped using the tub. The ceiling had paint marks where someone went in and they replaced the dry wall and painted over it. It obviously didn't stop the leak because the water that had been sitting in the pipes was GREEN from the copper. So they tried to fix it, were unable to, and just stopped using the tub. I asked for a 4K credit and they gave it, largely because by the time of the inspection, they were already packed and ready to move, not to mention they clearly knew about it but failed to disclose...

MoonShadow

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Re: Overpaying for a house that allows a walking commute - worth it?
« Reply #12 on: October 08, 2015, 10:37:48 PM »

So my question, fellow mustachians - do I bite the bullet and just eat the $10-15k short term loss for a long term gain in lifestyle, and recover the loss through other investment vehicles? Or do I need to look at this from a purely black and white financial investment and walk away?

If it were me, I'd eat the $15k for the roof.  That's still a rather small surprise in my experience, and you could easily save that much every single year by losing the car and biking/walking/busing to work year round.  Get whatever you can from the sellers, then worry about getting a new roof when you can.  I've replaced entire HVAC systems that cost more than that before.

And don't worry too much about getting your money back out.  That really don't happen on average; after considering inflation, maintenance, etc.  That's just something that realtors like to tell you.  You will always be very lucky to break even on a house sale if you include ALL of your costs.

andyp2010

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Re: Overpaying for a house that allows a walking commute - worth it?
« Reply #13 on: October 08, 2015, 11:57:13 PM »
If there's not much turnover in that area, it might be because there's not much demand, meaning you can lean on them a bit harder. Why are they selling?

I think it might have been Dolf De Roos that said 'The bargain of a lifetime comes up about once a month'. That's how I base my property investment decisions and I'm happy doing that with my own home too but I understand emotions come into play.

clarkfan1979

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Re: Overpaying for a house that allows a walking commute - worth it?
« Reply #14 on: October 12, 2015, 10:12:33 PM »
If there's not much turnover in that area, it might be because there's not much demand, meaning you can lean on them a bit harder. Why are they selling?

I think it might have been Dolf De Roos that said 'The bargain of a lifetime comes up about once a month'. That's how I base my property investment decisions and I'm happy doing that with my own home too but I understand emotions come into play.

If there is less turnover (less people selling), then demand is going to be higher. If there is a lot of turnover, you can just wait for the next one. If it's your only realistic option to live close to work,  I would do it. If you can realistically wait another year and have 2-3 more deals pop up, then maybe wait.

andyp2010

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Re: Overpaying for a house that allows a walking commute - worth it?
« Reply #15 on: October 12, 2015, 10:48:05 PM »
If there's not much turnover in that area, it might be because there's not much demand, meaning you can lean on them a bit harder. Why are they selling?

I think it might have been Dolf De Roos that said 'The bargain of a lifetime comes up about once a month'. That's how I base my property investment decisions and I'm happy doing that with my own home too but I understand emotions come into play.

If there is less turnover (less people selling), then demand is going to be higher. If there is a lot of turnover, you can just wait for the next one. If it's your only realistic option to live close to work,  I would do it. If you can realistically wait another year and have 2-3 more deals pop up, then maybe wait.

From my understanding, I do like to dabble in economics books, If demand then goes up because of a low amount of stock, then the price will go up which then incentivises more people to sell.