Author Topic: Most You Would Spend on Personal Residence?  (Read 4277 times)

LearningMustachian72

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Most You Would Spend on Personal Residence?
« on: June 08, 2020, 09:58:14 PM »
Hey!

Bought my first home several years ago, which is very affordable related to our income allowing us to save roughly 60% of our income.

We plan to live here for at least another 5 years and then purchase something we do not plan on moving from again.

My question is...what is the most you would spend on a personal residence?  Is there some calculation of rule or thumb you would use?

Personally, we are not bare bones FI...like traveling and enjoying our hobbies...currently 30 and are okay working til 45-50.

Trying to ballpark what I should be planning for.  Thanks!

ixtap

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Re: Most You Would Spend on Personal Residence?
« Reply #1 on: June 08, 2020, 10:22:20 PM »
I always spend the least amount that I can be comfortable in, but as the saying goes, location matters, too.

Which is to say, how much you should spend is a function of how much you have, what your priorities are, how much longer you are willing to work...

Paul der Krake

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Re: Most You Would Spend on Personal Residence?
« Reply #2 on: June 09, 2020, 01:56:54 AM »
I don't know, 10 million dollars?

former player

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Re: Most You Would Spend on Personal Residence?
« Reply #3 on: June 09, 2020, 03:25:59 AM »
Location and position over size, every time.  Which probably puts a financial limit on it but not that much of one.

Steeze

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Re: Most You Would Spend on Personal Residence?
« Reply #4 on: June 09, 2020, 04:00:04 AM »
I want to be able to max my retirement accounts, pay all my bills, and keep spending the same on only the lower of our two incomes.

I would be comfortable spending up to any amount as long as that was true. Right now that is about 1x annual income mortgaged.
« Last Edit: June 09, 2020, 04:08:44 AM by Steeze »

MudPuppy

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Re: Most You Would Spend on Personal Residence?
« Reply #5 on: June 09, 2020, 04:09:55 AM »
One of our (net) paychecks is my absolute maximum. Our mortgage was about 1.75x our annual gross.

rothwem

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Re: Most You Would Spend on Personal Residence?
« Reply #6 on: June 09, 2020, 06:16:29 AM »
$250,000.

Itís a silly mental block, especially since we can easily afford more and thereís not much inventory in this range in our area.  Iím in a pretty crappy location right now because of my price limit.

zinnie

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Re: Most You Would Spend on Personal Residence?
« Reply #7 on: June 09, 2020, 06:29:00 AM »
The way I look at it: figure out your priorities and then spend the least amount you can to meet the top ones. For us, that's a location near transit and parks, with enough space for a backyard garden. We typically also focus a lot on the monthly payment--for whatever reason $1500 including taxes has been the magic number for us. In a more expensive area, that means putting more down to arrive at that payment. And living in a multi-family instead of a single family.


talltexan

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Re: Most You Would Spend on Personal Residence?
« Reply #8 on: June 09, 2020, 06:45:52 AM »
You want to be very specific about the goals for the house, and some of these involve where you see your family being in five years. With every home purchase, we try to look at a range of different houses to get a sense of what a few extra dollars can buy (and whether that's worth it). I distinctly remember our realtor showing us two different houses--priced at $400,000 and $549,000--and my wife telling me the $400,000 house actually seemed to fit our family better.

Ultimately, having the list of written goals for the move made it very easy to pass on certain houses, and also made it easy to tell when we'd found a house that would work. Frankly, we didn't expect this shelter-in-place, but we've come through better than expected because of having gotten the move done sooner, and benefitted tremendously from being in the new location.

ixtap

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Re: Most You Would Spend on Personal Residence?
« Reply #9 on: June 09, 2020, 07:58:44 AM »
$250,000.

Itís a silly mental block, especially since we can easily afford more and thereís not much inventory in this range in our area.  Iím in a pretty crappy location right now because of my price limit.

That makes me sad.

Car Jack

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Re: Most You Would Spend on Personal Residence?
« Reply #10 on: June 09, 2020, 08:04:38 AM »
2 1/2 times gross income.  We did that with our first house, using 20% down, borrowed from my parents and for every subsequent house.  The bank gave us that number at the start of our search and it's served us well.  Never been house poor and we've now been mortgage free for over a decade.

v8rx7guy

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Re: Most You Would Spend on Personal Residence?
« Reply #11 on: June 09, 2020, 08:43:11 AM »
I'd have a real mental block at 1/2 million.  We bought ours for 250K 7 years ago, so I've never spent even close to that... but in the future I would have a real hard time spending over a half million for whatever reason.

AccidentialMustache

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Re: Most You Would Spend on Personal Residence?
« Reply #12 on: June 09, 2020, 08:50:29 AM »
Align house with priorities. Similar to talltexan, we saw a 400 or 450k house on the search for our current one (260k). The 400 had granite counters and all the fancy-fancy-fancypants. Including a 6-room master bedroom suite including walk in closet, powder room, bathroom, office, 2nd closet/gym, and of course the bedroom itself. But the kitchen, despite the granite was not well designed. There was too little counter space, it didn't have power in the right locations for appliances, there wasn't a lot of storage, etc. It was really for show and for reheating takeout, not cooking. Similar, there was a formal dining room that wasn't sized to hold more than a 4-seat table.

Our current house has tons of counter and cabinet space. No, it isn't granite (although it is marble, which I'm not super fond of either). But the layout is good and there's tons of power available. The dining room isn't formal, it is open to the living room but in addition to the usual 6-person table we can shift stuff and squeeze, add a card table, and seat 10 if they are friendly. Thanksgiving with both sets of parents, plus an uncle or two? Yes, please.

Being less expensive was just a side-benefit, to be honest.

That said, if I buy a house 25 years down the line, um, yeah, I expect to spend twice as much on it. 3% inflation will do that.

MudPuppy

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Re: Most You Would Spend on Personal Residence?
« Reply #13 on: June 09, 2020, 08:59:25 AM »
I dislike the kitchen and yard size of our house, but I do like being able to walk to my dentist, a couple restaurants, a park, and a small market. Our smallish town lacks public transit, so the trade off was nice.

martyconlonontherun

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Re: Most You Would Spend on Personal Residence?
« Reply #14 on: June 09, 2020, 09:03:23 AM »
The 'most' i would spend on a house is what the bank would allow. IDK maybe a $1m (I live in a $170k house)?Like most things, I would really consider the value, on-going costs, and quality of life rather than a max price.

Taxes -I live in Milwaukee county so taxes a little higher. $5k a year. A $500k house is closet to $12k a year. I'm motivated to buy low priced house whereas my in-laws have a $700k house with $4k in taxes. I'm way more likely to buy a big house if I'm not bleeding money
Size/Shape - Is the house going to need excessive repairs or so big that I can't afford up-keep
Future Value - Is it going to grow in value?
Location - I would pay more in a great location for a better quality of life


rothwem

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Re: Most You Would Spend on Personal Residence?
« Reply #15 on: June 09, 2020, 09:12:17 AM »
$250,000.

Itís a silly mental block, especially since we can easily afford more and thereís not much inventory in this range in our area.  Iím in a pretty crappy location right now because of my price limit.

That makes me sad.

Iíll survive! My location isnít THAT bad, Itís just not very walkable.

ketchup

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Re: Most You Would Spend on Personal Residence?
« Reply #16 on: June 09, 2020, 09:18:11 AM »
No specific guidance.  Minimum that fits our requirements. 

Presently we're renting at a single digit percentage of our gross income, so it's pretty hard to fuck that up.  We're planning on moving either later this year or next year, and it will absolutely be higher cost.  But far higher quality of life (closer to work/airport, and a house that isn't 100+ years old and falling apart at times), or else it wouldn't be worth it in the first place.

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Re: Most You Would Spend on Personal Residence?
« Reply #17 on: June 09, 2020, 09:21:18 AM »
When we upgraded our house here (From $135k to $300k), $300k seemed insanely extravagant.

When we looked at houses in the Seattle area, just under $1 million seemed reasonable. 

So this question doesn't really make sense to me; there are way too many other factors.

maisymouser

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Re: Most You Would Spend on Personal Residence?
« Reply #18 on: June 09, 2020, 09:30:10 AM »
My mental block is $350k. I figure we will be able to FIRE at $1.5M or so (not including property, and assuming we can get affordable health care). By that measure it would be silly for any larger of a fraction of assets to be in a primary residence.

Our current house (House #2) cost us $227k but I would like to move when it seems smart to do so. We downsized and prioritized proximity to work, which I relish- however, we compromised in lot size and can't garden much now (boo hoo). House #1 cost $275k and has most of what we wanted in a house but had to move for my work; House #1 is rented out now. From a purely financial perspective we probably should sell House #1. Instead we are renting it out and seeing what happens over the next few years. We're going to need to decide whether we stick around in this house and possibly pay for private school for our now-2-year-old, or move again.

If something drastic happens and I lose my current job we'll move back to House #1 and enjoy all the benefits that property has to offer, including a good school district. If not, we may upgrade and make the decision to get closer to that daunting $350k limit. But in that case we would seriously consider selling House #1 and #2, and invest the surplus.

Happy to hear any recommendations if y'all have them, I think about this a lot!

Fishindude

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Re: Most You Would Spend on Personal Residence?
« Reply #19 on: June 09, 2020, 09:40:56 AM »
Houses don't do much for me.   I buy land that we like, then figure we can then build or remodel a suitable living quarters.   I'm also a big fan of having plenty of shop / garage space.
Our current place with all land and buildings included is worth somewhere around $800k - $1 mil, but the house itself probably only represents $150-200k of it.

betsbillabong

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Re: Most You Would Spend on Personal Residence?
« Reply #20 on: June 10, 2020, 05:49:25 PM »
I think this is so dependent on location. I'm looking for a house now and it's really hard to find anything within a 20-minute drive that is under 500K. In some places, that would be 50K.

Houses are more of a multiple of my income than I'm comfortable with, but it would be hard for me to change locations (I'm an academic), and rents and home prices are unlikely to go down in the future, so I'm planning to find a place that will be good for us for the next thirty years.

My university also offers me a shared appreciation loan for the down payment; I'd probably choose to rent if I had a down payment I could invest.

evme

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Re: Most You Would Spend on Personal Residence?
« Reply #21 on: June 10, 2020, 08:27:42 PM »
For me, it's not a fixed dollar figure but rather a percentage of net worth. I would be comfortable purchasing a personal residence up to about 20-25% of NW, but not much more than that. If I was still working a regular job then it would be maximum 2-3 times annual salary.

Trifele

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Re: Most You Would Spend on Personal Residence?
« Reply #22 on: June 13, 2020, 04:54:41 AM »
Houses don't do much for me.   I buy land that we like, then figure we can then build or remodel a suitable living quarters.   I'm also a big fan of having plenty of shop / garage space.
Our current place with all land and buildings included is worth somewhere around $800k - $1 mil, but the house itself probably only represents $150-200k of it.

This is us, exactly.  We look for land that will work for us, and then remodel or build the house.  In our current place we basically bought the land and got the house for free (very little value assigned to the house).  We considered demolishing and building from scratch, but then ended up rehabbing.  In our case the mortgage amount was about 50% of our annual gross income. 

GuitarStv

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Re: Most You Would Spend on Personal Residence?
« Reply #23 on: June 13, 2020, 07:36:44 AM »
We bought our home for 380k a little over ten years ago.  Which seemed like a ridiculous overspend.  But renting a comperable place in Toronto was very expensive at the time.  Last year our home was valued at 890k, and rents are much more expensive than when we bought.  I'm not sure I'd pay 890 for our home if we were looking to buy today.

waltworks

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Re: Most You Would Spend on Personal Residence?
« Reply #24 on: June 13, 2020, 12:11:16 PM »
For the actual physical structure, not a whole lot. $300k maybe?

For the location, essentially infinite. I mean, half our NW is tied up in our house because it's exactly where we want to live. The house itself is fairly crappy, the land it sits on is probably worth close to a million bucks.

The house literally set back FIRE by 5+ years. But that's ok with me because I want to live somewhere awesome.

-W

JLee

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Re: Most You Would Spend on Personal Residence?
« Reply #25 on: June 13, 2020, 12:25:40 PM »
I don't know, 10 million dollars?

You could buy a million bananas for that!

spartana

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Re: Most You Would Spend on Personal Residence?
« Reply #26 on: June 13, 2020, 01:04:31 PM »
I don't know, 10 million dollars?

You could buy a million bananas for that!
Or a crappy tear down shack in Calif ;-).

I probably wouldn't spend more than 1/4 my NW (not counting any future income benefits like SS or pension). Which means I wouldn't be buying a current crappy tear down shack in Calif. The fact that I did buy a crappy tear down in coastal Calif only means I bought it long ago during a housing market crash as a fixer foreclosure for about 1/4 its former value and paid cash. Couldn't afford it now.

For me it is more about location then anythi g else. I would rather have a studio condo in an area I loved then a big house on a large lot in an area I was meh about for the exact cost.

SwordGuy

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Re: Most You Would Spend on Personal Residence?
« Reply #27 on: June 13, 2020, 01:18:10 PM »
The 'most' i would spend on a house is what the bank would allow.

I think this is an incredibly bad idea.

I can't imagine handing over the decision on one of the biggest financial purchases I'll make to a third party who will make more money off me if they sell me a bigger mortgage. 

evme

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Re: Most You Would Spend on Personal Residence?
« Reply #28 on: June 13, 2020, 07:09:35 PM »
The 'most' i would spend on a house is what the bank would allow.

I think this is an incredibly bad idea.

I can't imagine handing over the decision on one of the biggest financial purchases I'll make to a third party who will make more money off me if they sell me a bigger mortgage.

I agree with you SwordGuy, but I think the OP was maybe just being literal. The most they could possibly spend on a house is whatever loan amount a bank would give them.

iris lily

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Re: Most You Would Spend on Personal Residence?
« Reply #29 on: June 14, 2020, 01:11:09 AM »
$250,000.

Itís a silly mental block, especially since we can easily afford more and thereís not much inventory in this range in our area.  Iím in a pretty crappy location right now because of my price limit.

Thatís funny, because thatís my number as well. But Iím in a low cost of living area so we can get a nice house for $250,000.

waltworks

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Re: Most You Would Spend on Personal Residence?
« Reply #30 on: June 14, 2020, 09:39:03 AM »
$250,000.

Itís a silly mental block, especially since we can easily afford more and thereís not much inventory in this range in our area.  Iím in a pretty crappy location right now because of my price limit.

Here's something I don't understand about this. I talk to people interested in personal finance/FIRE regularly who say "well I live in this horrible location in this crappy apartment because it's so cheap so I can FIRE sooner".

And they aren't taking into account their time commuting back and forth to work/store/etc, their lack of local exercise/park/social options, etc. There are financial and emotional/health costs there that are significant. For example, if you gain just 5 hours a week of less commuting, over a decade that's like being FIRE for an extra 100 days or so.

Then there's the fact that, while it probably won't do as well as buying stocks, the house isn't just going away when you're done living there. You spend $500k instead of $250k on the house because it's in a nicer location and when you're done living there you *sell the house* for twice as much as the $250k place and get that money back. Of course it's not that simple - taxes and maintenance will probably cost more. But it's still not like it's a total loss.

If actual total life satisfaction/freedom to do what you want matters, then the decision is not as easy as just having a hard-and-fast number limit on what you'll spend on housing. Even if just minimizing your time in your cubicle at all costs is the goal, it's not that simple.

-W


rmorris50

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Re: Most You Would Spend on Personal Residence?
« Reply #31 on: June 14, 2020, 09:53:11 AM »
I kinda took a different approach. I literally did a very detailed Excel cash flow projection for the next 45 years (age 90). Projected out all sources of income, taxes, expenses over those 45 years and assumed 5% average returns and 1.25% inflation. It took some research to get all the inputs, but it was worth it.

This turned out to be the best thing I ever did to get comfortable with our financial picture and see what levers we have to meet our goals. It is much more informative than just tracking NW and using rule-of-thumb withdrawal assumptions, and gave me a good feel for how much longer we truly need to work.

Then using that Excel tool, I backed into what level of mortgage payment we could reasonably carry into retirement. So the PITI we backed into is no more than $2750 a month. Then we looked at what house we could get for that given the location and size we wanted. When we found a house that worked we also made sure the purchase prices wasn't crazy compared to our NW. As it turns out it's right at 25%, the max I felt comfortable with.

P.S. I did assume our expenses capped out at age 80 ,figuring inflation would be offset by decreased spending at that point. I also was able to leave our Roth's untouched in my projection, since I want to leave those as the "oh crap" fund, especially for the healthcare wildcard :-)


GuitarStv

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Re: Most You Would Spend on Personal Residence?
« Reply #32 on: June 14, 2020, 10:42:14 AM »
$250,000.

Itís a silly mental block, especially since we can easily afford more and thereís not much inventory in this range in our area.  Iím in a pretty crappy location right now because of my price limit.

Here's something I don't understand about this. I talk to people interested in personal finance/FIRE regularly who say "well I live in this horrible location in this crappy apartment because it's so cheap so I can FIRE sooner".

And they aren't taking into account their time commuting back and forth to work/store/etc, their lack of local exercise/park/social options, etc. There are financial and emotional/health costs there that are significant. For example, if you gain just 5 hours a week of less commuting, over a decade that's like being FIRE for an extra 100 days or so.

Then there's the fact that, while it probably won't do as well as buying stocks, the house isn't just going away when you're done living there. You spend $500k instead of $250k on the house because it's in a nicer location and when you're done living there you *sell the house* for twice as much as the $250k place and get that money back. Of course it's not that simple - taxes and maintenance will probably cost more. But it's still not like it's a total loss.

If actual total life satisfaction/freedom to do what you want matters, then the decision is not as easy as just having a hard-and-fast number limit on what you'll spend on housing. Even if just minimizing your time in your cubicle at all costs is the goal, it's not that simple.

-W

I pay less on taxes and maintenance for my 890k house than my mother does for her 300k house (in a different city).  Maintenance and taxes do not go up just because your home us worth more.

waltworks

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Re: Most You Would Spend on Personal Residence?
« Reply #33 on: June 14, 2020, 10:53:39 AM »
I pay less on taxes and maintenance for my 890k house than my mother does for her 300k house (in a different city).  Maintenance and taxes do not go up just because your home us worth more.

Sure, it'll vary depending on the specific location. In *general* a more expensive house will cost more to own, though. Plumbers and roofers charge more in a rich gated community than in a working class neighborhood, because they can.

I pay $3000 a year in taxes on my house, and it's worth a bit north of a million bucks. I know people in TX and the mid-Atlantic/New England who pay ten times that on a house with similar value. That doesn't mean that my (or your) experience is normal, though, especially if we're talking about choosing between 2 houses in the same city/town.

-W

waltworks

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Re: Most You Would Spend on Personal Residence?
« Reply #34 on: June 14, 2020, 10:56:09 AM »
I kinda took a different approach. I literally did a very detailed Excel cash flow projection for the next 45 years (age 90). Projected out all sources of income, taxes, expenses over those 45 years and assumed 5% average returns and 1.25% inflation. It took some research to get all the inputs, but it was worth it.

I'm curious (I did/do the same kind of planning) - are you assuming you'll stay in the same house the whole time?

In my case, I'm fine paying out the nose for a house where I want because it needs to house 6+ family members. In 17ish (gah) years when all the kids are out of the house we'll sell it and move into something much smaller and that chunk of money will go back into the market.

Even if we wanted to stay in our place until we die, it's full of stairs and takes a ton of work to maintain. No way will I want to deal with that when I'm 85 (if I'm lucky enough to live that long).

-W

rothwem

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Re: Most You Would Spend on Personal Residence?
« Reply #35 on: June 14, 2020, 07:50:12 PM »
$250,000.

Itís a silly mental block, especially since we can easily afford more and thereís not much inventory in this range in our area.  Iím in a pretty crappy location right now because of my price limit.

Here's something I don't understand about this. I talk to people interested in personal finance/FIRE regularly who say "well I live in this horrible location in this crappy apartment because it's so cheap so I can FIRE sooner".

And they aren't taking into account their time commuting back and forth to work/store/etc, their lack of local exercise/park/social options, etc. There are financial and emotional/health costs there that are significant. For example, if you gain just 5 hours a week of less commuting, over a decade that's like being FIRE for an extra 100 days or so.

Then there's the fact that, while it probably won't do as well as buying stocks, the house isn't just going away when you're done living there. You spend $500k instead of $250k on the house because it's in a nicer location and when you're done living there you *sell the house* for twice as much as the $250k place and get that money back. Of course it's not that simple - taxes and maintenance will probably cost more. But it's still not like it's a total loss.

If actual total life satisfaction/freedom to do what you want matters, then the decision is not as easy as just having a hard-and-fast number limit on what you'll spend on housing. Even if just minimizing your time in your cubicle at all costs is the goal, it's not that simple.

-W

Youíre not totally wrong. Iíve started a thread on this a couple months ago actually.  Your assumptions just donít apply to my situation though. For one thing, I picked my crappy-ish location because it was close to work, Iím 1.3 miles away. 

Another thing that makes me nervous about spending a bunch on a personal residence is that expensive houses here turn MUCH slower, while sub 250k houses turn almost instantly. I can also make an okay rental
out of this house if thatís something I decide to do at some point.

In my field, if I lose my job, Iím going to have to move because thereís usually only one or two people that do what I do in a given city. If Iíve got to leave because I get laid off, I donít want to worry about my fancy house in a fancy neighborhood sitting on the market for six months with a $3000 mortgage sucking my emergency fund dry.

So anyways, $250k limit. Maybe Iíll upgrade at some point so I can walk to a coffee shop or a park, but Iím going to stay where Iím at for now and bank the extra $2000/month.

rmorris50

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Re: Most You Would Spend on Personal Residence?
« Reply #36 on: June 14, 2020, 08:19:52 PM »
I kinda took a different approach. I literally did a very detailed Excel cash flow projection for the next 45 years (age 90). Projected out all sources of income, taxes, expenses over those 45 years and assumed 5% average returns and 1.25% inflation. It took some research to get all the inputs, but it was worth it.

I'm curious (I did/do the same kind of planning) - are you assuming you'll stay in the same house the whole time?

In my case, I'm fine paying out the nose for a house where I want because it needs to house 6+ family members. In 17ish (gah) years when all the kids are out of the house we'll sell it and move into something much smaller and that chunk of money will go back into the market.

Even if we wanted to stay in our place until we die, it's full of stairs and takes a ton of work to maintain. No way will I want to deal with that when I'm 85 (if I'm lucky enough to live that long).

-W

I love my Excel cash flow projection spreadsheet, I swear I play with it almost every day contemplating different scenarios. We are actually building a house in Charlotte at the moment, and for now I am assuming we'll be there the rest of our lives and don't prepay the mortgage. But you know, we all have the best laid plans and then life happens. Maybe we move to FL in 10-15 years. Maybe we downsize and stay in Charlotte, who knows. Like you said, at some point we'd want to downsize and not have stairs, but kinda hard to plan when that may happen. I think there will be one more move/downsize into permanent retirement in our future, and that we'll have the resources to make it happen!

Dicey

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Re: Most You Would Spend on Personal Residence?
« Reply #37 on: June 14, 2020, 08:28:27 PM »
There is no way to answer this question in any meaningful way without more input from you, OP. Either provide more info or start a case study if you want more than a bunch of opinions that are based on where other people live. Their opinions are just fine, but they are not a whole lot of use in judging your personal situation. And setting an arbitrary limit that puts you living in a shitty place just boggles the mind. Tomorrow's a promise, but not a guarantee. Striving to always live a balanced life is a much more worthwhile goal.
« Last Edit: June 15, 2020, 07:31:31 AM by Dicey »

evme

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Re: Most You Would Spend on Personal Residence?
« Reply #38 on: June 14, 2020, 10:46:01 PM »
I love my Excel cash flow projection spreadsheet, I swear I play with it almost every day contemplating different scenarios.

Care to share you excel spreadsheet as a Google doc? I'd be curious to give it a try with my numbers.

spartana

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Re: Most You Would Spend on Personal Residence?
« Reply #39 on: June 15, 2020, 08:07:56 AM »
There is no way to answer this question in any meaningful way without more input from you, OP. Either provide more info or start a case study if you want more than a bunch of opinions that are based on where other people live. Their opinions are just fine, but they are not a whole lot of use in judging your personal situation. And setting an arbitrary limit that puts you living in a shitty place just boggles the mind. Tomorrow's a promise, but not a guarantee. Striving to always live a balanced life is a much more worthwhile goal.
Yep this ^. If the OP is just looking for a number for a house purchase (not counting stuff like taxes, HOA, etc) then it's going to vary too much due to location to be of any value. $250k for example may get you a lake front mcmansions in the Midwest but would barely cover the down payment for a small hovel or one bedroom condo in a bad area in some HCOL areas like coastal Calif or NYC.

rothwem

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Re: Most You Would Spend on Personal Residence?
« Reply #40 on: June 15, 2020, 09:21:24 AM »
There is no way to answer this question in any meaningful way without more input from you, OP. Either provide more info or start a case study if you want more than a bunch of opinions that are based on where other people live. Their opinions are just fine, but they are not a whole lot of use in judging your personal situation. And setting an arbitrary limit that puts you living in a shitty place just boggles the mind. Tomorrow's a promise, but not a guarantee. Striving to always live a balanced life is a much more worthwhile goal.
Yep this ^. If the OP is just looking for a number for a house purchase (not counting stuff like taxes, HOA, etc) then it's going to vary too much due to location to be of any value. $250k for example may get you a lake front mcmansions in the Midwest but would barely cover the down payment for a small hovel or one bedroom condo in a bad area in some HCOL areas like coastal Calif or NYC.

Isnít location a large part of it though? Especially for the FIRE folks whoís income doesnít scale if they were to live in a HCOL area.  You donít HAVE to live where you currently live.  One of the reasons I live in NC is that the ratio of pay to cost of living is higher compared to somewhere like SoCal or NYC.

MaybeBabyMustache

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Re: Most You Would Spend on Personal Residence?
« Reply #41 on: June 15, 2020, 09:32:00 AM »
More than we'd like. We're in the bay area, and have a very short commute (7 miles, which can actually take ~30 minutes, depending on the time of day), comparatively. We opted for the distance from work vs cost. Both actual house value & property tax are incredibly high here. We can afford it, because we also make two bay area salaries, but as a general principle, I reject spending this much on housing.

We have five more years left before our youngest graduates from high school. After that, we will re-evaluate & likely move a few hours away. Good weather, way cheaper. With the way WFH is going, only one of us needing to go to the office 1-2x/week would make it feasible.

KateFIRE

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Re: Most You Would Spend on Personal Residence?
« Reply #42 on: June 15, 2020, 04:01:32 PM »
We have a house that is 1.5x our income. We paid it off and have lived here 6 years. But I want to move!! And I want to get a super nice house! Dream house!! Our next house we are looking to spend 4x our income.

talltexan

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Re: Most You Would Spend on Personal Residence?
« Reply #43 on: June 16, 2020, 12:13:02 PM »
I kinda took a different approach. I literally did a very detailed Excel cash flow projection for the next 45 years (age 90). Projected out all sources of income, taxes, expenses over those 45 years and assumed 5% average returns and 1.25% inflation. It took some research to get all the inputs, but it was worth it.

I'm curious (I did/do the same kind of planning) - are you assuming you'll stay in the same house the whole time?

In my case, I'm fine paying out the nose for a house where I want because it needs to house 6+ family members. In 17ish (gah) years when all the kids are out of the house we'll sell it and move into something much smaller and that chunk of money will go back into the market.

Even if we wanted to stay in our place until we die, it's full of stairs and takes a ton of work to maintain. No way will I want to deal with that when I'm 85 (if I'm lucky enough to live that long).

-W

I love my Excel cash flow projection spreadsheet, I swear I play with it almost every day contemplating different scenarios. We are actually building a house in Charlotte at the moment, and for now I am assuming we'll be there the rest of our lives and don't prepay the mortgage. But you know, we all have the best laid plans and then life happens. Maybe we move to FL in 10-15 years. Maybe we downsize and stay in Charlotte, who knows. Like you said, at some point we'd want to downsize and not have stairs, but kinda hard to plan when that may happen. I think there will be one more move/downsize into permanent retirement in our future, and that we'll have the resources to make it happen!

Glad to see another Charlotte person here! I live north of the city (in Huntersville, actually), and I tried to think through how much it takes to achieve various family goals wrt location. Those involved schools, proximity to family (currently very important), and proximity to activities (currently  not so important).

In the end, my 10.5 mi commute was increased to 17 miles, but the length of that commute is now completely irrelevant.

I'm a red panda

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Re: Most You Would Spend on Personal Residence?
« Reply #44 on: June 16, 2020, 01:56:28 PM »
I don't know, 10 million dollars?

You could buy a million bananas for that!

You are spending way too much money per banana....

martyconlonontherun

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Re: Most You Would Spend on Personal Residence?
« Reply #45 on: June 16, 2020, 03:25:58 PM »
The 'most' i would spend on a house is what the bank would allow.

I think this is an incredibly bad idea.

I can't imagine handing over the decision on one of the biggest financial purchases I'll make to a third party who will make more money off me if they sell me a bigger mortgage.

I agree with you SwordGuy, but I think the OP was maybe just being literal. The most they could possibly spend on a house is whatever loan amount a bank would give them.
Tried being funny, but my overall point is if I find great value in a house my upper limit is probably what the bank will lend me. Perfect house that is underpriced, with Giannis Antetokounmpo living next door so our kids can be BFFs, lake access, great school system, trails, areas to host people, perfect condition and low taxes, etc ... sure I would pay millions for it and eat beans/rice, have no car, not travel etc. As a mustachian, it is all about value.

Most houses don't have that kind of value to me so I'm currently living in the cheapest house my wife will let. $170k purchase price with probably $30k in renovations over 3 years. Wisconsin has high taxes, so it makes sense for a cheaper house. If I was in Arizona, I could see us in a $600k house but again comes down to value (both what i could resell and what i could get out of it).

talltexan

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Re: Most You Would Spend on Personal Residence?
« Reply #46 on: June 17, 2020, 06:52:51 AM »
I think you mean the Giannis who's a really dynamic, young NBA player. I don't know him specifically, but I imagine there's a whole spectrum of NBA players as neighbors, from Dennis Rodman (undesirable) to Tim Duncan (would probably cut your grass along with his since he had the mower out anyway).

I should disclose I'm a lifelong Spurs fan, so I might be biased.

waltworks

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Re: Most You Would Spend on Personal Residence?
« Reply #47 on: June 17, 2020, 09:02:02 AM »
We have an NBA champ, a Super Bowl champ, and too many winter sports Olympians to count in our neighborhood, and they are without exception really nice folks, for what it's worth. No Rodmans, all Duncans (agreed on that one!)

Last year my daughter's kindergarten classmate brought a super bowl ring (in his pocket!) for show and tell. Funny stuff.

-W

Dicey

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Re: Most You Would Spend on Personal Residence?
« Reply #48 on: June 17, 2020, 09:50:13 AM »
We have an NBA champ, a Super Bowl champ, and too many winter sports Olympians to count in our neighborhood, and they are without exception really nice folks, for what it's worth. No Rodmans, all Duncans (agreed on that one!)

Last year my daughter's kindergarten classmate brought a super bowl ring (in his pocket!) for show and tell. Funny stuff.

-W
That is funny. I wonder if daddy knew where his ring was that day?

evme

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Re: Most You Would Spend on Personal Residence?
« Reply #49 on: June 17, 2020, 06:26:40 PM »
Tim Duncan (would probably cut your grass along with his since he had the mower out anyway).

LOL!