Author Topic: Should I "rush" to buy?  (Read 829 times)

Tester

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Should I "rush" to buy?
« on: September 19, 2017, 03:57:31 PM »
Hi,

I am posting this to get advice from more experienced people around.

I started saving 2 and a half years ago and although I save some money I don't do enough.
I am working on improving the savings rate so I know I am not doing well enough on that one.
This topic is to validate if I should put more effort in changing the housing situation.

Besides having another look at our expenses, I am thinking of the biggest expense I have right now:
2050 USD/month in rent.
I have around 60k in 401k - I won't touch that.

I also have another 60k saved which I can use.
It will be around 80k in November.
This money is not cash, it is in shares for which I already paid the taxes when they vested.
The stock could go up or down, although I would say for the time being it will stay where it is.

Now our situation (again, I won't go in the savings rate part in this topic):

I am working, DW is SAHM, one 5y6m kid and we will have another child in April.



Current:

-Rent cost: 2050 USD/month.
Electric:100/2 months
WSG: 95/month.
+Commute: Don't know right now, I started to drive my kid to kindergarten and then drive to work. 16 miles roundtrip/day. I am planning to go back to bike/bus in around 6 months.
+Our current apartment is a 2 bedroom at 30 minutes bike/bus from work, 15-45 minutes drive to work.
+Around our apartment we have parks, grocery stores, restaurants (not visiting often but it helps) - all are in a 15 minutes walk radius.
+DW does not drive. I think she could drive at some point but she is stressed and panics at the smallest mistake she does. This is why she did not pass the driving exam in our home country.
Here she could drive, but even if she gets the license she will not be allowed to drive alone for 2 years I think.



I was looking at some properties and found some interesting places at 400k (for now I am considering this the maximum we can afford as it will get our payment below the current rent/or at the same level).
The most important part is that I found some properties which were duplexes - in both cases the rent for one of the units covered almost all the mortgage payment.
The bad thing is that they sold in around 3 days :).

Possible future situation:

Duplex (2 bed or 3 bed/2bed):
= Cost: 2000 mortgage (occupying the whole building).
+ Cost - almost 0 if we rent one of the duplex units.
+ Less stress for me regarding job security - I am losing motivation and this leads to a negative feedback where I do less than I can do, then get more stressed and so on :).
+ Quicker to FIRE - I think it is around 15 year out for us if we don't increase our savings rate.
- Wife+kid "isolated" if we don't find a duplex in a similar walkable location. It will be hard to find it.
- I will be forced to drive everyday to work.
- Kid misses activities like soccer where we can now just walk from our apartment.



I would like to hear what you think about this.
Should I invest effort in finding a duplex at a price we can afford in a place which will be walkable?

Or should I save some more (and really increase our savings rate/work on getting the promotion at work....) and then look again?
The problem with the last part is that in our area the prices go up like crazy and I might.

Thank you in advance for your advice.


clarkfan1979

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Re: Should I "rush" to buy?
« Reply #1 on: September 20, 2017, 10:59:51 AM »
IMHO, the only time you "rush" to buy is if there is a massive housing collapse and houses are dirt cheap. I think most here would agree that buying a duplex is a good route to go. I own two rentals, but have never personally lived next to my tenant. I would have some minor concerns about getting lots of requests for repairs by living next door.

J Boogie

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Re: Should I "rush" to buy?
« Reply #2 on: September 20, 2017, 12:35:39 PM »
I'd do it.

I own a duplex that cost me $230,000 and I rent the top out for $1,000.  High taxes mean my monthly payment is about $1,700 so it makes my cost about 700 overall.

Sounds like you've got a sweet deal there, as long as you like the location.  Don't buy it if you don't like the location.