Cash home purchase: What % of stache?

[Holyoak]

For you folks that are FIRE'd and have, or are considering paying cash for a personal home, what guidelines did you use for affordability?  Of course I am considering taxes, potential repairs, insurance, etc in this question of total affordability.  Never have paid cash for a home, let alone when FIRE'd, and appreciate your input.  Thank you. 

[Fishindude]

Any more than about 10% of my total new worth would probably not sit well with me.

[Slee_stack]

First, see what your mortgage options are considering you likely do not have traditional income.

You may or may not be offered a mortgage at all or a good rate.

[checkedoutat39]

I think of this in terms of a straight dollar amount. My plan is to raid my retirement accounts to the maximum allowed without penalty.

This includes contributions into Roth accounts and the $10K home purchase exemption in traditional accounts. Then subtract an allowance for immediate repairs and move-in expenses. In low cost of living areas this can easily cover the cost of many houses in move-in condition.

Then this drops the expenses I have to pay out of my non-retirement accounts to basically utilities, longer-term upkeep and property taxes. I still won't have tapped 72t withdrawals.

Of course the house is an asset, and can be sold as a way to transfer over money from retirement accounts to non-retirement. However houses in low cost of living areas can be *very* nonliquid and you generally don't want to be a forced seller. Lost of listing prices out there below 20 years ago and such.

[Bruinguy]

I'd want to have remaining cash sufficient to meet my spending needs.  If you are in the planning stages, I'd look at them separately. Say, with the property taxes and upkeep of a house, but assuming no mortgage, you need $750k.  Then, i would separately figure out where I wanted to live and how much that cost. If you are happy with a $125k place, then your overall number is $875k.

If I had to guess, I would probably not do more than 20% (house / (house + remaining stash), but I'm a ways a way.

[Mikila]

I would want to make sure the house would make a decent rental so that, if I wanted to move and couldn't sell for a profit, I wouldn't love money on the house.

[Dicey]

We had about 1.2M in equities and 1.2M in cash (mostly from the sale of 2 mortgaged, but highly appreciated homes). Due to a variety of circumstances, we paid 928k* cash for our current home. We still wish we hadn't, but it won't affect our FIRE dates at all. Both the RE and the stock market have done well since our home purchase, so it's probably a wash either way.

*No hate from flyover states, please. It's the Bay Area, and it was a short sale. I'm RE and DH walks to work.

[Spitfire]

I'd want to have remaining cash sufficient to meet my spending needs.  If you are in the planning stages, I'd look at them separately. Say, with the property taxes and upkeep of a house, but assuming no mortgage, you need $750k.  Then, i would separately figure out where I wanted to live and how much that cost. If you are happy with a $125k place, then your overall number is $875k.

Agree with this. Budget out what you will need for expenses as if you owned the home, multiply by 25, and anything in excess is what you can afford for a house. You can spend less, of course, but that should be the maximum.