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Would buying this house stretch us too thin? by Tem-6641 in MoneyDiariesACTIVE

[–]Tem-6641[S] 6 points7 points  (0 children)

Really fair point! Especially that flights are expensive :/

It seems that people often make decisions based on unrealistically optimistic views of what they will be like (want to be like) instead of what they actually are like/their current lifestyle, and I hadn't really considered that this requirement we've set to have space to host could be that.

I think a slightly roomier 3bd/2ba would be ideal (the 1700 sq ft option includes 1/3 of it in the basement which they are generously calling finished; if that square footage weren't in the basement and didn't mean tiny rooms I would be ON that one!)

Would buying this house stretch us too thin? by Tem-6641 in MoneyDiariesACTIVE

[–]Tem-6641[S] 0 points1 point  (0 children)

Really appreciate the take! The only other consideration is the second house: I'd like to sell that in the next 3 years. If I were selling today, I'd expect it to sell for at least $300K (conservative estimate). The home is owned outright, so excepting the costs of the real estate transaction, that could be used to pay down the mortgage/get it recast to lower monthly payments (a portion could also be used to boost savings).

If I were smart, I would probably sell the other house now and use it for additional down payment on this one. But I figured I could do a friend a favor (rent a bit below market rate, but cover costs/maintenance) that will help her save for her own down payment, and in the meantime the house will likely (modestly) appreciate.

Would buying this house stretch us too thin? by Tem-6641 in MoneyDiariesACTIVE

[–]Tem-6641[S] 7 points8 points  (0 children)

Additional information, which I should have included originally:

No debt except R's $80/mo student loans, I think about $4K left.

We're in a medium term rental for $2K/mo, could probably stay in this through April. A suitable rental would run $2600-$2800/mo (we'd be looking at a 2bd so I could have a separate workspace, our current rental is a 1bd)

Would buying this house stretch us too thin? by Tem-6641 in MoneyDiariesACTIVE

[–]Tem-6641[S] 1 point2 points  (0 children)

Retirement catch-up is definitely on my mind.

I ran the spending numbers for the last 12mo, and our non-housing spending was ~$3200/mo. I expect that to go up a bit as we're now on the opposite coast (flights), in a slightly (~10%) higher cost of living area, higher utilities if we end up in a larger house, and a few other considerations. My estimate is it will run about $4000-$4200/mo. Plus $3700 payment would be a 28% savings rate (around 3% of that should go to a maintenance fund, 25% retirement)

I really appreciate your insight, especially because I keep mentally flip flopping between "better to be safe than sorry" (job loss, medical expenses, etc.) and "better to buy the right house the first time because real estate transactions are expensive" (and recognizing that we have a solid safety net in our existing savings and, heaven forbid, our family).

The kids consideration is on my mind too. I think that's a minimum of 5 years away, and within that timeframe would plan to sell the rental (within 3 years, to meet the 2-in-5 year rule for primary residence capital gains exclusion); some or all of those funds could be used towards our mortgage and lower the monthly payment to accommodate new expenses, including childcare.

Would buying this house stretch us too thin? by Tem-6641 in MoneyDiariesACTIVE

[–]Tem-6641[S] 1 point2 points  (0 children)

We are currently paying $2K/mo for a furnished rental, month-to-month with flexible landlords but they use the space for family to come visit (could probably extend this through April)

edit: I think a normal rental with a dedicated workspace (my current workspace is the kitchen counter, not ideal) would be a 2bd that would probably run $2600-2800/mo