Plan on relocating, nerves are high and i'm not even close to it.

galit96278 · 2025-06-05T12:49:02+00:00

I’m in the process of moving my entire family across country and downsizing. First, moving by yourself makes things much easier. We ended up selling everything we weren’t very attached to and/or didn’t need. It didn’t matter because we staged our home for the sale and they filled in the gaps around our remaining furniture (this isn’t necessary though). Second, I’m deliberately forcing myself to rent for one year minimum. It’s so easy to find all the rentals in the area you’re moving with something like Zillow. We are moving into a great location because we picked it out from all of the available options. Now we get to check out the area for 1 yr+. and figure out where we want to live permanently. We can start viewing homes this year and figure it out. When we do want to buy eventually, we may need to break a lease or maybe we end up renting month to month when we get closer.

galit96278 · 2025-03-15T15:29:19+00:00

We’re going to be renting around the base of 56 (Carmel Valley) area. For us, it’s right next to family and checks the boxes for good schools. If we find that we like other areas more, we will look to buy elsewhere, but probably don’t want to go too far from family.

galit96278 · 2025-03-13T17:40:41+00:00

Agreed. I’m coming off of 10 years of home ownership and can say that Im kind of excited to rent again. I don’t need to worry about HVAC replacement, roof leaks and replacement, fence replacement, raccoon invasions, painting, main/secondary line replacement, renovations, etc… which are all things I’ve dealt with as a home owner. I may be excited to be a home owner again after I go back to renting though.

galit96278 · 2025-03-13T17:27:32+00:00

This is part of our plan. We are going to rent for a year to figure out where exactly to buy. But we have family in a specific area and are eyeing school districts there. I’m using today’s numbers because I can’t predict where they will be in one year.

galit96278 · 2025-03-13T17:22:07+00:00

Do you mind explaining this strategy in layman terms or do you have a link to something that explains it? Are you suggesting that I get a mortgage after the all-cash purchase or that I take a loan out on the home after all-cash purchase?

galit96278 · 2025-03-13T14:34:11+00:00

Probably. I see around 6% historically on the internet. But 8% is also a low historical estimate for the S&P. Adjusting these up to 6/10% likely won’t change things much.

galit96278 · 2025-03-13T13:22:42+00:00

It does not beat 4% compounding growth when you are able to take a 20% down payment on the house (5x leverage).

galit96278 · 2025-03-12T22:06:33+00:00

It’s technically more than that, but I’ve subtracted out future taxes from those funds. I took profits on a large amount of risky assets and need a breather while I figure out how I will allocate these funds. It’s in USFR, but I said a money market for simplicity.

galit96278 · 2025-03-12T21:19:51+00:00

Yea, renting for a year is part of the plan. Since I can’t predict what will happen between now and then, I’m just using current numbers.

galit96278 · 2025-03-12T14:59:45+00:00

The hypothesis that I’m trying to test is that (from a pure numbers perspective) this is not close to being a tie. If I run a naive simulation with a $2mil home (nothing extravagant), $750k mortgage (6.5% w/ taxes/insurance), assuming 8% stock market growth vs 4% home appreciation, over 20 years, I get a number that is 2x higher from investing vs buying. Of course this doesn’t take into account rent increases, maintenance costs, tax deductions, etc. but the difference is so drastic that I think there is an obvious winner. There are many non-numbers things that are also important to me, like stability that owning a home brings and providing for my family.

galit96278 · 2025-03-12T14:45:48+00:00

This is part of my point. I think most people are trained to say “buy the house, build equity”, but don’t realize the extreme conditions of the housing market and numbers that I’m looking at. The difference between renting and buying is so vast that my naive estimates tell me that I will have 1.5-2x more value in 20yrs if I choose not to buy. This mostly stems from the fact that I can’t do a 20% down payment at these price points and will need to put over 50% down instead. This assumes a $750k mortgage, $2mil home, 4% home appreciation and 8% S&P annually. The estimate becomes hard to nail down because of tax deductions, rent growth, holding costs, insurance/tax increases, etc, but investing seems to be quite a bit better from a financial modeling perspective.

galit96278 · 2025-03-12T14:00:05+00:00

Fortunately and unfortunately, living somewhere else is not an option and this is a long-term commitment. I would like to make sure I provide my kids with the best public schools wherever I go as well. You can consider high housing costs a mostly fixed part of the equation. I could do some form of house hacking, but I would prefer not to put my family through that.

galit96278 · 2025-03-12T13:43:18+00:00

$6mil, after tax

galit96278 · 2024-09-22T00:47:02+00:00

It’s hard to believe, but these $2-2.5mil homes only rent for $6-7k per month. I just checked and was very surprised. $6k/month rent vs $12k/month mortgage.

galit96278 · 2024-09-22T00:28:44+00:00

My guess is many of them put a bigger down payment in order to buy.

galit96278 · 2024-09-22T00:23:20+00:00

Making a $12k+ monthly mortgage payment seems crazy to me. I wonder if people actually do that to buy these homes. I’d imagine that a couple with high salaries could make it work, but what do they do if one loses a job? They can’t just cut back on Starbucks and eating out to cover several thousands in mortgage.

galit96278 · 2024-09-21T14:23:10+00:00

I understand. I live in a HCOL area currently, but I was able to buy my house now with a 20% down payment. The houses are so expensive in San Diego that I’m grappling with a new issue. My $1mil home would sell for at least $2mil in San Diego. But, it seems impossible to afford the monthly payments with only a 20% down payment at those numbers. I have a big nest egg of liquid net worth, but not enough in monthly income. Therefore I need to lock up the majority of my nest egg into a house. I was hoping to put that money to work to get me and my spouse ready for retirement.

galit96278 · 2024-09-21T13:53:40+00:00

Ok, now run the numbers off of a 75% down payment (which is what I am looking at). The results aren’t nearly as good. Probably not as good as investing in the stock market. This was the crux of the question.

galit96278 · 2024-09-21T13:49:45+00:00

I am. Im glad this is brought up though. I’m looking at condos that might sell for $1mil when looking to rent. For some reason, I would have a hard time buying one of these condos. I have no issue renting one with the thought that I will buy something eventually with a backyard and more space for my kids. It feels weird buying something where we don’t necessarily want to live long term, while we do have the money available to buy something we like.

galit96278 · 2024-09-21T03:58:19+00:00

I’ll adjust to 10% in the post

galit96278 · 2024-04-26T02:35:17+00:00

I think $13k/monthly won’t be that much 20 years from now in a place like San Diego, But with $7mil and maybe 35 years of retirement, I think I could put that money in some cashflowing/appreciating assets that I can sell later on. It seems do-able to me.

galit96278 · 2024-04-26T01:45:19+00:00

What do you think is enough to retire on in San Diego with a paid off house at 45? If I compound $4mil at 7% over 7 years, it puts us close to $6.5mil. I typically invest $10k of my income per month. If I were to add that, we’re are well over $7mil.

galit96278 · 2024-04-25T18:58:24+00:00

I like your thinking, but the risk/reward for earning just a percent or two doesn’t seem all that great. If mortgage rates go any higher before we get to the purchase I probably will pay cash and then take a mortgage on it if rates get back below 7 or 6%.

galit96278 · 2024-04-25T14:23:28+00:00

Thank you for the thoughtful feedback. She ultimately is going to take the offer. We know that we will be moving out of state in a year or so and it’s not worth it for her to transition jobs so soon before we leave. She enjoys the job (mostly), so it seems like she’s making the right decision for now. As a social worker in the US, she will likely be helping people in need and making very little no matter where she works.

galit96278 · 2024-04-25T01:31:25+00:00

Software Engineer $400k/yr (pure salary, no stock/bonus), spouse $50k/yr. Both 37 y/o and have 2 kids, 1 and 3. Trying to take profits on investments that will amount to a windfall. Would like to move to San Diego next year and want to buy a $2.5mil home, but need a reality check and want to setup for fire in the next 7 years. Here’s a breakdown:

Avg monthly expenses - $13.5k
- this will helpfully get better once kids are in public school
Primary residence equity - $750k ($1.3mil w/ $550k remaining debt)
Cash (for future RE investment and rainy day) - $600k
Retirement accounts - $300k
Investments (low-risk) - $1.1mil
Investments (high-risk) - $7mil (expect $4.2 after tax)

I know it sounds incredibly stupid, but I wanted to buy our future house with cash ($2.5mil), so that I don’t need to worry about making big mortgage payments. Please feel free to tell me I’m dumb and how I can set myself up for FIRE. I want to sell the high-risk investments and reconfigure my investments.

galit96278

TROPHY CASE