Assess our possible new house purchase (update)

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Topic Author
uwbadgers
Posts: 86
Joined: Mon Aug 25, 2014 3:36 pm

Assess our possible new house purchase (update)

Post by uwbadgers »

Hi all,

[update and more details farther down]

Wanted to get feedback and thoughts on how these numbers look at your first glance.

Potential new house: 550k price and ~3100 sq ft

Current house: realtor assessed value based on sold comps ~444k and ~2600 sq ft
Mortgage remaining: 222k
After expenses should net 150k-165k

To keep it simple, we are looking at upgrading houses to get a little more space, a larger lot, and much more privacy. The house is a bit older than our current one, we actually built the current one. Potential new house would, over time, need some things done, but nothing instant. My wife may argue that point a bit, but it's very livable :happy

Age 32/33

Net Income MONTH last 4 years: $8,300

Total Expenses MONTH last 4 years: $5,711 (includes all mortage, taxes, major house projects, basically everything there is)

Retirement: 265k
Last 3 years: Max 401k and Both Roth IRAs (29k total + 4k company match) = 33k total retirement/year

Kids: 20k
I put $200/month away for this.

Rental Property
Value 200k
No mortage
Have had same renters for last 4 years, just renewed for another year
Clear NET $734/month after ALL expenses

I do/did not include that in my NET income above though.

Down Payment
We would use the sale of this home to fund the down payment for new home. We should clear close to 170k after realtor fees. We are lucky as we bought the cheapest house on the block but prices have risen well and we should be able to sell for 400k, 220k mortgage left


CURRENT HOUSE PAYMENT: $60 (ins) + $670 (tax) + $1,200 (P+I) = $1,930/month

NEW HOUSE PAYMENT: $70 (ins) + $850 (tax) + $2,015 (P+I) = $2,929/month


To sum it up:
Buying new house would incur ~$1,000 additional per month. I do understand there will probably be some additional costs related to a larger home, but looking into the utilities, public info, they are almost identical to what we pay now (2 story current vs 1 story possible).

Here is what the income vs expenses would be.

Net Income MONTH last 4 years: $8,300

Total Expenses MONTH with NEW HOME PAYMENT: $6,711

Other Option
If we were to purchase and found the payment/cash flow was challenging, I believe our plan would be to sell the rental (~200k) and after realtor fees we would have ~ 170k to "use" in some fashion.

Thoughts and opinions?

Thanks in advance!
Last edited by uwbadgers on Sat Jul 22, 2017 9:08 pm, edited 5 times in total.
WL2034
Posts: 490
Joined: Tue May 21, 2013 10:36 pm

Re: Assess our possible new house purchase

Post by WL2034 »

What are you currently doing with the $40k/year surplus you have been accruing for the past 4 years (net income $8300 - net expenses $5711 + $750/month rental income)?
Topic Author
uwbadgers
Posts: 86
Joined: Mon Aug 25, 2014 3:36 pm

Re: Assess our possible new house purchase

Post by uwbadgers »

WL2034 wrote:What are you currently doing with the $40k/year surplus you have been accruing for the past 4 years (net income $8300 - net expenses $5711 + $750/month rental income)?
We put that extra towards rental property. I know that isn't always the "best" in pure numbers, but it really helped us focus in and honestly we probably would have just "spent" it if it was sitting around :)

Also, I don't include ROTH IRA in expenses so leftover was used to fill those as well each year (11k)
hightower
Posts: 863
Joined: Mon Dec 12, 2016 2:28 am

Re: Assess our possible new house purchase

Post by hightower »

Well, you've been doing a good job saving and have a healthy amount in retirement accounts already. Also having a rental property is nice. Can you afford another $1000/month? Yes, it appears so.
How old of a house is it? What kind of upgrades/repairs are you anticipating? I would go ahead and get a good solid idea of exactly how much those upgrades could cost now so you can factor it into your decision.
Topic Author
uwbadgers
Posts: 86
Joined: Mon Aug 25, 2014 3:36 pm

Re: Assess our possible new house purchase

Post by uwbadgers »

hightower wrote:Well, you've been doing a good job saving and have a healthy amount in retirement accounts already. Also having a rental property is nice. Can you afford another $1000/month? Yes, it appears so.
How old of a house is it? What kind of upgrades/repairs are you anticipating? I would go ahead and get a good solid idea of exactly how much those upgrades could cost now so you can factor it into your decision.
Hi!

House is 2003. Big things, not necessary, but will be done.

Some new carpet.
New paint
New appliances (white currently)
Partially unfinished basement

So, things we will do, but not HAVE to be done. We normally have been pretty good saving/paying off any house projects quickly.

I'd feel comfortable "easing" into those projects.

Not sure exactly how to factor them in.....but I'm aware :)
wilked
Posts: 1932
Joined: Thu Mar 24, 2011 1:50 pm

Re: Assess our possible new house purchase

Post by wilked »

How long ago did you build your house, and why are you outgrowing a house you built?
Topic Author
uwbadgers
Posts: 86
Joined: Mon Aug 25, 2014 3:36 pm

Re: Assess our possible new house purchase

Post by uwbadgers »

wilked wrote:How long ago did you build your house, and why are you outgrowing a house you built?
Hey,

Built 4 years ago. Life's changed a bit, 2 kids now, and some aspects of neighborhood aren't as enjoyable as when we moved in. We don't have much privacy, small lots, and we are in center of everyone (I can see about 12 houses surrounding me).

New house would be about 500 square feet more with an extra bedroom. We have some big things we look for as I need a separate bathroom to get ready in the mornings (I get up at 3:45am) so I'm not waking everyone. My wife works from home about half time so having some additional space would be helpful.

So, the extra place with the better neighborhood with larger lot size and privacy/views. I actually really enjoy yard work :)

Less out growing but more changing needs and location change (about 2 miles away).
wilked
Posts: 1932
Joined: Thu Mar 24, 2011 1:50 pm

Re: Assess our possible new house purchase

Post by wilked »

In 4 years, for new construction, you will sell for $400k and clear $170k? That is amazing, must be serious appreciation going on in that area.

I guess my question was to probe into why you've changed directions in such a short time and to encourage you to be certain you spent time to align as a family on what characteristics of a house are important to you.

Usually when you buy and sell within 4 years you are losing money due to heavy transaction costs.

Good luck!
Topic Author
uwbadgers
Posts: 86
Joined: Mon Aug 25, 2014 3:36 pm

Re: Assess our possible new house purchase

Post by uwbadgers »

wilked wrote:In 4 years, for new construction, you will sell for $400k and clear $170k? That is amazing, must be serious appreciation going on in that area.

I guess my question was to probe into why you've changed directions in such a short time and to encourage you to be certain you spent time to align as a family on what characteristics of a house are important to you.

Usually when you buy and sell within 4 years you are losing money due to heavy transaction costs.

Good luck!
Hi,

Yes, we bought for 309k and since have finished the basement, added a fence, I DIY built a pretty large and awesome deck along with paver patio. So, there is other money invested, but all that is paid for as we cash flowed it all.

Houses are selling in the 400k's, so yes, there is some luck involved. We just were assessed at 411k so 400k is probably on the low end.

220k left so if sold at 400k, after 6% realtor, ~156,000. I think we can get more than 400k though based on sales nearby and comps.

If I could lift my house and move it, I probably would. I think the excitement of first house has worn off a bit too. I/we just don't really like having so many neighbors, it's a typical .2 acre, side by side, etc style neighborhood. I'm just more private/want that feeling. New house would give that location change aspect.

I guess I just don't see my view changing on our location and staying there another 10-15 years just isn't that appealing for me. Can change the house, but not location, right? Unfortunately to get that location change it costs a bit more :)

New house is also on a cul de sac/non busy road. Since we built our house our road has become more busy as the neighborhood has expanded. We can't really use/play in front yard/driveway currently.

I grew up, as did my wife, in a cul de sac and we were always playing out there, safely, as we grew.

Also, as far as costs go, my wife is a mortgage originator and a perk she gets from the bank is basically all closing costs waived :) So another helpful aspect of all this.

Thanks for your thoughts! Let me know if there is anything else we can pick apart :)
hightower
Posts: 863
Joined: Mon Dec 12, 2016 2:28 am

Re: Assess our possible new house purchase

Post by hightower »

uwbadgers wrote:
hightower wrote:Well, you've been doing a good job saving and have a healthy amount in retirement accounts already. Also having a rental property is nice. Can you afford another $1000/month? Yes, it appears so.
How old of a house is it? What kind of upgrades/repairs are you anticipating? I would go ahead and get a good solid idea of exactly how much those upgrades could cost now so you can factor it into your decision.
Hi!

House is 2003. Big things, not necessary, but will be done.

Some new carpet.
New paint
New appliances (white currently)
Partially unfinished basement

So, things we will do, but not HAVE to be done. We normally have been pretty good saving/paying off any house projects quickly.

I'd feel comfortable "easing" into those projects.

Not sure exactly how to factor them in.....but I'm aware :)
What I meant was, get estimates for how much it will all cost. Sit down with your wife and make a realistic "wish list" on things you would like to do to the house. Then, get estimates on what they will cost (for instance, that basement project could be 20k or more depending on what's involved). Then, add them all up and look at that number and decide if the house is still worth it to you considering you'll need to save up cash for it all. Sounds like you have relatively minor things needed, so I agree, it's probably not a big deal, but in general this is an exercise I wish I had done when we bought our house because we ended up spending way more than we ever expected on ours.
Topic Author
uwbadgers
Posts: 86
Joined: Mon Aug 25, 2014 3:36 pm

Re: Assess our possible new house purchase

Post by uwbadgers »

hightower wrote:
uwbadgers wrote:
hightower wrote:Well, you've been doing a good job saving and have a healthy amount in retirement accounts already. Also having a rental property is nice. Can you afford another $1000/month? Yes, it appears so.
How old of a house is it? What kind of upgrades/repairs are you anticipating? I would go ahead and get a good solid idea of exactly how much those upgrades could cost now so you can factor it into your decision.
Hi!

House is 2003. Big things, not necessary, but will be done.

Some new carpet.
New paint
New appliances (white currently)
Partially unfinished basement

So, things we will do, but not HAVE to be done. We normally have been pretty good saving/paying off any house projects quickly.

I'd feel comfortable "easing" into those projects.

Not sure exactly how to factor them in.....but I'm aware :)
What I meant was, get estimates for how much it will all cost. Sit down with your wife and make a realistic "wish list" on things you would like to do to the house. Then, get estimates on what they will cost (for instance, that basement project could be 20k or more depending on what's involved). Then, add them all up and look at that number and decide if the house is still worth it to you considering you'll need to save up cash for it all. Sounds like you have relatively minor things needed, so I agree, it's probably not a big deal, but in general this is an exercise I wish I had done when we bought our house because we ended up spending way more than we ever expected on ours.

A few updates. We did what you said and make a little spreadsheet of things to do and rough cost, door knobs, cabinet handles, carpet, paint, appliances, etc. We came up with ~20-25k. Not all would need to be done immediate, but things to make it "ours."

We are actually going back and forth right now with offers and having some stress on this. Here's the updated numbers with potential new payment.

4 year avg NET income: 8277
4 year avg NET rental income: 734

TOTAL NET INCOME: 9,001

EXPENSES + NEW house payments: 7,557 (includes new mortgage, taxes, insurance along with all our average expenses last 4 years)

LEFTOVER: 1,452/month

From that "leftover" we would max Roth IRA's and save 200/month for kids future (1,100/month)

This leaves: $352/month after all expenses, max 401k, max roth, 200 for kids, and that new house payment.

We've looked at all sorts of numbers and scenarios, it's really hard to make up our minds. We do have semi-variable incomes so that makes this more difficult.

I also took our LOWEST average net income/month the last 4 years (7,056 + rental 734 = 7,790/month)

In that scenario, we still cover all expenses with new mortage: 7,790 VS 7,557.

In this scenario maxing 401k and Roth IRA would be more challenging. Again, this is using our lowest income over the last 4 years. I know we could alter savings for a time, but we don't want to overcompromise.

My wife is struggling as she is now having trouble "seeing" this one as our new house as we need to do some of those updates from above. We trade our newer house for an older one but a large location upgrade. I know location is the one thing we can't change while the house interior we can, just takes work.

Are we in over our heads? Are we over=analyzing? Help? :)
UncleBen
Posts: 315
Joined: Wed Feb 19, 2014 8:43 pm

Re: Assess our possible new house purchase

Post by UncleBen »

$2929/$8300 = 35% going to housing. I know that lenders use gross but 35% of net would be uncomfortable for me (and we're in the same income bracket with no children). Additionally, if you have cable, internet, gas, electric, water, sewer, you probably have at least another $500 in utilities bringing your total housing to 41%. Even if you add in your rental income it's 32% and 38%. In your shoes, the only way I would consider this would be to sell the rental property and use the proceeds for the down payment.
Topic Author
uwbadgers
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Joined: Mon Aug 25, 2014 3:36 pm

Re: Assess our possible new house purchase

Post by uwbadgers »

UncleBen wrote:$2929/$8300 = 35% going to housing. I know that lenders use gross but 35% of net would be uncomfortable for me (and we're in the same income bracket with no children). Additionally, if you have cable, internet, gas, electric, water, sewer, you probably have at least another $500 in utilities bringing your total housing to 41%. Even if you add in your rental income it's 32% and 38%. In your shoes, the only way I would consider this would be to sell the rental property and use the proceeds for the down payment.
Thanks for the thoughts. We don't have cable, would just have internet like we do now. I checked the 12 month avg for the new home and the electric/gas are almost identical to what we pay now, so wouldn't be a big jump there.

I guess since those costs are about a wash and part of our normal expenses above I didn't include them in additional housing payment.

We have someone with about 11 months left on lease for rental right now so unable to sell currently.

Thanks
runner540
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Re: Assess our possible new house purchase

Post by runner540 »

uwbadgers wrote:
hightower wrote:
uwbadgers wrote:
hightower wrote:Well, you've been doing a good job saving and have a healthy amount in retirement accounts already. Also having a rental property is nice. Can you afford another $1000/month? Yes, it appears so.
How old of a house is it? What kind of upgrades/repairs are you anticipating? I would go ahead and get a good solid idea of exactly how much those upgrades could cost now so you can factor it into your decision.
Hi!

House is 2003. Big things, not necessary, but will be done.

Some new carpet.
New paint
New appliances (white currently)
Partially unfinished basement

So, things we will do, but not HAVE to be done. We normally have been pretty good saving/paying off any house projects quickly.

I'd feel comfortable "easing" into those projects.

Not sure exactly how to factor them in.....but I'm aware :)
What I meant was, get estimates for how much it will all cost. Sit down with your wife and make a realistic "wish list" on things you would like to do to the house. Then, get estimates on what they will cost (for instance, that basement project could be 20k or more depending on what's involved). Then, add them all up and look at that number and decide if the house is still worth it to you considering you'll need to save up cash for it all. Sounds like you have relatively minor things needed, so I agree, it's probably not a big deal, but in general this is an exercise I wish I had done when we bought our house because we ended up spending way more than we ever expected on ours.

A few updates. We did what you said and make a little spreadsheet of things to do and rough cost, door knobs, cabinet handles, carpet, paint, appliances, etc. We came up with ~20-25k. Not all would need to be done immediate, but things to make it "ours."

We are actually going back and forth right now with offers and having some stress on this. Here's the updated numbers with potential new payment.

4 year avg NET income: 8277
4 year avg NET rental income: 734

TOTAL NET INCOME: 9,001

EXPENSES + NEW house payments: 7,557 (includes new mortgage, taxes, insurance along with all our average expenses last 4 years)

LEFTOVER: 1,452/month

From that "leftover" we would max Roth IRA's and save 200/month for kids future (1,100/month)

This leaves: $352/month after all expenses, max 401k, max roth, 200 for kids, and that new house payment.

We've looked at all sorts of numbers and scenarios, it's really hard to make up our minds. We do have semi-variable incomes so that makes this more difficult.

I also took our LOWEST average net income/month the last 4 years (7,056 + rental 734 = 7,790/month)

In that scenario, we still cover all expenses with new mortage: 7,790 VS 7,557.

In this scenario maxing 401k and Roth IRA would be more challenging. Again, this is using our lowest income over the last 4 years. I know we could alter savings for a time, but we don't want to overcompromise.

My wife is struggling as she is now having trouble "seeing" this one as our new house as we need to do some of those updates from above. We trade our newer house for an older one but a large location upgrade. I know location is the one thing we can't change while the house interior we can, just takes work.

Are we in over our heads? Are we over=analyzing? Help? :)
What do you mean when you say lowest average monthly net income? Is that: take 4 years of income, figure out the monthly averages and take the lowest of the 4, or is it take the lowest of 48 months of income? If I understand this correctly, your budget allows you to max 401k, 2 Roth IRAs, and cover all expenses with $352 left over? I agree that having a housing payment 35% of net income means that you have budget everything else carefully. When you added the detail that your income is variable, that is a situation where I would suggest waiting,adding ($40k x 2 years?) significantly to your down payment, so the monthly nut is lower.
Topic Author
uwbadgers
Posts: 86
Joined: Mon Aug 25, 2014 3:36 pm

Re: Assess our possible new house purchase

Post by uwbadgers »

Hi Runner,

Great question, let me explain what I meant.

Our AVG NET incomes for each calendar year (this is where I used our "lowest" 12 month average for worst case scenario)
2013---7,295---->7,993 with rental income (734/month)
2014---7,056---->7,790 with rental income
2015---9,137---->9,871 with rental income
2016---9,355---->10,089 with rental income
2017---8,306 (next few months will raise this with wife's busy time)---->9,040 with rental income

AVERAGE of those 5 years including rental income = 8,956/month

CURRENT Expenses (last 5 year average) including housing = 5,718 each month

***Note***
We have 0 debt (cars, student loan, CC, etc)

PROPOSED Expenses with new housing payment = 6,753/month (include the additional mortgage, taxes, and home insurance)

So, I was taking that 5 year average for us and using that against expenses to help evaluate.

CURRENT---8,956 - 5,718 = $3,238/month LEFT----from here we would do ROTH IRA + kid savings

PROPOSED---8,956 - 6,753 = $2,203/month LEFT---from here, same as above, fill ROTH IRA

WORST SCENARIO---7,790 (lowest calendar year) - 6,753 = 1,037 LEFT---could still do IRA for both.

Retirement Savings per year-----14,449 (2013)---20,565 (2014)---29,000 (2015)---29,000 (2016)---25,500 (2017)

These are our retirement savings, starting with 2013, per year. 18k 401k and 11k Roths for 29k total as the max. Still finishing Roth's for this year.

I felt this was the best way to examine and look at our trends as there is some variability.

Thanks.
Last edited by uwbadgers on Fri Jul 07, 2017 9:15 am, edited 1 time in total.
bloom2708
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Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Assess our possible new house purchase

Post by bloom2708 »

Approved.

One item, 401k max should be $18k + $18k = $36K + $4k match.

Match does not count against the total you can put in. Make sure doing pre-tax 401k. Pay the tax "down the road".
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
Topic Author
uwbadgers
Posts: 86
Joined: Mon Aug 25, 2014 3:36 pm

Re: Assess our possible new house purchase

Post by uwbadgers »

bloom2708 wrote:Approved.

One item, 401k max should be $18k + $18k = $36K + $4k match.

Match does not count against the total you can put in. Make sure doing pre-tax 401k. Pay the tax "down the road".
I do not have a 401k at my work so it's just Wife 401k and Both Roth IRA.
bloom2708
Posts: 8699
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Location: Fargo, ND

Re: Assess our possible new house purchase

Post by bloom2708 »

uwbadgers wrote:
bloom2708 wrote:Approved.

One item, 401k max should be $18k + $18k = $36K + $4k match.

Match does not count against the total you can put in. Make sure doing pre-tax 401k. Pay the tax "down the road".
I do not have a 401k at my work so it's just Wife 401k and Both Roth IRA.
Check. Makes sense now. Thanks. Good luck!
"We are here to provoke thoughtfulness, not agree with you." Unknown Boglehead
squirm
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Re: Assess our possible new house purchase

Post by squirm »

I only saw the part about no privacy. Being able to see 12 houses is bad, really bad.... that's a lot. We thought our rental house is bad seeing 6. I hated being packed in like sardines.

You can't do anything about the privacy issue. We moved many years ago, we have a lot of acreage and love it. Everyone can put a dollar figure on expenses, projects, etc but QOL is important too. That's why they say location, location, location.
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Watty
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Re: Assess our possible new house purchase

Post by Watty »

A huge question is what you are willing to give up to have the larger house. For example will you and your spouse be OK it that means that you have to skimp on vacations and retire ten years later?

If you might be having more kids then you will also need to budget for that, and there is always a chance that you could have a special needs kid. Even with some moderate and temporary health issue that could make having a stay at home parent real desirable since finding good daycare for a kid with even small health issues can be hard. Could you pay for the more expensive house with just one income?
uwbadgers wrote:Clear NET $734/month after ALL expenses
Is that after taxes and also include building reserves for eventual big repairs like a new roof and occasional bad tenants or vacancies?

One thing to keep in mind if you buy the house and keep the rental then you will have somewhere around 200% of your net worth tied up in real estate in the same city. A 20% decline in home prices would mean a 40% decline in your net worth which could hard to recover from. I would take a hard look at selling the rental just for diversification.

It does not sound like there is an urgent need to move so you might consider waiting to buy a different house until the lease is up and you can sell the rental house. You might see if the current renters would be interested in buying the house with a significant discount. If you sold it to them you would not only save on the real estate commission but you would also not have to refurbish the house with at least carpets and paint to get it ready to sell. You would also not have the cost of keeping an empty house for three or more months while the house is up for sale. Potential buyers of an empty house will also, rightly, assume that you are a motivated seller and often give lower offers. If it would sell for $200K then all those costs could easily be more than $15,000.
uwbadgers wrote:..... but the newer homes in this neighborhood we like are more in the 750k-1million.
That is a huge price range and with a $200K downpayment you would be looking at a $550K to $800K mortgage which percentage wise is an even bigger difference. You need to focus on a more specific price range.

A big risk is that you will decide that buying a $750K house would be OK but then end up buying a million dollar house, or a less expensive house that you then spend a lot on to upgrade.
uwbadgers wrote:NEW HOUSE PAYMENT: $70 (ins) + $850 (tax) + $2,015 (P+I) = $2,929/month
What is the math on that? The mortgage payment sounds low on a $550K loan. The insurance sounds low too but your area may be different.
Topic Author
uwbadgers
Posts: 86
Joined: Mon Aug 25, 2014 3:36 pm

Re: Assess our possible new house purchase

Post by uwbadgers »

Hi Watty, please see the bolded below for my answers to some of your questions. I appreciate the feedback and thoughts.
Watty wrote:A huge question is what you are willing to give up to have the larger house. For example will you and your spouse be OK it that means that you have to skimp on vacations and retire ten years later?

This is hard to officially answer, as I can't see the future, future incomes, etc. I guess we both feel that the quality of life increase for us and kids can outweigh some other aspects. I think if we need to tighten things up on occasion, or not max all possible retirement accounts, that is ok. We feel at 32/33 that having ~265k is pretty respectable and we don't have any plans of slowing down.

All part of our average expenses the past 5 years includes trips we've went on, big purchases, etc. I don't feel this will handcuff us in a way we can't save for retirement or go on trips.

We aren't big travelers, not saying that couldn't change, but we are more homebodies. We'd rather sit out on a Friday night with some beers, around the fire, watching the kids play in the yard, things like that. The location change from where we are now really gives us that aspect.


If you might be having more kids then you will also need to budget for that, and there is always a chance that you could have a special needs kid. Even with some moderate and temporary health issue that could make having a stay at home parent real desirable since finding good daycare for a kid with even small health issues can be hard. Could you pay for the more expensive house with just one income?

No more kids, I have been fixed :)

It would depend on which income would be 100% lost, so the answer would vary.

My wife and I split stay at home duties right now, due to work schedules. I work very early and she goes in when I get home. Have done this the last 3 years

uwbadgers wrote:Clear NET $734/month after ALL expenses
Is that after taxes and also include building reserves for eventual big repairs like a new roof and occasional bad tenants or vacancies?

One thing to keep in mind if you buy the house and keep the rental then you will have somewhere around 200% of your net worth tied up in real estate in the same city. A 20% decline in home prices would mean a 40% decline in your net worth which could hard to recover from. I would take a hard look at selling the rental just for diversification.

It does not sound like there is an urgent need to move so you might consider waiting to buy a different house until the lease is up and you can sell the rental house. You might see if the current renters would be interested in buying the house with a significant discount. If you sold it to them you would not only save on the real estate commission but you would also not have to refurbish the house with at least carpets and paint to get it ready to sell. You would also not have the cost of keeping an empty house for three or more months while the house is up for sale. Potential buyers of an empty house will also, rightly, assume that you are a motivated seller and often give lower offers. If it would sell for $200K then all those costs could easily be more than $15,000.

Yes, that is a true net currently. After taxes, insurance, HOA, prop manager, and the misc funds (all repairs/assessments last 4 years). We have no mortgage on it.

There is definitely not a NEED to move, this is a want and this house fits our wants very well, more than any another we've seen. We see this as the long term place our kids grow up in. Our home now was pre-2 kids and wants/needs have changed.

uwbadgers wrote:..... but the newer homes in this neighborhood we like are more in the 750k-1million.
That is a huge price range and with a $200K downpayment you would be looking at a $550K to $800K mortgage which percentage wise is an even bigger difference. You need to focus on a more specific price range.

A big risk is that you will decide that buying a $750K house would be OK but then end up buying a million dollar house, or a less expensive house that you then spend a lot on to upgrade.

We will 100% NOT be moving if this doesn't work out. Now that I reread, I believe that was a mistype from me. I meant to just say a lot of homes are higher priced than this one, but we don't have interest/means to look into them. There will be NO 750k homes
uwbadgers wrote:NEW HOUSE PAYMENT: $70 (ins) + $850 (tax) + $2,015 (P+I) = $2,929/month
What is the math on that? The mortgage payment sounds low on a $550K loan. The insurance sounds low too but your area may be different.
Yes, that is low, we have an updated quote from our insurance guy at $122/month. The house would be 550k, not the loan. Plan would be 25% down so loan would be 412k.

The total sum of increases is $1,000 month between mortage, taxes, and insurance.
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Watty
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Re: Assess our possible new house purchase

Post by Watty »

uwbadgers wrote:The house would be 550k,
You might want to edit your original post to make that clear.

Going from a $400k to $550k house is much different than what your original post sounds like it was asking.
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uwbadgers
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Re: Assess our possible new house purchase

Post by uwbadgers »

Watty wrote:
uwbadgers wrote:The house would be 550k,
You might want to edit your original post to make that clear.

Going from a $400k to $550k house is much different than what your original post sounds like it was asking.
Yes, now as I read it more it doesn't make much sense :) Thanks, I updated and fixed the wording.
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uwbadgers
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Re: Assess our possible new house purchase

Post by uwbadgers »

Though I'd post a little update on what we decided.

We ended up getting into a purchase agreement for the new house for 558k.

Today, we accepted an offer for 440k on current home. We paid 309k in 2013 so really lucked out/my sweat equity paid off! Our house was probably one of the lowest cost in the neighborhood originally but we did a lot of. Ice upgrades, most DIY, so without spending a lot.

Buyer is actually all cash and has proof of funds so that worked out really well.

We were on the market for 9 days.

After fees we will clear 158k of which we will use 101k (already put 10k down as earnest money) for down payment. (20%)

This will give us about 57k leftover.

We plan to put about 15k into savings and to build a nice buffer.

The rest we will use to do some carpet and paint work and add a fence, all things we planned to do if we sold for enough.
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