Can I pull this 900k house?

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newyorker
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Can I pull this 900k house?

Post by newyorker »

Income is around 500k after tax

I just bought a house for 300k in January but found a pretty nice house in the best neighborhood for 900k

Liquid Asset around 900k (650k in taxable) + illiquid assets (commercial RE and etc)

I am pretty happy with my house now but wouldnt mind an upgrade and was intently looking into this neighborhood.

My house did go up in value by 30k in few months.



1) Can I pull this one off?


2) My current house is really nice. Should I rent it out using property manager (only 1100/month in mortgage, tax and insurance) for around 2000/month or sell it?
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JoeRetire
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Re: Can I pull this 900k house?

Post by JoeRetire »

Sure, why not?

Just remember, buying a different house every 6 months can eventually get expensive.

As far as your current house, if you want to be a landlord, rent it. Otherwise sell it.
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RickBoglehead
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Re: Can I pull this 900k house?

Post by RickBoglehead »

Have you used a mortgage calculator?
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newyorker
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Re: Can I pull this 900k house?

Post by newyorker »

JoeRetire wrote: Tue Jun 22, 2021 8:04 pm Sure, why not?

Just remember, buying a different house every 6 months can eventually get expensive.

I agree. Trying to make it the “final house”

Reason why im considering selling my current house is the fear of buying at the market top.
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newyorker
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Re: Can I pull this 900k house?

Post by newyorker »

RickBoglehead wrote: Tue Jun 22, 2021 8:05 pm Have you used a mortgage calculator?
Yes, around 4k/month including everything
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JoeRetire
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Re: Can I pull this 900k house?

Post by JoeRetire »

newyorker wrote: Tue Jun 22, 2021 8:06 pm Reason why im considering selling my current house is the fear of buying at the market top.
I don't understand.
What does "buying at the market top" have to do with selling?
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tomsense76
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Re: Can I pull this 900k house?

Post by tomsense76 »

It's also worth noting hedonic adaptation can be an issue. Maybe the house looks nice now, but after a few months living in it the difference might not be noticeable
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newyorker
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Re: Can I pull this 900k house?

Post by newyorker »

JoeRetire wrote: Tue Jun 22, 2021 8:08 pm
newyorker wrote: Tue Jun 22, 2021 8:06 pm Reason why im considering selling my current house is the fear of buying at the market top.
I don't understand.
What does "buying at the market top" have to do with selling?
Say that market drops. Im just losing value on 900k instead of 1.25M if i am holding onto 2 places.
bltn
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Re: Can I pull this 900k house?

Post by bltn »

From what you supplied, you seem to like the current house. And the house cost is modest for someone with you current income.
I would stay in the current house. When the real estate market cools off, prices may well come down. Then look at upgrades if you really want one at that time. It is easy to end up in a much bigger house than you need or really want.
Last edited by bltn on Tue Jun 22, 2021 8:15 pm, edited 1 time in total.
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newyorker
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Re: Can I pull this 900k house?

Post by newyorker »

bltn wrote: Tue Jun 22, 2021 8:10 pm We need information about your age, family, job security.

From what you supplied, you seem to like the current house. And the house cost is modest for someone with you current income.
I would stay in the current house. When the real estate market cools off, prices may well come down.
33/single/professional

Market drop is what i am afraid of. 😥
bltn
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Re: Can I pull this 900k house?

Post by bltn »

newyorker wrote: Tue Jun 22, 2021 8:13 pm
bltn wrote: Tue Jun 22, 2021 8:10 pm We need information about your age, family, job security.

From what you supplied, you seem to like the current house. And the house cost is modest for someone with you current income.
I would stay in the current house. When the real estate market cools off, prices may well come down.
33/single/professional

Market drop is what i am afraid of. 😥
If the market drops and you really like your current house you re ok. Better off than in a bigger, more expensive house.
I d sit tight.
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newyorker
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Re: Can I pull this 900k house?

Post by newyorker »

bltn wrote: Tue Jun 22, 2021 8:17 pm
newyorker wrote: Tue Jun 22, 2021 8:13 pm
bltn wrote: Tue Jun 22, 2021 8:10 pm We need information about your age, family, job security.

From what you supplied, you seem to like the current house. And the house cost is modest for someone with you current income.
I would stay in the current house. When the real estate market cools off, prices may well come down.
33/single/professional

Market drop is what i am afraid of. 😥
If the market drops and you really like your current house you re ok. Better off than in a bigger, more expensive house.
I d sit tight.

True. Honestly im pretty content now. Ugh, more boring s&p500 then lol.
Goal33
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Re: Can I pull this 900k house?

Post by Goal33 »

I don’t get it. You bought a 300k house a few months ago and now you’re shopping 900k houses?
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JoeRetire
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Re: Can I pull this 900k house?

Post by JoeRetire »

newyorker wrote: Tue Jun 22, 2021 8:10 pm
JoeRetire wrote: Tue Jun 22, 2021 8:08 pm
newyorker wrote: Tue Jun 22, 2021 8:06 pm Reason why im considering selling my current house is the fear of buying at the market top.
I don't understand.
What does "buying at the market top" have to do with selling?
Say that market drops. Im just losing value on 900k instead of 1.25M if i am holding onto 2 places.
(shrug)

Makes no sense to me, but it's your house to sell.
If you think the market is going to drop, don't buy now - just wait.

Frankly, it sounds like your high income causes you to not know what to do with all our money (hint: invest it) and you are just bored.

Good luck.
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bltn
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Re: Can I pull this 900k house?

Post by bltn »

newyorker wrote: Tue Jun 22, 2021 8:19 pm
bltn wrote: Tue Jun 22, 2021 8:17 pm
newyorker wrote: Tue Jun 22, 2021 8:13 pm
bltn wrote: Tue Jun 22, 2021 8:10 pm We need information about your age, family, job security.

From what you supplied, you seem to like the current house. And the house cost is modest for someone with you current income.
I would stay in the current house. When the real estate market cools off, prices may well come down.
33/single/professional

Market drop is what i am afraid of. 😥
If the market drops and you really like your current house you re ok. Better off than in a bigger, more expensive house.
I d sit tight.

True. Honestly im pretty content now. Ugh, more boring s&p500 then lol.
Good thinking. Good luck.
jharkin
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Re: Can I pull this 900k house?

Post by jharkin »

I'm surprised you would be cross shopping houses at 300k and 900k. Did the 300 house actually meet your needs? Its kind of like saying should I get a Civic or a Suburban...

You know how much transaction costs are going to kill your ROI buying and selling in 6 months, but it sounds like you easily have the means to do it if you really want to.
Luke Duke
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Re: Can I pull this 900k house?

Post by Luke Duke »

newyorker wrote: Tue Jun 22, 2021 8:01 pm Can I pull this 900k house?
How big is your truck?
TheHiker
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Re: Can I pull this 900k house?

Post by TheHiker »

You can buy it for cash, of course you can afford it (I wish we had houses this cheap around here).
If it is a big house, ask yourself if you need a big house.
The increased property tax would be my concern as you will be paying it forever. You may have to downsize later on if you plan early retirement.
demdeah26
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Re: Can I pull this 900k house?

Post by demdeah26 »

If you would enjoy the house/neighborhood/location more than your current one, it wouldn’t cause stress, and you still have money for travel/hobbies/investing, then I would do it.

This is coming from a 30 yr old with less income and portfolio balance who bought a 800k house 2 years ago when the one we were in was technically fine. But we loved the house and neighborhood and have been very happy with the decision. Still been able to invest and do everything we (spouse and 2 kids) want as well
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newyorker
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Re: Can I pull this 900k house?

Post by newyorker »

TheHiker wrote: Wed Jun 23, 2021 11:05 am You can buy it for cash, of course you can afford it (I wish we had houses this cheap around here).
If it is a big house, ask yourself if you need a big house.
The increased property tax would be my concern as you will be paying it forever. You may have to downsize later on if you plan early retirement.

My current house is 2000 sqft combined (basement, 1st floor and 2nd floor)

This one is 4000sqft ranch style house. Property tax on the former is $200 and the latter $1000. I will be honest and im content with where I live. But, all my colleagues live in this nice part of town and i eventually want to move to this area. Its just a matter of when. Now, I have both fomo if i dont buy and fear of crash if i do buy.
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newyorker
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Re: Can I pull this 900k house?

Post by newyorker »

jharkin wrote: Wed Jun 23, 2021 9:28 am I'm surprised you would be cross shopping houses at 300k and 900k. Did the 300 house actually meet your needs? Its kind of like saying should I get a Civic or a Suburban...

You know how much transaction costs are going to kill your ROI buying and selling in 6 months, but it sounds like you easily have the means to do it if you really want to.

Yes it did. Its more like buying civic then thinking damn i shouldve got suburban. I am thinking of renting the current house out if i proceed.
cogito
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Re: Can I pull this 900k house?

Post by cogito »

Your reasoning makes no sense, but obviously you can afford it. We have half your income and assets and comfortably afford our own 900k house. If you had double your income, many bogleheads would still not give you approval. You easily pass all the qualifiers for "income times X" tests so go ahead and spend your money on what aligns with your goals and desires in life.
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Re: Can I pull this 900k house?

Post by KT785 »

newyorker wrote: Tue Jun 22, 2021 8:13 pm 33/single/professional
Agree with the others that you can afford it, but I'd argue that 4,000 sq.ft. is a lot of house for a single person and would likely entail added expenses like increased insurance and utility costs. Do you clean your current home yourself and/or handle the landscaping? May not be as easy for a house double the size (or it will cost more if you outsource it).

Also, I'd be disinclined to find a "final house" if you ever plan on getting married in the future . . . just because you like the house doesn't mean a future spouse will.

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Re: Can I pull this 900k house?

Post by bltn »

newyorker wrote: Wed Jun 23, 2021 12:48 pm
TheHiker wrote: Wed Jun 23, 2021 11:05 am You can buy it for cash, of course you can afford it (I wish we had houses this cheap around here).
If it is a big house, ask yourself if you need a big house.
The increased property tax would be my concern as you will be paying it forever. You may have to downsize later on if you plan early retirement.

My current house is 2000 sqft combined (basement, 1st floor and 2nd floor)

This one is 4000sqft ranch style house. Property tax on the former is $200 and the latter $1000. I will be honest and im content with where I live. But, all my colleagues live in this nice part of town and i eventually want to move to this area. Its just a matter of when. Now, I have both fomo if i dont buy and fear of crash if i do buy.
Just because you can afford it doesn t make it a wise move right now.

I ll just mention that my first house I bought before I was married and I Iiked it. My last three houses I bought after I was married. I have liked them also. My wife picked out each of the last three.
rascott
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Re: Can I pull this 900k house?

Post by rascott »

A 4k sqft house for a single 33 year old is rather ridiculous. Numbers aside.
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Re: Can I pull this 900k house?

Post by cchrissyy »

newyorker wrote: Wed Jun 23, 2021 12:50 pm
jharkin wrote: Wed Jun 23, 2021 9:28 am I'm surprised you would be cross shopping houses at 300k and 900k. Did the 300 house actually meet your needs? Its kind of like saying should I get a Civic or a Suburban...

You know how much transaction costs are going to kill your ROI buying and selling in 6 months, but it sounds like you easily have the means to do it if you really want to.

Yes it did. Its more like buying civic then thinking damn i shouldve got suburban. I am thinking of renting the current house out if i proceed.
Sure you can afford a car with twice the seats or a house with twice the square feet but it would be a very strange decision with all those empty rooms!
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cchrissyy
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Re: Can I pull this 900k house?

Post by cchrissyy »

newyorker wrote: Tue Jun 22, 2021 8:13 pm
bltn wrote: Tue Jun 22, 2021 8:10 pm We need information about your age, family, job security.

From what you supplied, you seem to like the current house. And the house cost is modest for someone with you current income.
I would stay in the current house. When the real estate market cools off, prices may well come down.
33/single/professional

Market drop is what i am afraid of. 😥

At your income, there is no need to fear market drop. It's the folks who stretched to buy and whose house is a big piece of their puzzle who need to fear that.

But JoeRetire is right to perceive you are bored or otherwise searching for satisfaction through shopping, where it will not be found. IMO 6 months ago when you bought you should have deleted your home shopping app alerts.
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pasadena
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Re: Can I pull this 900k house?

Post by pasadena »

You just bought a house, you like it and you're happy in it. Why would you want something 3x more expensive, so soon?!

Not to mention, living alone in 4,000 sqf sounds like serious overkill. You won't use half the house, but you'll still have to maintain it while drowning a lot more money in it (taxes, maintenance, insurance...).

I agree with others who say your reasoning makes no sense. What would be your motivation to buy the new mansion? Also, if the market drops, well, you'll be able to buy the $900k house at a discount, so count it as a win.
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Re: Can I pull this 900k house?

Post by hachiko »

My suggestion is to really try thinking about living in a 4k sq ft house alone. There will almost certainly be rooms that you will basically never go into. If you want to buy a $2m house you might even be ok. But I think the idea of a 4k sq ft house sounds better than it actually is. If you want the house, that's a valid reason to buy in my opinion, but I'm not sure I'd give any weight to the last 1k sq ft at a minimum unless you're planning on airbnb or something.
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hachiko
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Re: Can I pull this 900k house?

Post by hachiko »

JoeRetire wrote: Tue Jun 22, 2021 8:33 pm
newyorker wrote: Tue Jun 22, 2021 8:10 pm
JoeRetire wrote: Tue Jun 22, 2021 8:08 pm
newyorker wrote: Tue Jun 22, 2021 8:06 pm Reason why im considering selling my current house is the fear of buying at the market top.
I don't understand.
What does "buying at the market top" have to do with selling?
Say that market drops. Im just losing value on 900k instead of 1.25M if i am holding onto 2 places.
(shrug)

Makes no sense to me, but it's your house to sell.
If you think the market is going to drop, don't buy now - just wait.

Frankly, it sounds like your high income causes you to not know what to do with all our money (hint: invest it) and you are just bored.

Good luck.
The reason a lot of people try to buy and sell at the same time is because they want to limit their exposure to real estate past a certain amount of time. You have a $1m house and $5m NW, your exposure to RE is 20%. But if you buy another $1m house, your exposure to RE is 40% which is where a lot of people don't want to be.

If you buy at the top of the market and sell at the same time (top of the market) it takes some of the sting out of buying where you did. If you buy and sell on the way up, you lose some of the would-be gains of the small house, but you get the gains on the bigger house. But the difference in selling time here doesn't seem to be as relevant because the small house is only worth 1/3.
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newyorker
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Re: Can I pull this 900k house?

Post by newyorker »

hachiko wrote: Wed Jun 23, 2021 10:07 pm
JoeRetire wrote: Tue Jun 22, 2021 8:33 pm
newyorker wrote: Tue Jun 22, 2021 8:10 pm
JoeRetire wrote: Tue Jun 22, 2021 8:08 pm
newyorker wrote: Tue Jun 22, 2021 8:06 pm Reason why im considering selling my current house is the fear of buying at the market top.
I don't understand.
What does "buying at the market top" have to do with selling?
Say that market drops. Im just losing value on 900k instead of 1.25M if i am holding onto 2 places.
(shrug)

Makes no sense to me, but it's your house to sell.
If you think the market is going to drop, don't buy now - just wait.

Frankly, it sounds like your high income causes you to not know what to do with all our money (hint: invest it) and you are just bored.

Good luck.
The reason a lot of people try to buy and sell at the same time is because they want to limit their exposure to real estate past a certain amount of time. You have a $1m house and $5m NW, your exposure to RE is 20%. But if you buy another $1m house, your exposure to RE is 40% which is where a lot of people don't want to be.

If you buy at the top of the market and sell at the same time (top of the market) it takes some of the sting out of buying where you did. If you buy and sell on the way up, you lose some of the would-be gains of the small house, but you get the gains on the bigger house. But the difference in selling time here doesn't seem to be as relevant because the small house is only worth 1/3.

I agree but if my original property is something that can be rented out at 2200/month with monthly expense of 1200/month. It aint too bad right?
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newyorker
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Re: Can I pull this 900k house?

Post by newyorker »

hachiko wrote: Wed Jun 23, 2021 9:48 pm My suggestion is to really try thinking about living in a 4k sq ft house alone. There will almost certainly be rooms that you will basically never go into. If you want to buy a $2m house you might even be ok. But I think the idea of a 4k sq ft house sounds better than it actually is. If you want the house, that's a valid reason to buy in my opinion, but I'm not sure I'd give any weight to the last 1k sq ft at a minimum unless you're planning on airbnb or something.

I agree. Even in my tiny house, i use one bedroom out of 3. Its more of an investment in one thing (using leverage to buy a property) and vanity on the other (living in neighborhood where all drs and lawyers live)
JustGotScammed
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Re: Can I pull this 900k house?

Post by JustGotScammed »

Of course you can afford it. You could even afford a house at $1.7 million. Go for it, man, why make money if you can't enjoy it.
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newyorker
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Re: Can I pull this 900k house?

Post by newyorker »

One more question, I saw on another thread that house price usually dont beat stock market but the advantage is you can borrow money against bank to do so. Isnt it wise to borrow like 500k from bank and lump sum into the market?
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Re: Can I pull this 900k house?

Post by Marseille07 »

newyorker wrote: Thu Jun 24, 2021 7:27 pm One more question, I saw on another thread that house price usually dont beat stock market but the advantage is you can borrow money against bank to do so. Isnt it wise to borrow like 500k from bank and lump sum into the market?
That's just a levered play. Kind of like saying buying UPRO is better than SPY if the market goes up.
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newyorker
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Re: Can I pull this 900k house?

Post by newyorker »

Marseille07 wrote: Thu Jun 24, 2021 7:42 pm
newyorker wrote: Thu Jun 24, 2021 7:27 pm One more question, I saw on another thread that house price usually dont beat stock market but the advantage is you can borrow money against bank to do so. Isnt it wise to borrow like 500k from bank and lump sum into the market?
That's just a levered play. Kind of like saying buying UPRO is better than SPY if the market goes up.
I guess. But it does beg a question of isnt it better to hold upro than spy if so?
Marseille07
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Re: Can I pull this 900k house?

Post by Marseille07 »

newyorker wrote: Thu Jun 24, 2021 7:54 pm
Marseille07 wrote: Thu Jun 24, 2021 7:42 pm
newyorker wrote: Thu Jun 24, 2021 7:27 pm One more question, I saw on another thread that house price usually dont beat stock market but the advantage is you can borrow money against bank to do so. Isnt it wise to borrow like 500k from bank and lump sum into the market?
That's just a levered play. Kind of like saying buying UPRO is better than SPY if the market goes up.
I guess. But it does beg a question of isnt it better to hold upro than spy if so?
Sure, but the markets can go down. If you borrowed money on your property, you still have to pay back the original amount + interest.
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newyorker
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Re: Can I pull this 900k house?

Post by newyorker »

Marseille07 wrote: Thu Jun 24, 2021 8:00 pm
newyorker wrote: Thu Jun 24, 2021 7:54 pm
Marseille07 wrote: Thu Jun 24, 2021 7:42 pm
newyorker wrote: Thu Jun 24, 2021 7:27 pm One more question, I saw on another thread that house price usually dont beat stock market but the advantage is you can borrow money against bank to do so. Isnt it wise to borrow like 500k from bank and lump sum into the market?
That's just a levered play. Kind of like saying buying UPRO is better than SPY if the market goes up.
I guess. But it does beg a question of isnt it better to hold upro than spy if so?
Sure, but the markets can go down. If you borrowed money on your property, you still have to pay back the original amount + interest.

True but we are going under assumption that market will go up eventually in 20-30 years hence upro better than spy?
Marseille07
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Re: Can I pull this 900k house?

Post by Marseille07 »

newyorker wrote: Thu Jun 24, 2021 8:01 pm True but we are going under assumption that market will go up eventually in 20-30 years hence upro better than spy?
Not quite. It's better than 1x but UPRO suffers volatility decay. Optimal leverage is said to be around 2x (SSO). This is off topic though, you were asking about a house & HELOC. The UPRO stuff was just an analogy.
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Re: Can I pull this 900k house?

Post by chazas »

rascott wrote: Wed Jun 23, 2021 8:43 pm A 4k sqft house for a single 33 year old is rather ridiculous. Numbers aside.
Lol well. I’m a single 60 year old in a 5000 square food house, Judgy McJudgington.
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newyorker
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Re: Can I pull this 900k house?

Post by newyorker »

Update for you guys. I decided against it. Too big of a house and didnt feel like moving in 3 months. Hopefully i find some tear down house I can rent out to people and stay at my place for a while.
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