1.6MM home- how much would you want to be making?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Op, look at your financial situation, your consumption habits, and future income vs expenses. People on this forum are nuts. I think most just have bad spending habits....excessive alochol, travel, recreation drug use, etc. You don't need a $500k to purchase a $1.6m home, at least when you are not white (cacausian). We built a $2m custom for a income same as yours and not stretched by any means. Both kids in private college and retirement fully funded and we travel and shop at whole foods,mets. We are in our late 40s. Bunch of bull here on this form....!

PPP may be on to something here. I have seen many immigrant (the professional kind) with good, but not super high incomes purchasing high end (>$1.5m) homes throughout the finer suburban Montgomery and Fairfax county sub divisions. I own a small hme improvement business and find myself installing decks, patios, hardscaping, etc at numerous newly built homes owned by immigrants. Must be a cultural and/or lifestyle thing I guess.

I think you will be fine and agree with this. We have $5k monthly payments on a $19k monthly post tax income. When we bought our income was $12k. We don't live extravagently. I like living in a nice area and have always been happy to lead a simple life. If you like fancy holidays, brand new cars or your wife is really into clothes it will be harder.

I remember when I purchased our home, around 1.5M. It shocked me how many people were just like yourself, living in a nice home on a lower end income for the neighborhood and how the houses were hardly furnished and the finishes were sated and low end. It strikes me as odd that someone would buy a house for 1M+ and can only afford to furnish at a 400k house level.

We purchased for 1.7, financed 1M (max tax write off) and bring in 30k/mo and have lots of investments.

Yes. It's bizarre to be okay spending so much on interest payments but not on anything else in life.

I'm the PP you are quoting and if we did not have our high income level, there is no way wed be in this home. Funding our kids education came first, long before the huge downpayment we put down. Plus travel is a big part of what we value. Experiences are more important than things and having a huge mortgage that we could barely fit into at the expense of travel would be a no go.

I think some people just want the outward status of a big home in a top zip code, but the second you step foot inside the home you realize the whole thing is a facade. There are largely empty rooms, old worn out furniture and updates the home need that are neglected. Many of these people are just treading water...much like how the OPs future will look.

[Anonymous]

OP, buy ONLY if you are Asian or of some other ethnic culture....

[Anonymous]

Anonymous wrote:OP, buy ONLY if you are Asian or of some other ethnic culture....

Racist.

[Anonymous]

310k income, 75k in retirement? For 2 people? How does that happen??

[Anonymous]

Anonymous wrote:310k income, 75k in retirement? For 2 people? How does that happen??

Maybe OP forgot a zero.

[Anonymous]

Anonymous wrote:310k income, 75k in retirement? For 2 people? How does that happen??

It's not surprising. Seems consistent with Ops approach to finances.

[Anonymous]

Anonymous wrote:OP, buy ONLY if you are Asian or of some other ethnic culture....

???

[Anonymous]

OP. not to pile on, but I also think you're probably underestimating the costs of kids as they grow a bit older, if you want them to live the typical suburban lifestyle. We have 3 kids, so a bit more, but our expenses just for the clear itemizable things run like this:

Groceries -- about $1K a month. We don't eat expensive stuff like steak, but fresh fruit, yogurt, veggies, etc. really add up and kids eat a TON of it.
Sports and scouting -- about $2K a year. Karate is probably the most expensive one, and baseball the cheapest. We don't do the expensive travel sports, but every time we turn around, we're dropping a few hundred on a sport.
Vacations -- about $15K a year. Again, we don't do luxury -- we've never stayed at a 4 Seasons or an all-inclusive. This is for one trip a year to someplace like Disney or a Carnival Cruise (not the expensive Disney cruise!) and a trip to visit Grandma.
Camps -- $10+K a year. And that's not even for the expensive sleep away camps. Day camps around here run from $250/wk for the cheapest YMCA camps to over $500/week for specialty camps in the kids' interest. We do a mix of the cheaper and more expensive.

...and I haven't even tried to estimate clothes (shoes are killing me -- that's probably another $1K a year for 3 kids who run through them like mad), all the random PTA and room fees, etc., etc.

And what if public school doesn't work for one or more of your kids and you need to think about private? Or if/when one of them needs a psychologist for anxiety/ADHD/depression?

Obviously, you can save a lot by clipping coupons, telling the kids no expensive camps or sports teams, take a camping summer vacation instead of hotels, etc....the question is really -- do you want that $1.6M house enough to make those sacrifices? I would not.

[Anonymous]

Anonymous wrote:310k income, 75k in retirement? For 2 people? How does that happen??

Yup. I'm 35 with $130K income and I have $350K saved in retirement accounts, $150K equity in the condo I bought when I was single, paid off car, paid off student loans, $3K in CC debt. Contributing $16K a year to my retirement.

My husband has a trust so we don't have to worry about college tuition.

Together we make $270K. We bought $800K house.

[Anonymous]

We bring home $340k before bonuses (that we don't count on because there have definitely been years where they didn't happen) and have a $760 mortgage. Our monthly is about $4200. Add in our student loan, which you don't seem to have, and let's say we're paying out $5400/month. Sure, we could theoretically afford over 7, but isn't the point of making good money NOT having to worry about money? Why stretch? Your savings are not nearly enough. And I also agree that scrimping and saving into a 1.6mm home and then not being able to afford the commensurate lifestyle or furnishings is sad.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Op, look at your financial situation, your consumption habits, and future income vs expenses. People on this forum are nuts. I think most just have bad spending habits....excessive alochol, travel, recreation drug use, etc. You don't need a $500k to purchase a $1.6m home, at least when you are not white (cacausian). We built a $2m custom for a income same as yours and not stretched by any means. Both kids in private college and retirement fully funded and we travel and shop at whole foods,mets. We are in our late 40s. Bunch of bull here on this form....!

PPP may be on to something here. I have seen many immigrant (the professional kind) with good, but not super high incomes purchasing high end (>$1.5m) homes throughout the finer suburban Montgomery and Fairfax county sub divisions. I own a small hme improvement business and find myself installing decks, patios, hardscaping, etc at numerous newly built homes owned by immigrants. Must be a cultural and/or lifestyle thing I guess.

The immigrant families are able to do this because single adult children often live with their parents and their income contribute to the household expenses.

Asian-American here. Many Asians also have family wealth. My parents came to America with family money even though they never had a high income. DH and I live in an expensive home but we have a seven figure income.

If you see an average Chinese guy buying an expensive home that is not well supported by his income, it's most likely the older parents in China funding their lifestyle. I wouldn't go so far as to call this family wealth because the older parents are not really wealthy, they just passed on their life savings to their kids while they are still alive. This is quite common in modern Chinese culture where the male side of the family is expected to put up the housing for the young couple. This is in contrast to rich families from HK, Taiwan, or even the newly rich from mainland China, who are truly wealthy, and these people tend to buy much much larger homes - $3M and above typically.

PP here. I'm from NYC and went to school in Boston. Many of my Asian friends bought multi million dollar homes in Manhattan in cash from family money from Asia. There is tons of money in Asia. I see it less in the DC area. Those Asians are more attracted to NYC, LA and SF.

Sure, these are rich second generation of business men, and corrupt politicians from China. This is different from some regular family making $150k HHI and yet somehow buys a $1M house with a lot of down payment. What I'm saying is that there are two distinct phenomenons happening here, impacting different people and different segments of the market. I know people from both camps.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Op, look at your financial situation, your consumption habits, and future income vs expenses. People on this forum are nuts. I think most just have bad spending habits....excessive alochol, travel, recreation drug use, etc. You don't need a $500k to purchase a $1.6m home, at least when you are not white (cacausian). We built a $2m custom for a income same as yours and not stretched by any means. Both kids in private college and retirement fully funded and we travel and shop at whole foods,mets. We are in our late 40s. Bunch of bull here on this form....!

PPP may be on to something here. I have seen many immigrant (the professional kind) with good, but not super high incomes purchasing high end (>$1.5m) homes throughout the finer suburban Montgomery and Fairfax county sub divisions. I own a small hme improvement business and find myself installing decks, patios, hardscaping, etc at numerous newly built homes owned by immigrants. Must be a cultural and/or lifestyle thing I guess.

The immigrant families are able to do this because single adult children often live with their parents and their income contribute to the household expenses.

It can be all over the map with immigrant families. Sure some have the set up you're describing -- where grown adult children live at home until marriage so there are multiple incomes paying off the mortgage. There are other scenarios where immigrants come here with family money and/or their family back home funds a lot of a house purchase. But there are also scenarios where they come here with a few suitcases and no family help and buy a $2 million home when their kids are 8 and 10 and obviously not contributing to the mortgage -- never under estimate immigrant scrimping and saving and sacrificing to get what they want; I have seen it time and time again.

I don't think you can get to a $2M house by scrimping and saving. You need cash flow to maintain the lifestyle of a $2M house. Even if you managed to save up $2M in cash and paid off the house in full, the yearly property tax, maintenance, landscaping, utilities, and etc, are all significantly higher than say a $1M house. I see plenty of people scrimping and saving their way to a large house, but it's all $1M or less - and most often with multiple generations living together.

There are immigrant families who came here with nothing and do well in small businesses. They can save from the earnings from their nail salons, dry cleaners, grocery stores and restaurants. My childhood friend lived in a huge mansion. He parents owned a few dry cleaners.

Well, that's different from scrimping and saving. That's called entrepreneurship, which is different from scrimping and saving. My parents were scrimpers and savers, they had normal professional/engineer jobs and bought their first house with cash that they had scrimped and saved. I think their salary peaked out somewhere around $120k combined? Their total net worth at retirement was maybe $2M, which included a lot of retirement fund growth and gains from the sale of their primary home.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP, buy ONLY if you are Asian or of some other ethnic culture....

Racist.

REALIST....not racist....

[Anonymous]

jeez, our HHI is 340k and I wouldn't begin to think of taking on that kind of mortgage. that is one-paycheck-away-from-financial-ruin status.

[Anonymous]

2.5 times your salary.