I don’t understand how my neighbors are paying for their renovation

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:You have no idea how people conduct themselves. My DH and I when dating at age 22 fresh out of college bought a house in Vienna woods. That was 23 years ago. We held for a long time as a rental and then bought another house. We then 1031 exchange the Vienna house and didn’t sell our 2nd home and turned that into a rental as well. After renting the 1031 for a year to keep up appearances for the IRS we moved into it that home and here we are in a home that is paid off. We do not make a ton of money but we do use what we make wisely and have never been afraid to leverage ourselves. This approach has paid off very well in this real estate market. We sit in two income producing rentals and own a primary home without a mortgage

I’m not sure why DCuM is sooo class obsessed. This is not a happy way to live your life.

Nice to have family money & no student loans!

Maybe they didn't have student loans, maybe they only had $10-15K of student loans. Either way..... they definately didn't need family money to do this. We bought our first house at 24, and that was after paying off $80K+ in student loans and waiting to have 20% down. No family money. If we hadn't had student loans, we could have purchases at 22/22.5 with 20% down. And we bought a 2200sq ft, 4 bed 2.5 bath home. Could have easily bought for 25% less a smaller home and done it 6 months earlier. If we had no student loans, could have purchases at 22 very easily and still put 20% down.

This is all meaningless drivel without location/prices

[Anonymous]

Anonymous wrote:

Anonymous wrote:For us it was Apple stock and a decade of frugality.

Not everything is about family money, far from it, but after spending years on DCUM, I've seen that people feel more comfortable thinking their neighbors benefited from family help than from their own investment decisions or their own frugality or hard work. It must make them feel better about themselves, a la "it's not my fault I can't have the same thing, this family just started out on a different rung".

DID YOU cash out your apple stock?

My neighbor brought 1000 shares of apple stock back in 2000...

So? That's not really a lot, especially with capital gains tax.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. Thanks for all the responses. I guess the answer is borrowing against a paid-off house that they were given - I hadn't thought of that. If I were gifted a paid-off house, I would just be grateful to never have a mortgage; it wouldn't be my first thought to leverage myself back to the gills just to upgrade my standard of living a little bit.

I understood your curiosity at first, but it’s becoming clearer in follow up that you’re trying to somehow convince yourself your neighbors are drowning in debt. Why? To feel better about your own home/life choices? I’m not really sure.

But a 500k loan on a 160k income is doable, especially if no student loans. And it’s entirely possible they had saved up earlier on (especially if they lived in the paid off house for a while before renovating) so maybe they only took out 350k and had 150k cash.

It is entirely possible your neighbors are about to have a newly fixed up house worth close to $1.2m + and be financially comfortable.

Yes. It really seems like the OP is just very jealous that her neighbors are going to be living in this beautiful house and has to convince herself that they really can't do it and are going to be karmically punished for some reason. No. We have the same HHI and a 500k loan would be doable, but more likely they had cash saved up and they have a much smaller loan.

OP here. I’m not jealous at all. As mentioned, I didn’t even think about the fact that they would borrow against an inherited, paid-off house because it’s not something I would do. I actually have lots of untapped equity and could do the exact same thing if I wanted to.

I’m just surprised that they did this because, as I mentioned, this is not a Bethesda
sh*tshack and their $900,000 house was nice enough before the renovation. The renovation is a want — not a need — and I wouldn’t want to go into debt for 30 years for something like that. But that doesn’t mean I don’t think they can afford a $500-600K mortgage or that I’m jealous. Different strokes for different folks.

NP. I am so embarrassed for you, that your life is so pathetic that you spend this much time and attention ruminating on other people. Goodness, when was your last orgasm? You need to take up knitting or something. Get a cat. You’re That Lady in the neighborhood, the gossipy one with no life that everyone avoids.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Are sure they only make $160k? That’s very low for a 30+ year old married couple from wealthy families. Are they teachers? I have a feeling their income is a lot higher than you think it is.

Who said their families were wealthy?

Pretty sure the house was not valued at $900k when the parents bought it.

Passing down an almost $1M home means you’re wealthy. Doesn’t matter when the parents bought it.

Not really. Parents likely bought it for $100K 40 years ago and paid off the mortgage over 30 years. And lived there until they couldn't any longer and then passed it onto the kid rather than selling. Those parents may not be "wealthy", just financially savvy and able to stay in one house their entire lives and pay off a mortgage over 30 years.

They may not be wealthy, just financially savvy and patient? It may not be wealthy by your standards of wealth inside the wealthy DMV bubble but to say that’s not “wealthy” is absurd.

I don’t understand why DCUM struggles to call people wealthy.

Buying a home for $100K and paying it off after living in it for 30 years is NOT wealthy. It does NOT matter what the home is worth now. They bought a middle class home and lived there for 30+ years. That does not make them wealthy.

My own LMC parents did something similar... paid $80K for a home and sold it 35 years later for $320K, and only had a $25K mortgage at that point. Trust me, they are NOT wealthy. Never made more than $35-40K yearly over their lifetime. They just lived frugally, stayed in the same home and saved whatever they could. But they are NOT wealthy. Even with the home sale, they were only worth $800K at that point with all their "savings". That is likely a middle class family who worked to pay off their mortgage, not keep up with the Joneses(ie did not upgrade to a fancier home along the way), and just got lucky that the home increased a ton during those 30-40 years. But that fact alone does not make them wealthy, as they did not purchase the 900K home---they paid maybe $100K 30-40 years ago.

I get it now. I use wealthy to mean “has money”. You appear to have all sorts of class baggage tied up with the term.

Well one does not "have money" if it's tied up in a home. they have to sell the home 30-40 years later and then you still need somewhere to live (and the homes are going to cost similar or more than what you have sold for) or have to plan to rent for your retirement or buy a new home and carry a mortgage until you die. But to each their own...whatever definition you like.

NP, not sure I agree. If you have a paid off home, you have more cash flow due to lower monthly obligations, and you can adjust your retirement savings knowing either that your housing is paid for life or you'll have a big lump sum when you sell. It definitely makes more things possible even if you never borrow against the equity.

My parents bought their house in the 70s for $57k. The fact they weren't paying a mortgage in the 90s was meaningful for our vacations, college, etc.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. Thanks for all the responses. I guess the answer is borrowing against a paid-off house that they were given - I hadn't thought of that. If I were gifted a paid-off house, I would just be grateful to never have a mortgage; it wouldn't be my first thought to leverage myself back to the gills just to upgrade my standard of living a little bit.

I understood your curiosity at first, but it’s becoming clearer in follow up that you’re trying to somehow convince yourself your neighbors are drowning in debt. Why? To feel better about your own home/life choices? I’m not really sure.

But a 500k loan on a 160k income is doable, especially if no student loans. And it’s entirely possible they had saved up earlier on (especially if they lived in the paid off house for a while before renovating) so maybe they only took out 350k and had 150k cash.

It is entirely possible your neighbors are about to have a newly fixed up house worth close to $1.2m + and be financially comfortable.

Yes. It really seems like the OP is just very jealous that her neighbors are going to be living in this beautiful house and has to convince herself that they really can't do it and are going to be karmically punished for some reason. No. We have the same HHI and a 500k loan would be doable, but more likely they had cash saved up and they have a much smaller loan.

OP here. I’m not jealous at all. As mentioned, I didn’t even think about the fact that they would borrow against an inherited, paid-off house because it’s not something I would do. I actually have lots of untapped equity and could do the exact same thing if I wanted to.

I’m just surprised that they did this because, as I mentioned, this is not a Bethesda
sh*tshack and their $900,000 house was nice enough before the renovation. The renovation is a want — not a need — and I wouldn’t want to go into debt for 30 years for something like that. But that doesn’t mean I don’t think they can afford a $500-600K mortgage or that I’m jealous. Different strokes for different folks.

Lol some of us are born in the dc area and we like the neighborhood. I would never live in Bethesda.

[Anonymous]

Anonymous wrote:OP here. Thanks for all the responses. I guess the answer is borrowing against a paid-off house that they were given - I hadn't thought of that. If I were gifted a paid-off house, I would just be grateful to never have a mortgage; it wouldn't be my first thought to leverage myself back to the gills just to upgrade my standard of living a little bit.

Wow. With every post, you reveal yourself to be a complete d-bag.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You have no idea how people conduct themselves. My DH and I when dating at age 22 fresh out of college bought a house in Vienna woods. That was 23 years ago. We held for a long time as a rental and then bought another house. We then 1031 exchange the Vienna house and didn’t sell our 2nd home and turned that into a rental as well. After renting the 1031 for a year to keep up appearances for the IRS we moved into it that home and here we are in a home that is paid off. We do not make a ton of money but we do use what we make wisely and have never been afraid to leverage ourselves. This approach has paid off very well in this real estate market. We sit in two income producing rentals and own a primary home without a mortgage

I’m not sure why DCuM is sooo class obsessed. This is not a happy way to live your life.

Nice to have family money & no student loans!

Absolutely no family money, but we did meet at George Mason and both commuted to school from home. We lived in a shared house junior and senior year. You are correct though no student loans was able to pay as we went.

[Anonymous]

Yes, family money. There's so much of that in DC. We sold two homes in NWDC. Both times, lots of people came to see it with their parents who were footing the entire bill.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP here. Thanks for all the responses. I guess the answer is borrowing against a paid-off house that they were given - I hadn't thought of that. If I were gifted a paid-off house, I would just be grateful to never have a mortgage; it wouldn't be my first thought to leverage myself back to the gills just to upgrade my standard of living a little bit.

I understood your curiosity at first, but it’s becoming clearer in follow up that you’re trying to somehow convince yourself your neighbors are drowning in debt. Why? To feel better about your own home/life choices? I’m not really sure.

But a 500k loan on a 160k income is doable, especially if no student loans. And it’s entirely possible they had saved up earlier on (especially if they lived in the paid off house for a while before renovating) so maybe they only took out 350k and had 150k cash.

It is entirely possible your neighbors are about to have a newly fixed up house worth close to $1.2m + and be financially comfortable.

Yes. It really seems like the OP is just very jealous that her neighbors are going to be living in this beautiful house and has to convince herself that they really can't do it and are going to be karmically punished for some reason. No. We have the same HHI and a 500k loan would be doable, but more likely they had cash saved up and they have a much smaller loan.

OP here. I’m not jealous at all. As mentioned, I didn’t even think about the fact that they would borrow against an inherited, paid-off house because it’s not something I would do. I actually have lots of untapped equity and could do the exact same thing if I wanted to.

I’m just surprised that they did this because, as I mentioned, this is not a Bethesda
sh*tshack and their $900,000 house was nice enough before the renovation. The renovation is a want — not a need — and I wouldn’t want to go into debt for 30 years for something like that. But that doesn’t mean I don’t think they can afford a $500-600K mortgage or that I’m jealous. Different strokes for different folks.

Not up to you to define a "want" vs "need". In reality, if they have no mortgage (gifted family home), in your 40s, it's not a bad idea to take 500K in HELOC and renovate. Do it while your family can enjoy it. Until you know their entire financial picture, you have no clue whether it's a good idea or not. And really you do sound jealous. Most of us with good finances spend $$ on wants all the time.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP here. Thanks for all the responses. I guess the answer is borrowing against a paid-off house that they were given - I hadn't thought of that. If I were gifted a paid-off house, I would just be grateful to never have a mortgage; it wouldn't be my first thought to leverage myself back to the gills just to upgrade my standard of living a little bit.

Wow. With every post, you reveal yourself to be a complete d-bag.

+1000

You literally have no clue about their finances. Yet seem invested in wasting a lot of your time figuring it out. It does seem like you are jealous.

[Anonymous]

Anonymous wrote:OP here. Thanks for all the responses. I guess the answer is borrowing against a paid-off house that they were given - I hadn't thought of that. If I were gifted a paid-off house, I would just be grateful to never have a mortgage; it wouldn't be my first thought to leverage myself back to the gills just to upgrade my standard of living a little bit.

You don't know that they are leveraging themselves up "to the gills". For all you know, they can easily pay for it with a combination of savings/inheritance and current cash flow. I also have a neighbor who has gutted his 20 yr old large home and doing a 1 mil+ renovation. His wife is a SAHM and he is a consultant. They are conservative with their cash and have sent their kids thru college. I would highly doubt they are leveraging themselves more than it is prudent since he will retire in less than 10 years and only one kid still lives at home and their parents have passed. They clearly want to have a new home but a reno makes more sense than new.

[Anonymous]

Anonymous wrote:Yes, family money. There's so much of that in DC. We sold two homes in NWDC. Both times, lots of people came to see it with their parents who were footing the entire bill.

Lots of people admitted that when viewing the house? Seems like it would be none of anyone's business how the potential buyers intended to finance the purchase until they made an offer.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yeah, yeah, I should mind my own business – but I still don’t get it. They are in their mid-30s with three young kids. I obviously don’t know their exact salaries, but based on their jobs, I’d bet one earns about $90,000 and the other about $70,000.

Pre-renovation, the house was probably worth $900,000. And they’re now doing so much work that it’s almost like a new build (adding square footage, completely gutting the inside, adding a deck, etc.). I don’t see how they’re spending any less than $500,000 on the renovation, and it’s probably more.

I don’t get how a family with three young kids making $160,000 a year can afford this. I guess the answer is family money, but is there really this much of it going around? This is not even in Bethesda or some place like that. I should add that it is the childhood home for one of them, so maybe they were gifted it by their parents – but still, are parents giving an extra $500,000+ cash on top of a paid-off $900,000 house (plus rent for a second place while the remodel is happening)??

MYOB.

Are you the same poster who posts this (MYOB) repeatedly throughout this website ?

Do you see the irony of your posts ?

Yes! I never understand the MYOB comment. This is an anonymous forum. People are legitimately curious as to why and how some people do things with money (is it debt? is it family money? a better job?) and it is OK to ask. Ignoring legitimate questions about money under MYOB -- which is repeated here like all the freakin' time -- seems silly. Its anonymous, lighten up!

[Anonymous]

We have neighbors who don't have well paying jobs and who have done a lot to their house. (one is a high school coach, the other is a teacher). Also they bought their house for about $750K, which seems high on their salaries, if they aren't getting help from family.

The husband has openly told us that his in laws are going to pay off their entire house, but he has given us a different story each time. Once he said his FIL was selling his business for $100 million and would pay off their house once he did. Another time he said he FIL was selling his business for $10 million. Another time he said his in laws were selling their house and moving into an RV and using the money from their house to pay off his house. I once met the FIL, and he is actually in the same line of work as me, which is a pretty standard corporate type job. Based on what he told me about his career, it didn't sound like he even owned a business.

I know their finances are none of my business, but when my neighbor keeps volunteering this information and changing his story, it makes them seem very sketchy and makes me question everything they are telling me.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yes, family money. There's so much of that in DC. We sold two homes in NWDC. Both times, lots of people came to see it with their parents who were footing the entire bill.

Lots of people admitted that when viewing the house? Seems like it would be none of anyone's business how the potential buyers intended to finance the purchase until they made an offer.

Yes. My realtor said she got this info at the open house. Most realtors will try to ascertain how potential buyers are financing a home. Plus she said that one young woman came with her parents and her dad asked her "So do you want me to buy you this one or the other one?" She said the other one LOL. For the other home we sold, the wife's parent paid cash for it.