How much to spend on real estate?
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Anonymous
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What would be reasonable to spend on real estate with:
$3.8M saved and invested No loans or debt Salary $250K with company stock What would be the least to spend, the average and the higher end? Thank you. |
Anonymous
| Anyone? |
Anonymous
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What is it you want to do and use it for?
An investment? A retreat? A backdoor citizenship play? |
Anonymous
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For what?
Your residence? A second residence? An investment property? Any sales of current property in exchange? |
Anonymous
To live in. |
Anonymous
Are you currently renting, or selling, and if so, how much equity do you have? |
Anonymous
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Assuming this is your first purchase, I would not be comfortable with a mortgage of over 800,000, meaning about 5,000 PMI. This means you could buy a 1,000,000 house with 200,000 down, or a 1.5 million house with 700,000 down (which you could do with your savings).
If this is your first purchase, beware that even at high price points even if you put down a large down payment you can have extensive repair and work costs. Things like tree work, landscaping, painting, small fixes, small renos, and replacements add up quickly. Plan for 200K over the first few years of ownership at your price point/income, even if it house is "nice." |
Anonymous
| ^Unless you get new construction, in which case, probably less work needed. |
Anonymous
Renting. |
Anonymous
| Do you have children and have you saved for their future? We spent close to a million bucks on two private colleges and one law school. Factor that in. |
Anonymous
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I think with your stats, I'd start from what do you want - how many BDs, how much space, what neighborhood.
You have some flexibility. I intentionally live in a smaller house than I can otherwise afford b/c I don't want to HAVE to get a high paying job to service my mortgage if I lose my current job. Read the two-income trap. You have enough savings that you could make a different choice for sure. I prefer to take lots of vacations during the year that can at times be expensive, and have a lot of flexibility that is not tied up in my home. I think you have enough money that you should instead ask yourself where do you want to live and how, and then see if you are comfortable with it. I also wonder how old you are, if any of your $3.8M is in tax-advantaged retirement vehicles, are you losing funds to inflation etc. |
Anonymous
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Is $1 million saved the new $100k saved? It seems like everyone already has a $1mil+ saved and usually by 35 years old. These same people have another potential 20 years of saving and investing.
I feel bad for people asking if they can retire with $1mil+ because the purchasing power of these millionaires before 35 is going to drive prices for everyone. |
Anonymous
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Keep renting if that's how you ended up with so much money.
I don't know how you leave out your age, how many people will live in it, when you are retiring, and if it's your last home among other things. |
Anonymous
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OP, we are in a similar position but had 4.5m saved in investments- we landed at 1.9m house that we paid 1.6m cash for and took out a small 300k loan because we didn't want a big payment each month. We have a similar salary as well. Hope this helps.
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Anonymous
| For most people, the biggest factor here is what it takes to get a house they like within the area they want to live in. |