$2M home w/ $160k HHI?

[Anonymous]

Anonymous wrote:https://www.redfin.com/MD/Rockville/10107-Gary-Rd-20854/home/10888099

Something like this in Potomac yes. I picked this one as was all redone only 16k taxes and solid home

Are you a real estate agent looking for a sucker? This is exactly the kind of house I would not buy on a $160,000 income.

I'd buy something in close-in Bethesda or Chevy Chase. 4,000 sq. ft. or less new build or fully renovated.

[Anonymous]

I would buy 2 homes. One to live in and a vacation house (maybe even rent out occasionally)

[Anonymous]

Did you consider the taxes after you cash out the brokerage? And no, I don’t think you should buy the house. 8k sqf houses are obscene. No one needs that. In your situation I would much rather blow that money on experiences instead of making myself housepoor.

[Anonymous]

Anonymous wrote:Did you consider the taxes after you cash out the brokerage? And no, I don’t think you should buy the house. 8k sqf houses are obscene. No one needs that. In your situation I would much rather blow that money on experiences instead of making myself housepoor.

Yes. I'm only considering after tax gains.

[Anonymous]

Thanks for the stock info. I posted about that I would buy a $2m house, but do you need that kind of space in that Potomac House? Also you say the house is redone, but the bathrooms absolutely are not.

This is the house I’ve been eyeing, but we ended up going under contract for something smaller and a little less $ - https://www.redfin.com/DC/Washington/3537-Edmunds-St-NW-20007/home/9974745?utm_source=ios_share&utm_medium=share&utm_campaign=copy_link&utm_nooverride=1&utm_content=link

[Anonymous]

My biggest concern would be the wealth and lifestyle of my neighbors. Lots of studies show that people are happiest when they are near the higher end of wealth/income for their neighborhood. I personally wouldn’t like to have the lowest income in my neighborhood.

[Anonymous]

OP, pay cash and if you can afford the taxes and maintenance each year go for it.

[Anonymous]

Do you have a family? College expenses to think about? Spending $2mil on a house that doesn’t suit you just because you got lucky in the stock market seems . . . off. A house at that price point can just as easily go down in value as up. In this area you could spend $1mil and get something really nice in a more reasonable size. And have the money you’ll need to furnish it and maintain it.

We spent something like $40k on paint, carpet, light fixtures, and furniture when we moved into our 3k sf house a few years ago. And we already had enough furniture for about half of it. Making an 8k sf house livable will cost you. This seems a bit like the tail wagging the dog. Invest in REITs if you want to diversify into real estate, not a giant house at the top end of the local market.

[Anonymous]

I would get a second home near a beach somewhere with that kind of money. Easily enjoyed if I’m free, easily rented out for the summer if I’m not. So much nicer than rattling around in a giant house in Potomac all year long.

[Anonymous]

Remember that the furniture in your current house absolutely will not go in whatever $2m house you buy. Other than the concerns noted above, I say go for it.

As far as second home, that always seems like more of a headache in terms of maintenance and all that. Also why would you want to spend all your vacations in the same place? I never understood that.

Maybe if you spring for a smaller house, buy a boat with the extra funds!

[Anonymous]

Absolutely you can do this -- just make sure it is a smaller house. We just traded a $1.4 million 4500 square foot house on an acre in MD for a $1.4 million 1900 square foot house on a small lot in a lower tax state and the difference in maintenance costs and property taxes is substantial. The smaller house also has more appreciation potential. If in DC, I'd look at NW DC, or Arlington.

[Anonymous]

Just because you can doesn't mean you should. Before you commit, input that 2mil into a compound interest calculator to see how much you'd be missing out on by pulling it out of the market. But it depends on your goals. Do you want an expensive house or do you want to be financially independent? There is no guarantee that you would be able to make that kind of money again.

[Anonymous]

Also you say you want to rebuild your brokerage account, but with what funds? Even if house is paid off, will you be saving anything?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Can you tell us more about that stock?

Sorry, I should have been more clear. Can you tell us more about how you made that kind of money in the stock market? I have about $135k coming in from real estate investments and I would like to put some in the market. Are you doing options trading, or anything complicated? I’m assuming that you didn’t make that kind of money in mutual funds.

Nothing crazy....the first $100k is the hardest. Bought Home Depot, Costco, Tesla, Match, Amazon, etc. etc. a little bit at a time all during 2010-2019. Kept putting what I could into my accounts. Was eventually able to get my account up to about $430K. I am an avid reader of Barron's, and I read the issue in the earlier part of this year where they had a special issue on sports gambling. I was entirely convinced of the outlook for that industry and bought warrants for DEAC back in Jan./Feb. I kept buying during March when the market tanked, and had about $60K in warrants (I forget the exact number I had), with an average of about $1.91. DEAC eventually reversed merged into DraftKings, and the warrants skyrocketed to about $35 when I sold. That play netted me almost 18x (about $1M). There were a lot of other picks too.....if you haven't been paying attention, it has been an absolute bonanza with SPACs and SPAC warrants. I also had $30K in SHLL warrants, and another $40k in VTIQ warrants (which turned into NKLA), and $40K in TRNE warrants. Those ended up turning into about another $2.5M....especially when NKLA went up to $80+. Sure, NKLA is garbage now, but I got out before the hype train burst.


Basically, buying a lot of stocks earlier in the decade, then flipping the gains into SPAC warrants.

TL;DR but also, get in your time machine and buy lots of Apple and Amazon in 2008. Worked for us.

[Anonymous]

It's not the house, it's the carrying costs. I used live in Charlotte and had a very large house. I was shocked at the carrying costs including taxes and upkeep. No, I was not cleaning the house and doing the landscaping, but you do have to manage it all - and that was a lot of work. When you have that type of home, it really does need to be perfect at all times. I moved back to DC to a smaller house with an HOA and could not be happier.