Can I afford this house?

[Anonymous]

I think it's fine. I wouldn't be concerned if it were me at all. buy your dream house.

[Anonymous]

Anonymous wrote:I mean technically yes, but you’re putting so much of your savings and salary into a house. And have you considered the ongoing costs for utilities and maintenance? I have about your stats (albeit with less savings) and also a single mom of a tween, and I wouldn’t do it. Plus you are going to be an empty nester too - do you really want to live in the burbs? Don’t you have other things you want to spend your money on, like travel?

Suburbs are full of empty nesters. Nearly half my street is empty nesters who seem very happy.

[Anonymous]

OP. I have no plans to retire. I like what I do and have a flexible schedule. I’ll probably top out around $250K in a couple of years. My biggest concern would be if I can’t work from illness. I want to be able to house a helper if I need one, which I currently can’t do.

I thought this seemed like an opportunity to buy my dream house and an investment property at the same time—the small wing of the house is readily divisible into a 2 story 1BR 2BA Apt, I would just need to install a kitchen in the LR. So I could depreciate part of the house and also deduct some expenses & improvements on taxes against the rental income.

It does sound like a potential maintenance saga/money sink though.

[Anonymous]

Look op you’re in great financial shape considering things. But you are about to risk that position for very intangible reasons. And I know renting sucks and you probably felt like your kid was made to feel like a second class citizen or a second class parent. But buying a big house and having your friends kids over isn’t going to somehow undo all of that. There is a smarter way.

Don’t make these decisions from your heart, think about daily life everyday in the reality of managing a large house and yard alone: what do you and your kid like to do on the weekends? Is it yard work, gardening? That’s a lot of yard work, even if you hire mowers. How about replacing toilets? How handy are you? Have you been to Home Depot workshops? Do you have plumbers or hvac guys you have worked with before and trust? How about managing a tenant, have you looked over the types of contracts online, have you looked at the market for tenants in your neighborhood? Have you had the trees in the property assessed? Are your neighbors going to cite you for an illegal tenant if you don’t have a permit? This is taking on a lot at a time when your kid will want you to to spend more time on them.

[Anonymous]

So what is the smarter way? I like the convenience of being a renter but I hate not having fixed housing costs going into the future.

[Anonymous]

Anonymous wrote:So what is the smarter way? I like the convenience of being a renter but I hate not having fixed housing costs going into the future.

The vast majority of Americans become homeowners at some point, and they handle it just fine. In fact single women own at a higher rate than men. If you think you've found your dream home you should buy it and not look back. You'll make it work.

[Anonymous]

You don't need to go to any home depot workshops -- most people don't do home repairs on their own. The standard advice is to plan on spending 1% of the house value every year on maintenance (so about $13K), and that's good advice. Just know that some years might be much higher, and some much lower.

Dealing with contractors in this area is pretty awful (even a 1-hour appointment for a minor issue seems to cost $500), but you can ask for recommendations from neighbors and there are tons of reviews out there (yelp, checkbook, google, angies list, nextdoor).

[Anonymous]

Anonymous wrote:So what is the smarter way? I like the convenience of being a renter but I hate not having fixed housing costs going into the future.

For the size house you need versus want? Condo might be a better solution if the driving factor is fixed housing costs. More akin to a renter in that there is some building infrastructure for handling major things. The downside of course includes less space (particularly private green space), usually (but not always) a worse “investment,” and less privacy overall. But way more convenient, and most condo developments have shared spaces that you can use for big parties.

[Anonymous]

Anonymous wrote:

Anonymous wrote:So what is the smarter way? I like the convenience of being a renter but I hate not having fixed housing costs going into the future.

For the size house you need versus want? Condo might be a better solution if the driving factor is fixed housing costs. More akin to a renter in that there is some building infrastructure for handling major things. The downside of course includes less space (particularly private green space), usually (but not always) a worse “investment,” and less privacy overall. But way more convenient, and most condo developments have shared spaces that you can use for big parties.

I think this would make me very depressed. Just bc I’m single doesn’t mean I want to miss out on having a nice home, a community, and the ability to entertain.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So what is the smarter way? I like the convenience of being a renter but I hate not having fixed housing costs going into the future.

For the size house you need versus want? Condo might be a better solution if the driving factor is fixed housing costs. More akin to a renter in that there is some building infrastructure for handling major things. The downside of course includes less space (particularly private green space), usually (but not always) a worse “investment,” and less privacy overall. But way more convenient, and most condo developments have shared spaces that you can use for big parties.

I think this would make me very depressed. Just bc I’m single doesn’t mean I want to miss out on having a nice home, a community, and the ability to entertain.

Op, all we know is what you’ve told us, which is a very bare outline of your financial situation. If you’re concerned about affording this house, sit down with a fee-only financial planner and go over your actual numbers.

Do you have a handle on how much you spend monthly now? Can you cash flow this purchase with your income and projected PITI? Can you handle repair costs and maintenance costs from monthly cash flow or will you need to dip into savings? Can you handle pulling from savings? Is the PITI number a 30-year mortgage or a 15-year? Will you be able to handle the costs when you retire?

We can’t answer those questions for you, or even hazard a guess with the very small amount of information you’ve given us. I totally support the idea of you owning your own home as a single parent. I’d have concerns about cash flow if I were in your shoes.

[Anonymous]

^ meant to add “concerns about cash flow from this particular home purchase”. It’s not about the age of the home so much it is the cost of it. There are a lot of nice homes in the DMV that cost less, so I guess I don’t understand looking in this price range. But that’s just me.

Do you have a good handle on your current expenses? If you don’t already use a tool, I’d recommend something like Monarch Money or the equivalent and gather/categorize your spending for the last year. Get a good handle on your outflow to make sure you’re not going to be in over your head from day 1.

[Anonymous]

I wouldn’t do it. How much longer are you planning on working? Do you like to travel?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:So what is the smarter way? I like the convenience of being a renter but I hate not having fixed housing costs going into the future.

For the size house you need versus want? Condo might be a better solution if the driving factor is fixed housing costs. More akin to a renter in that there is some building infrastructure for handling major things. The downside of course includes less space (particularly private green space), usually (but not always) a worse “investment,” and less privacy overall. But way more convenient, and most condo developments have shared spaces that you can use for big parties.

I think this would make me very depressed. Just bc I’m single doesn’t mean I want to miss out on having a nice home, a community, and the ability to entertain.

You don't have to do a condo. It's just the closest you can get to the convenience of renting without having the rental housing costs go up with the market, which is the question you asked. And I'd push back against not having a community or being able to entertain in a condo, you just have to find the right condo.

That said, if you really just want to live in a house, then don't buy a condo! But be prepared for the fact that it's going to be nothing like the convenience of renting. That's not bad. It's just different.

[Anonymous]

Anonymous wrote:OP. I have no plans to retire. I like what I do and have a flexible schedule. I’ll probably top out around $250K in a couple of years. My biggest concern would be if I can’t work from illness. I want to be able to house a helper if I need one, which I currently can’t do.

I thought this seemed like an opportunity to buy my dream house and an investment property at the same time—the small wing of the house is readily divisible into a 2 story 1BR 2BA Apt, I would just need to install a kitchen in the LR. So I could depreciate part of the house and also deduct some expenses & improvements on taxes against the rental income.

It does sound like a potential maintenance saga/money sink though.

If you've never owned a house where you've done a rental conversion, you are almost certainly vastly underestimating the cost in time, effort, and money of adding that kitchen and making it a real rental. Renovating a kitchen is one of the most expensive remodel projects there is. Adding one, even more so. If it has no kitchen now, you are talking about likely completely redoing the electrical for at least that room (to handle appliances), potentially running a gas line, redoing ventilation and HVAC, adding all new plumbing (not just relocation), and probably fixing discovered issues in the subfloor and building out the wall structure (kitchens often need stronger framing for cabinets). That's before you even get to buying appliances, adding cabinets and counters, adding a sink, and other finishes.

And that is just the kitchen. If it is a real rental, you want to for a bunch of reasons get it legally recognized as such. In DC, that involves getting a certificate of occupancy, but your mileage may vary depending on location. But usually there are code requirements you need to meet (that a 90 year old house probably doesn't) like a certain number of and size of egress points in the case of fire. Those cost money to fix, and sometimes are impossible to fix. Even if everything is already perfect, that's still more permitting applications, and potentially a negotiation with your neighbors. And this is all before you get to the process of actually finding and vetting renters.

Point being there is a big difference between a house that has a legal rental apartment, and a house that could have a rental apartment. I would make this decision assuming it will never actually have a rental apartment. If you are still fine with it financially, then good. If you were banking on that to make the finances work, I would pass.

[Anonymous]

Anonymous wrote:Found my dream house in the suburbs. Price $1.351M plus buyer wants me to cover first $30K of anything found on inspection. It’s 90y old and current residents have been there for 40 years. Has about a half acre; part of the house has a separate entrance and can be turned into a 1BR apt to rent for ~$1500/m tops.
My finances:
50 yo single parent one tween
Income $230K
Net worth $3M all in (retirement, brokerage)
529 $60K of projected $120K cost (ex pays rest)
Currently renting

Can I afford this? Take home pay is about $10500/m after deductions. Would mean DP of about $750K then ~$5700/m plus utilities/maintenance.

WTF?! Is this is the norm nowadays? I'm assuming that she meant seller wants her to cover first $30K of anything found during inspection. That's crazy.