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

[Anonymous]

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)??

Not necessarily family $$ either. My partner and I moved here to be close to family and change careers in our 30s after doing well in CA. We make significantly less money than we did before and have saved quite a bit for things like what you described. This thread made me realize that our neighbors may wonder and assume the same thing too, which annoys me.

[Anonymous]

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)??

Not necessarily family $$ either. My partner and I moved here to be close to family and change careers in our 30s after doing well in CA. We make significantly less money than we did before and have saved quite a bit for things like what you described. This thread made me realize that our neighbors may wonder and assume the same thing too, which annoys me.

Why?

[Anonymous]

1. They make at least twice as much as you think they do. AT LEAST. What are the jobs and we'll tell you how much they actually make?

2. Mom & Dad are helping

[Anonymous]

If it's a childhood home, the parents might be helping pay for the renovation, whether they live there or not.

That's one thing I found out in my 20s and 30s, in a much more rural area than DC: a lot of parents really helped their adult kids out by buying them cars or house down payments or no interest loans, or that sort of thing. These weren't millionaires, but well off middle class people who wanted to make sure their kids lived close to them, hence the bribes.

[Anonymous]

Debt or family money

Yes, there really is “that much” of it going around

A modest inheritance could fund that. People in this country also have tons of consumer debt so who knows

[Anonymous]

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.

[Anonymous]

I made $90k/year at my first job out of college in what was/is a relatively low COL city and immediately bought a nice condo instead of renting. My parents pitched in $15k. I went straight from living on-campus all four years to that condo. I’m guessing people wondered about that.

[Anonymous]

It’s called generational wealth, honey, and no. You wouldn’t get it. Keep looking, though! We see you.

[Anonymous]

We were in a similar situation decades ago, except we bought our house (not gifted) and had no family money. We sold our first home, which gave us enough to put 20% down on the second one. DH and I both had grad school loans we were paying off and car payments, too. Bought a house for about $600K, and spent about $500K renovating. We funded the renovation through a combo of selling stock granted to DH through his job, taking out a HELOC, and some cash. We refinanced the HELOC when rates went down. Our HHI was around $200K.

[Anonymous]

^^^You took a HELOC right after buying? Is that even possible?

[Anonymous]

Anonymous wrote:^^^You took a HELOC right after buying? Is that even possible?

It was more like 2 years after buying.

[Anonymous]

Obviously they got the house with a step up in basis paid no taxes on it and then took out a cash out refi at an under 3% rate and/or a HELOC at a low rate, on which the interest is deductible bc it is their primary residence. They have it made.

[Anonymous]

The answer is obvious in your case. They got gifted the house.

We bought and renovated a very nice house and it appears to people that my husband is underemployed and I couldn’t possibly make enough money. My spouse busted his ass for a decade+ and sold a business. Blood, sweat, and tears. I can tell new people who meet us and don’t know our back story are trying to figure it out. I’m sure people gossip it’s family money.

Oh well. Comparison is the thief of joy OP.

[Anonymous]

If the home is worth $900k and was a childhood home, it’s either paid off or has significant equity. They’re probably financing the renovation with some of the equity or from savings.

This isn’t a mystery … You, and we, have no clue how much savings they have. They could have received an inheritance from a deceased family member or they could have been very frugal before they had kids. A lot of possible factors could explain this. The most likely is that it’s a $900k family home lol

Equity.

[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)??

Not necessarily family $$ either. My partner and I moved here to be close to family and change careers in our 30s after doing well in CA. We make significantly less money than we did before and have saved quite a bit for things like what you described. This thread made me realize that our neighbors may wonder and assume the same thing too, which annoys me.

Why?

Not this poster but people pretty clearly think differently if you earned something through your own work vs having it given to you. See this entire thread.