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

[Anonymous]

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.

[Anonymous]

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Anonymous wrote:We live in a neighborhood of 1.5-3 mil homes (think Tulip Hill, Mohican, Glen Echo Heights) and there are quite a number of people living in their parent's houses, paid for long ago, who are sitting on lots and homes with a massive capital gains. Pretty easy to get a HELOC or equity loan for 500-700 and still not approach 80% LTV

My parents live on a lot of land in this area. They want me to do this. Any resources on this? I didn’t realize so many people did it.

You just go to a bank and say you want a home equity line of credit for X dollars with X being less than 80% of your home’s value

My co-worker said him and his wife did that with their in-laws house. Basically, his wife grew up there and they decided to make a in-law suite and revamp the house. So, you're saying that they basically took out a loan to do this? Who's name is on the house? The parents?

The loan is secured by the house so the person whose name is on the deed is the only one who can do this. It’s basically just borrowing against your equity in the house.

How are people doing this if the home is owned by their parents?

Either their parents took out the HELOC and the kids are just paying it off or they transferred ownership of the house to the kids so they could get the loan.

[Anonymous]

Anonymous wrote:

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

As someone who has been the beneficiary of intergenerational wealth, you disgust me.

NP. What disgusts ME is OP acting like she is entitled to know the financial details of other people’s lives. Look at her, still sniffing around and literally asking other posters whose name is on a mortgage, etc., etc. How about mind ya business.

[Anonymous]

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.

[Anonymous]

Maybe they won the lottery
Maybe they are embezzling from their employers
Maybe they earn more money than you think
Maybe a distant elderly aunt left them her fortune
Maybe their parent was killed in a workplace accident and they received a large settle ment
Maybe they founded a scam crypto currency
Maybe they are blackmailing a CEO or high ranking official
Maybe they invested in Amazon in the year 2000
Maybe they run a very profitable Etsy business
Maybe their side hustle is selling drugs
Maybe their parents are wealthy and funding this
Maybe they are going into debt

[Anonymous]

Anonymous wrote:Maybe they won the lottery
Maybe they are embezzling from their employers
Maybe they earn more money than you think
Maybe a distant elderly aunt left them her fortune
Maybe their parent was killed in a workplace accident and they received a large settle ment
Maybe they founded a scam crypto currency
Maybe they are blackmailing a CEO or high ranking official
Maybe they invested in Amazon in the year 2000
Maybe they run a very profitable Etsy business
Maybe their side hustle is selling drugs
Maybe their parents are wealthy and funding this
Maybe they are going into debt

Lol. Reminds me of the rich family in our neighborhood where it turned out the dad WAS embezzling from his clients! Went to jail for 10 years! Poor wife had to downsize and get a job. This really happened! So you just never know.

[Anonymous]

Crypto.

!!!

[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)??

You answered your own question.
If I inherit a paid off $900k house needing renovation from my parents and my income is $160k, I would take a Heloc or construction loan to renovate the place. That’s how I would afford the renovation. Simple and easy. That’s not magic.

[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)??

Yes there is. I have a friend going through a nasty divorce with her husband and her parents are banking rolling gobs and gobs of money to fight him. Her parents also bought them the house they used to share together which cost 1M and then they did a massive addition that included a weight room and a multipurpose gym.

[Anonymous]

Our friends at that point were doing just that (only 2 kids). They purchased the home together and both sold their previous homes to buy it. It left quite a bit of money to put into the new home.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

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

As someone who has been the beneficiary of intergenerational wealth, you disgust me.

NP. What disgusts ME is OP acting like she is entitled to know the financial details of other people’s lives. Look at her, still sniffing around and literally asking other posters whose name is on a mortgage, etc., etc. How about mind ya business.

+1

It's gross.

[Anonymous]

You have your life, they have their life. Don't get invested in their lives. It has nothing to do with you.

[Anonymous]

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.

[Anonymous]

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!

[Anonymous]

Anonymous wrote:They got a free or nearly free house. That why they have so much money. I don't understand why you still think it's mystery where the money is coming from.

Yes. This. Isn't this obvious? They have a very decent HHI and have had NO MORTGAGE OR RENT for years. No down payment. That very quickly adds up to hundreds of thousands of dollars saved, that they could easily spend on a renovation. Maybe they are also taking out a HELOC, who knows. But it's no surprise that they can afford this.