Anonymous
Post 09/06/2022 18:41     Subject: Afford $1.8M on 300K?
Anonymous wrote:OP you seem pretty financially literate to me!

Two thoughts.

1. I have four kids and I can tell you that life gets so so much more $$ as they get older. You know about college, but I am talking about them needing cars, with $$ insurance, clothes get more expensive, their tech needs are greater, they use more electricity in the house, they eat more! Taking trips becomes more expensive. Srsly. It’s not just college. And if you live in a fancy neighborhood, your kids are going to want trips to Vail at Xmas and a BMW at 16 and winter coats that cost $1000.

2. You are so thoughtful about all this, but crowdsourcing isn’t the way to plan. Go to an independent financial planner (like Lori Atwood! We used her) and talk this through with them. When we met with Lori she had awesome info about how certain costs go up as your kids move out, and others go down etc. Just general life planning.

Good luck.


Hi Lori. No ads allowed on this forum.
Anonymous
Post 09/06/2022 18:27     Subject: Afford $1.8M on 300K?
OP you seem pretty financially literate to me!

Two thoughts.

1. I have four kids and I can tell you that life gets so so much more $$ as they get older. You know about college, but I am talking about them needing cars, with $$ insurance, clothes get more expensive, their tech needs are greater, they use more electricity in the house, they eat more! Taking trips becomes more expensive. Srsly. It’s not just college. And if you live in a fancy neighborhood, your kids are going to want trips to Vail at Xmas and a BMW at 16 and winter coats that cost $1000.

2. You are so thoughtful about all this, but crowdsourcing isn’t the way to plan. Go to an independent financial planner (like Lori Atwood! We used her) and talk this through with them. When we met with Lori she had awesome info about how certain costs go up as your kids move out, and others go down etc. Just general life planning.

Good luck.
Anonymous
Post 09/06/2022 18:01     Subject: Afford $1.8M on 300K?
Anonymous wrote:
Anonymous wrote:
20% down and investing the rest would be financially astute.

20% down and putting the rest in a savings account because you don't invest outside of retirement and don't want to invest in a bear market -- which is what you said you've been doing -- is idiotic. The money you have earning 1% a year is losing value every day due to inflation. You're not even beating the rate on your mortgage, and then you're setting yourself up to have no spare cash flow every month. Unless you enjoy stress there's no upside.


Op here. I didn't want to get into internet arguments with posters that resort to name calling, but I'd like to clarify that our alternative to the $1.8M home is something other than a 1% savings savings account. Currently, we are putting our excess cash into 1% savings because of the market downturn (and this investment strategy has beaten the sp500 by 20% YTD!) but are trying to figure out what to do with it in the future - buy a bigger house or buy investment property or buy into a bear market (or buy pumpkins - who knows). That's why we're soliciting advice from DCUM.

Thanks to those who are providing sage advice on the increase in expected cost of home ownership for a $1.8M home. We are definitely thinking about whether a $6K PITI is "doable" (or if pumpkin investing is the best path forward). I'm still not understanding why people are thinking that that a $1.5- $2M neighborhood would be full of multi-millionaires (unless those multi-millionaires hide their lamborghinis in the garage and rather show off their $50K cars in the driveway.) Unless these posters are not from NOVA?







I live in a neighborhood of $900k-$1.1M homes and we make $300k. I can assure you that we are among the poorer people on our street.

I'm completely befuddled how you have $6k leftover currently after maxing 401k, IRA, and 529. Our current mortgage is 3300/month and while we are quite comfortable, we have nowhere near that amount leftover. And we don't have car payments or student loans or childcare.
Anonymous
Post 09/06/2022 17:56     Subject: Afford $1.8M on 300K?
Anonymous wrote:Because multimillionaires are by no means Uber rich so they drive normal cars. And multimillionaires don’t overspend on their primary houses. That’s part of the reason they accumulated that wealth. OP, you can’t judge the wealth of a neighborhood just by driving by and looking at cars on driveways. Multiple people living in those neighborhoods are telling you that no financially literate people spends 6* HHI on primary residence, but you choose to not believe it.


Exactly. You'd never guess how rich we are by looking at how we live. Living below our means brings not just great peace but also flexibility. No one has to stay at a job they don't like because of bills.
Anonymous
Post 09/06/2022 16:28     Subject: Afford $1.8M on 300K?
Anonymous wrote:
Anonymous wrote:there is a huge difference between 6k and 9k. and, since your jobs and income sounds secure, 6k is probably doable for you.


I think so too. One of the reasons we thought 9K might be doable is because the resulting monthly debt-to-income ratio is still below 40% (and slightly below 36% for us) which are the broad percentages (that are posted on the internet) for which prospective house buyers should strive. But it sounds like the broad consensus on DCUM is that even a 36% DTI ratio is too high. I wonder what DTIs are being considered by people in SanFra


I think the issue is people calculate this based on their gross income when in my opinion it should be NET. keep yourself out of trouble that way. But that's just me, and how I choose to look at my finances.
Anonymous
Post 09/06/2022 14:49     Subject: Re:Afford $1.8M on 300K?
Savings and investments should make you feel secure. It is likely this purchase will keep you up at night.

And I don't mean to sounds dramatic, but don't we want to set up our future generations for success? By straddling your kids with student debt, it delays their ability to build wealth and invest in a home... which will impact their children, etc. I am not saying that you should live in a hovel to save for your kids, but don't stretch yourself this thin.

Also, more expensive houses really do cost more on the upkeep + repair end. Ever had to replace a Sub Zero fridge?
Anonymous
Post 09/06/2022 14:33     Subject: Afford $1.8M on 300K?
The consensus is less than 15% of gross income (10% ideally, hard no no to anything above 20%). This way the monthly housing cost (PITI, utilities, basic maintenance) can be controlled under 20-25% of income. SF people have much higher income so the ratio can be upped a little.
Anonymous
Post 09/06/2022 14:06     Subject: Afford $1.8M on 300K?
Anonymous wrote:there is a huge difference between 6k and 9k. and, since your jobs and income sounds secure, 6k is probably doable for you.


I think so too. One of the reasons we thought 9K might be doable is because the resulting monthly debt-to-income ratio is still below 40% (and slightly below 36% for us) which are the broad percentages (that are posted on the internet) for which prospective house buyers should strive. But it sounds like the broad consensus on DCUM is that even a 36% DTI ratio is too high. I wonder what DTIs are being considered by people in SanFra
Anonymous
Post 09/06/2022 13:58     Subject: Afford $1.8M on 300K?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Lol at paying $2M to live in Fairfax.


We are a boutique builder in fairfax....new homes on 1/2 acre lots in close in Fairfax sell for min $2.2m...approx
4000sq ft top two floors, with 1200 sq ft finished basement. Lots cost anywhere from $650K to $750K.


Well, by all means charge whatever people will pay, but you can grab a larger new construction house up in north Arlington for that price. If OP is just looking for a basic 4,000 square foot house in Fairfax, you can do a LOT better than 1.8m. But whatever, the underlying question is just a personal calculation of risk tolerance and spending priorities.


Not everyone needs to or desires to live in Arlington. The home example I was citing above comes with a 1/2 acre flat lot, leafy neighborhood, Woodson HS district, and about 2 miles from 495. Can you get 1/2 acre in Arl (does it even exist) and is the HS superior to the Woodson HS in Fairfax...? BTW, we also build in Arl.....we know the markets.
Anonymous
Post 09/06/2022 13:58     Subject: Afford $1.8M on 300K?
there is a huge difference between 6k and 9k. and, since your jobs and income sounds secure, 6k is probably doable for you.
Anonymous
Post 09/06/2022 13:53     Subject: Afford $1.8M on 300K?
Anonymous wrote:
Anonymous wrote:
20% down and investing the rest would be financially astute.

20% down and putting the rest in a savings account because you don't invest outside of retirement and don't want to invest in a bear market -- which is what you said you've been doing -- is idiotic. The money you have earning 1% a year is losing value every day due to inflation. You're not even beating the rate on your mortgage, and then you're setting yourself up to have no spare cash flow every month. Unless you enjoy stress there's no upside.


Op here. I didn't want to get into internet arguments with posters that resort to name calling, but I'd like to clarify that our alternative to the $1.8M home is something other than a 1% savings savings account. Currently, we are putting our excess cash into 1% savings because of the market downturn (and this investment strategy has beaten the sp500 by 20% YTD!) but are trying to figure out what to do with it in the future - buy a bigger house or buy investment property or buy into a bear market (or buy pumpkins - who knows). That's why we're soliciting advice from DCUM.

Thanks to those who are providing sage advice on the increase in expected cost of home ownership for a $1.8M home. We are definitely thinking about whether a $6K PITI is "doable" (or if pumpkin investing is the best path forward). I'm still not understanding why people are thinking that that a $1.5- $2M neighborhood would be full of multi-millionaires (unless those multi-millionaires hide their lamborghinis in the garage and rather show off their $50K cars in the driveway.) Unless these posters are not from NOVA?



From your OP:

Other threads on DCUM are suggesting house price around $1M for our HHI. But we're doing that right now and have $6K left over every month going into measly 1% savings accounts ( we have maxed out 401K, HSA, 529 plans, so this is after all those things). We are debt free (besides current mortgage)

What do you guys think? Should we upgrade and basically dump all of our extra savings into a bigger house? Or is that too much house for our income?

You literally said that using every dollar of your current monthly savings to purchase this house was the alternative to putting the money into a 1% savings account, so it's a little rich to act like taking your words at face value is somehow an attack. Good luck with your new house.
Anonymous
Post 09/06/2022 13:49     Subject: Afford $1.8M on 300K?
Because multimillionaires are by no means Uber rich so they drive normal cars. And multimillionaires don’t overspend on their primary houses. That’s part of the reason they accumulated that wealth. OP, you can’t judge the wealth of a neighborhood just by driving by and looking at cars on driveways. Multiple people living in those neighborhoods are telling you that no financially literate people spends 6* HHI on primary residence, but you choose to not believe it.
Anonymous
Post 09/06/2022 13:36     Subject: Afford $1.8M on 300K?
Anonymous wrote:
20% down and investing the rest would be financially astute.

20% down and putting the rest in a savings account because you don't invest outside of retirement and don't want to invest in a bear market -- which is what you said you've been doing -- is idiotic. The money you have earning 1% a year is losing value every day due to inflation. You're not even beating the rate on your mortgage, and then you're setting yourself up to have no spare cash flow every month. Unless you enjoy stress there's no upside.


Op here. I didn't want to get into internet arguments with posters that resort to name calling, but I'd like to clarify that our alternative to the $1.8M home is something other than a 1% savings savings account. Currently, we are putting our excess cash into 1% savings because of the market downturn (and this investment strategy has beaten the sp500 by 20% YTD!) but are trying to figure out what to do with it in the future - buy a bigger house or buy investment property or buy into a bear market (or buy pumpkins - who knows). That's why we're soliciting advice from DCUM.

Thanks to those who are providing sage advice on the increase in expected cost of home ownership for a $1.8M home. We are definitely thinking about whether a $6K PITI is "doable" (or if pumpkin investing is the best path forward). I'm still not understanding why people are thinking that that a $1.5- $2M neighborhood would be full of multi-millionaires (unless those multi-millionaires hide their lamborghinis in the garage and rather show off their $50K cars in the driveway.) Unless these posters are not from NOVA?





Anonymous
Post 09/06/2022 13:27     Subject: Afford $1.8M on 300K?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Lol at paying $2M to live in Fairfax.


We are a boutique builder in fairfax....new homes on 1/2 acre lots in close in Fairfax sell for min $2.2m...approx
4000sq ft top two floors, with 1200 sq ft finished basement. Lots cost anywhere from $650K to $750K.


Well, by all means charge whatever people will pay, but you can grab a larger new construction house up in north Arlington for that price. If OP is just looking for a basic 4,000 square foot house in Fairfax, you can do a LOT better than 1.8m. But whatever, the underlying question is just a personal calculation of risk tolerance and spending priorities.


I know the DC/Arlington/Bethesda crowds will find this mind boggling, but there are MANY of us living in NoVa who do not want to live in Arlington, Alexandria or close-in suburbs. They're unappealing, cramped and riddled with crime. We like the space, schools, and peace in the farther out burbs. I live in FFX and the $2.2M number for the new construction homes here sounds right. It's not something that I want to spend for ANY house, but new construction across the board is overpriced. And yes, we could get a house in Arlington or DC but do not want to live in or near the city.

https://www.zillow.com/homedetails/4057-Doveville-Ln-Fairfax-VA-22032/51837519_zpid/
https://www.zillow.com/homedetails/9224-Okla-Dr-Fairfax-VA-22031/51837703_zpid/
https://www.zillow.com/homedetails/8600-Hillside-Pl-Fairfax-VA-22031/51838621_zpid/



PP here (clearly way to riveted by this thread lol). I didn’t mean to say north Arlington was objectively more desirable than Fairfax, just that it is objectively more expensive. Apologies for the way it came across!


This was probably one of the nicest posts I've read on DCUM. Wow. Understood. I misread. Thanks, PP!
Anonymous
Post 09/06/2022 13:24     Subject: Afford $1.8M on 300K?
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:
Anonymous wrote:Lol at paying $2M to live in Fairfax.


We are a boutique builder in fairfax....new homes on 1/2 acre lots in close in Fairfax sell for min $2.2m...approx
4000sq ft top two floors, with 1200 sq ft finished basement. Lots cost anywhere from $650K to $750K.


Well, by all means charge whatever people will pay, but you can grab a larger new construction house up in north Arlington for that price. If OP is just looking for a basic 4,000 square foot house in Fairfax, you can do a LOT better than 1.8m. But whatever, the underlying question is just a personal calculation of risk tolerance and spending priorities.


I know the DC/Arlington/Bethesda crowds will find this mind boggling, but there are MANY of us living in NoVa who do not want to live in Arlington, Alexandria or close-in suburbs. They're unappealing, cramped and riddled with crime. We like the space, schools, and peace in the farther out burbs. I live in FFX and the $2.2M number for the new construction homes here sounds right. It's not something that I want to spend for ANY house, but new construction across the board is overpriced. And yes, we could get a house in Arlington or DC but do not want to live in or near the city.

https://www.zillow.com/homedetails/4057-Doveville-Ln-Fairfax-VA-22032/51837519_zpid/
https://www.zillow.com/homedetails/9224-Okla-Dr-Fairfax-VA-22031/51837703_zpid/
https://www.zillow.com/homedetails/8600-Hillside-Pl-Fairfax-VA-22031/51838621_zpid/



PP here (clearly way to riveted by this thread lol). I didn’t mean to say north Arlington was objectively more desirable than Fairfax, just that it is objectively more expensive. Apologies for the way it came across!