Anonymous
Post 09/14/2020 20:42     Subject: $2M home w/ $160k HHI?
We spent slightly less (1.8) and make slightly more (~$200) and it’s tight but doable. Maintenance costs are the biggest unknown and you definitely pay a wealth tax having an expensive home. Quotes for home repairs are always high. This year we had to replace a few windows, gutters, and a water heater. About $15K.

If I had an even more expensive house and even less income it would feel impossible. The definition of house poor....
Anonymous
Post 09/14/2020 20:21     Subject: Re:$2M home w/ $160k HHI?
We live in a $2m house. We spend a ton of money on maintenance and our house is only 13 years old. I would not buy a $2m home on $160k income. It will also cost a lot to furnish and decorate the home.
Anonymous
Post 09/14/2020 19:45     Subject: $2M home w/ $160k HHI?
You can’t afford that house with only 100-200k left over. The furniture alone will wipe you out.

You can do 1.5M....not saying you should but you could. And I would only do it if it’s new and will not need any major work in the next few years at a minimum.
Anonymous
Post 09/14/2020 13:58     Subject: $2M home w/ $160k HHI?
Anonymous wrote:I made $2.2M on the stock market. We have a HHI of $160k. Would it be insane to pay all cash for a $2M home? Yes, I realize there are taxes, insurance, closing costs etc. Can you still own a home with that price tag with a $160k HHI? Would taxes, insurance, etc. be untenable while essentially having no mortgage?

I don't really care about wiping out my brokerage account to $100-200k. Plenty saved in IRAs and 401ks. What else should I use the money for at this point? No other debts. Still lots more time to rebuild my brokerage account, and I actually do want to remove a lot my wealth from equities into real estate just to diversify.
no, the upkeep costs would be too much. Maybe consider $500-$800k.
Anonymous
Post 09/14/2020 13:49     Subject: $2M home w/ $160k HHI?
Can you? Sure. Should you? I don't think so. The carrying costs of a house that large are significant and will eat a large chunk of your take-home. If I wanted to spend 2M on real estate and had your income, I would purchase a 1M property to live in, and then another 1M property as an investment. This would put you in a position of having your money do several things for you - getting it out of equities, generating an income stream, and providing some flexibility by allowing you sell one or both properties if you needed to access the cash at a later date.
Anonymous
Post 09/14/2020 13:44     Subject: Re:$2M home w/ $160k HHI?
OP, congrats on your success. Remember the long game in investing. Check out the retirement threads to see how much people are requiring to feel secure upon retirement. The last 10 years have been exceptional for investors. The near-term market is uncertain, so whether you will be able to replicate your success is less predictable. Sending good vibes for continued success -- best wishes to you!
Anonymous
Post 09/14/2020 13:36     Subject: $2M home w/ $160k HHI?
Anonymous wrote:
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


That house has electric heat, so expect a $1,000+ bill in winter, going as high as $1,500 if we have a cold spell and the heat pumps need to switch to aux (resistor) mode. At least it has public sewer and water.

Then $20k/year in property taxes (based on the purchase price.. the new assessment will come in at that), and $5k/year on the lawn but you can mow yourself.



The heating bill really depends on how well air sealed and insulated the house is and the efficiency and design of the systems. In a leaky uninsulated house even a gas bill would be astronomical. Today’s heat pumps are actually very energy efficient.
Anonymous
Post 09/14/2020 13:26     Subject: $2M home w/ $160k HHI?
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


That house has electric heat, so expect a $1,000+ bill in winter, going as high as $1,500 if we have a cold spell and the heat pumps need to switch to aux (resistor) mode. At least it has public sewer and water.

Then $20k/year in property taxes (based on the purchase price.. the new assessment will come in at that), and $5k/year on the lawn but you can mow yourself.

Anonymous
Post 09/14/2020 13:20     Subject: $2M home w/ $160k HHI?
Anonymous wrote:I made $2.2M on the stock market. We have a HHI of $160k. Would it be insane to pay all cash for a $2M home? Yes, I realize there are taxes, insurance, closing costs etc. Can you still own a home with that price tag with a $160k HHI? Would taxes, insurance, etc. be untenable while essentially having no mortgage?

I don't really care about wiping out my brokerage account to $100-200k. Plenty saved in IRAs and 401ks. What else should I use the money for at this point? No other debts. Still lots more time to rebuild my brokerage account, and I actually do want to remove a lot my wealth from equities into real estate just to diversify.


buying property you will live in is not diversifying in to real estate

If you want to diversify in to real estate you should either buy something that generates income or go in to the funds that are invested in real estate. With the virus, I would not want to be a landlord now and I think those real estate funds are on their way down, not up.

A huge 2 million dollar house you live in is like buying a classic car. It isn't really an investment. It is a lifestyle choice masquerading as an investment.
Anonymous
Post 09/14/2020 13:14     Subject: $2M home w/ $160k HHI?
Anonymous wrote:I made $2.2M on the stock market. We have a HHI of $160k. Would it be insane to pay all cash for a $2M home? Yes, I realize there are taxes, insurance, closing costs etc. Can you still own a home with that price tag with a $160k HHI? Would taxes, insurance, etc. be untenable while essentially having no mortgage?

I don't really care about wiping out my brokerage account to $100-200k. Plenty saved in IRAs and 401ks. What else should I use the money for at this point? No other debts. Still lots more time to rebuild my brokerage account, and I actually do want to remove a lot my wealth from equities into real estate just to diversify.


From an investment standpoint, make sure to look at your house carefully. Pre-covid, Potomac wasn't doing as well as Bethesda because of the commute. Not sure if things will change post-COVID. This area is conservative in its preferred style, so the house you posted would not appreciate as well as a more traditional house. Also, the type of house that you posted would not have as many potential buyers as a more mainstream house (smaller, lower price point).

I appreciate that you posted how you made the money. Thanks for sharing. Hoping to learn something from your approach.
Anonymous
Post 09/14/2020 12:57     Subject: $2M home w/ $160k HHI?
Why not keep the money invested and let it work for you instead?

A house is dead money and the carrying costs will stress you out, even if you can technically afford them.

You seem smart so you can probably make $160k anywhere in the country, why not move to an up-and-coming MCOL area, buy a fantastic house for $750k and invest the rest?
Anonymous
Post 09/14/2020 12:55     Subject: $2M home w/ $160k HHI?
I don't think you can afford the taxes, insurance and maintenance savings you would need for that house.

Rule of thumb is 1% per year to save for maintenance. Some years you will send way less and some way more, so you keep it rolling forward. That isn't even considering property taxes and homeowners insurance.

You would be better off investing this money. It will be enough to make you independently wealthy if you invest it and don't touch it.
Anonymous
Post 09/14/2020 12:40     Subject: $2M home w/ $160k HHI?
Anonymous wrote:
Anonymous wrote:
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.



That house is ugly as hell and poorly laid out. You're probably paying for 1,000 sq. feet of unusable space due to long hallways and piss poor planning.


+1 And they have been trying to offload it for over two years now. OP, if you decide to go for it, you should definitely offer significantly below asking.
Anonymous
Post 09/14/2020 11:32     Subject: $2M home w/ $160k HHI?
Anonymous wrote:
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.



That house is ugly as hell and poorly laid out. You're probably paying for 1,000 sq. feet of unusable space due to long hallways and piss poor planning.
Anonymous
Post 09/14/2020 10:14     Subject: $2M home w/ $160k HHI?
I wouldn't just because it's a continuation of the gambling mentality that got you the money in the first place. Put it all on red and let it ride, except this time it's a huge house. It's actually really impressive that you were able to gamble your way to that much money in the stock market but you should balance out that impulse by being more deliberate and conscientious in other areas. Pull some of it out and buy a more reasonable house in cash, or put money down on rental properties, something to hedge your bets here. The net worth equivalent of cashing out for the night and not trying to ride a hot streak.