Anonymous wrote:

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.

I am wondering what jurisdiction this house is in. In Fairfax County I believe this would straight up be disallowed under current regulations (although when zMod passes again, maybe that changes)

Anonymous wrote:“You could buy a nice townhome in a community with good amenities and in the best school districts and nice areas for under 1 mil. You still would have outdoor space, just not anything to be a burden to maintain.”

Where?

Falls Church City comes to mind. Vienna/oakton around the metro. North Pimmitt/surrounding McLean.

Basically pick a metro stop.

“You could buy a nice townhome in a community with good amenities and in the best school districts and nice areas for under 1 mil. You still would have outdoor space, just not anything to be a burden to maintain.”

Where?

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.

You need to price it all out and also evaluate your personal patience having to deal with a stranger living in your home, sharing your yard, etc. Your income isn't that high and if not able to increase it, you might find yourself financially uncomfortable and forced to downsize. Is you money well invested to return a little passive income? You could bump your income if you put your money into something returning income.

You also can continue renting and invest into a rental property instead somewhere you would love to retire, but cannot live now. if the place pays for itself then you got yourself a good investment, and you can hire management company to deal with repairs and tenants.

You could buy a nice townhome in a community with good amenities and in the best school districts and nice areas for under 1 mil. You still would have outdoor space, just not anything to be a burden to maintain.

Op, are you in the DMV or a different area?

Not an 80 year old home. I have one. It’s $$$$$$. The monthly payment is not the only consideration.

Consider you’ll need to spend around $150k the first few years you live there on required maintenance. A new roof, painting, foundation work, appliances will go, furnace etc.

Find something that’s NOT this old and is less expensive to maintain. Shoot for 900k and throw 100k into it.

I’m not that upwardly mobile. To double my income I’d probably have to move to another city or state! I’ll probably keep creeping up at about 10K/year. Am currently working on getting a side gig that could bring in another $5K/month but that is uncertain.

Shop around and find a better interest rate.

Are you upwardly mobile? Is it likely that you will increase your income (like double it..) in the next 10 years, so that you could prepay and pay off your mtg before you retire? If not, you will need to downsize, rent it out, or sell if retiring as you won't be able to afford it. Even if you intend to work your job until you are 80 you simply may not be able to.

Also, looks like converting your dream house into the rental will be too costly to make sense, you will never see this money back, because income from rental is too small. And you may not want to live in the same home with your renter, it can get old. If you are ok sharing the walls of your SFH, why not just get a TH and slap on some self-adhesive noise reducing panels you can get on Amazon? I think you need to ask yourself why you want this house, and if you are doing it for investment purpose thinking it will appreciate a lot, or you really love extra outdoor space, gardening, privacy, not sharing walls, etc (in which case you won't enjoy having a renter).

I think you can afford it, but you are not likely going to be saving anything beyond 401k contribution and would have to watch your budget closely to avoid dipping into savings. When something needs to be fixed you are likely going to start spending your savings as you won't have enough cashflow to cover expensive repair/maintenance costs. You can make it work, but you have to be comfortable with investing your existing savings well enough to grow as you won't have income to contribute.

You have a good NW for a single person, so not as much pressure to build retirement savings as someone your age with a lot less (more common). But you have to be ok with some portion of your savings depleted as your bury it into this home and hope to cash out when you need to sell. It may be a great investment that would enrich you 20 years from now when you are ready to move on and downsize, or it may be a drain, nobody knows.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Absolutely not. You're 50 and single. That's too much house, too much work, too much mortgage, and too much taxes.

With $3M, you're in a position to be very, very comfortable between now and in retirement. But not if you go blowing a bunch of money on a house you definitely don't need. And especially not some 90-year-old work pit.

Spend $600k on a small house, or townhouse or something.

600K in DC Metro is a dump, not in a good/safe area or... far out, or a really tini shoddy TH

Op could go up to $900k, spend $400k less than this house would cost, and get something nice not too far out.

i was going to say this. 600 is too low. 900 is different, but still low for sfh unless ok with a fixer upper. i would look at luxury townhome communities near good schools and amenities, better for single parents, more community feel

That does not exist in my area. It’s city w commute to schools or suburbs with a SFH.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Absolutely not. You're 50 and single. That's too much house, too much work, too much mortgage, and too much taxes.

With $3M, you're in a position to be very, very comfortable between now and in retirement. But not if you go blowing a bunch of money on a house you definitely don't need. And especially not some 90-year-old work pit.

Spend $600k on a small house, or townhouse or something.

600K in DC Metro is a dump, not in a good/safe area or... far out, or a really tini shoddy TH

Op could go up to $900k, spend $400k less than this house would cost, and get something nice not too far out.

i was going to say this. 600 is too low. 900 is different, but still low for sfh unless ok with a fixer upper. i would look at luxury townhome communities near good schools and amenities, better for single parents, more community feel

Anonymous wrote:

Anonymous wrote:Absolutely not. You're 50 and single. That's too much house, too much work, too much mortgage, and too much taxes.

With $3M, you're in a position to be very, very comfortable between now and in retirement. But not if you go blowing a bunch of money on a house you definitely don't need. And especially not some 90-year-old work pit.

Spend $600k on a small house, or townhouse or something.

600K in DC Metro is a dump, not in a good/safe area or... far out, or a really tini shoddy TH

Op could go up to $900k, spend $400k less than this house would cost, and get something nice not too far out.

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.

buy a cheaper house!

Anonymous wrote:Absolutely not. You're 50 and single. That's too much house, too much work, too much mortgage, and too much taxes.

With $3M, you're in a position to be very, very comfortable between now and in retirement. But not if you go blowing a bunch of money on a house you definitely don't need. And especially not some 90-year-old work pit.

Spend $600k on a small house, or townhouse or something.

600K in DC Metro is a dump, not in a good/safe area or... far out, or a really tini shoddy TH

No way.