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Can I afford a home in So Cal?

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  • #31
    Yes I think you are okay. You have a lot in savings at a relatively young age, and made a good decision to grow your taxable/retirement accounts before plopping down a few mil for a home. Def worth it in SoCal. What city are you looking in? Costal OC?

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    • #32
      My dream home is moving from my McMansion to your $4K/month rental.

      You've done so well financially, why let emotions mess that up? Too expensive for your current income, even if you can swing the monthly payments. Your dream is likely going to be a money pit cash flow choking nightmare.

      Is this another one of those $2,999,999 for the land and $1 for 20 sq ft shack or are the sq footage and amenities actually good? I don't understand this Cali RE thing. I got my 2 acres for $130K and threw 7500sq ft on it for half of what you're looking at. Oh right, it's not So Cal.

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      • #33
        Many So Cal homes are already priced to account for anticipated continuous appreciation. Any concern about buying in a bubble as companies with their high paying jobs and well compensated employees move to more business/tax friendly states (i.e. Texas). People are starting to figure out with this pandemic you can work for high paying companies anywhere without actually having to live there.

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        • #34
          Companies have constantly been moving away from Cali -- and it's still there. You simply can't move the climate to Austin as much as one tries.

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          • #35
            Originally posted by StarTrekDoc View Post
            Companies have constantly been moving away from Cali -- and it's still there. You simply can't move the climate to Austin as much as one tries.
            This.

            It's all fine and well to leave VHCOL areas like Manhattan, Bay Area for low-cost livin' Austin or Miami. It is probably a good decision financially for most tech employees and executives.

            But I wonder if these people will feel the same way when they realize you can't go outside for like 5 months of the year, due to intense heat, humidity, and mosquitoes. Especially if you were used to living in the balmy and pleasant Bay, for ex.

            I know some people who have moved from the Bay down to San Diego/OC. I can sympathize with that, and much easier transition.

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            • #36
              Originally posted by wonderwoman77 View Post
              Can we afford a 2.5 - 3M home in SoCal?
              We are currently renting @4k/month

              My husband and I make about 500K/yr gross (we are in early 40's)
              $750K in cash - holding to make the downpayment
              $1.7M in stocks, index funds and bonds
              $800k in retirement accounts
              $200K in 529 plan for the kids
              $200K in downpayment/equity in our old home out of state that we are renting out (positive cash flow at the moment)

              i realize this is against the 2x gross pay rule but not sure how applicable that is in SoCal. Any thoughts or advice is much appreciated?

              thanks
              Yes, you can, but know thyself. Run the numbers with your budget. People outside of VHCOL areas just live different lifestyles. Yes - the numbers have to work, but only wonderwoman77 knows the details of her budget and lifestyle.

              My two cents, a story I've told before:

              (Now) two kids, Bay Area 3+MM home. Salary wise, we were slightly above you when we bought, savings wise you're >4x what we had. Our salaries have increased since we purchased. Mortgage (actively refinancing) is now like $10k, prop tax is $3.5k / month. We still meet all our savings goals, are on track for early FI.

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              • #37
                I know that Socal is turning into a desert. That being said I'm getting my 5th generation of monarch butterflies off my milkweed plants since May. Plus I get to bike home in shorts after work on Winter solstice. I don't know if that has monetary value, but it has value.

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                • #38
                  Originally posted by wonderwoman77 View Post
                  Can we afford a 2.5 - 3M home in SoCal?
                  We are currently renting @4k/month

                  My husband and I make about 500K/yr gross (we are in early 40's)
                  $750K in cash - holding to make the downpayment
                  $1.7M in stocks, index funds and bonds
                  $800k in retirement accounts
                  $200K in 529 plan for the kids
                  $200K in downpayment/equity in our old home out of state that we are renting out (positive cash flow at the moment)

                  i realize this is against the 2x gross pay rule but not sure how applicable that is in SoCal. Any thoughts or advice is much appreciated?

                  thanks
                  U can afford the house but based on your salary and numbers you posted, I don’t think you are as frugal as you may think you are.

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                  • #39
                    Originally posted by fatlittlepig View Post

                    U can afford the house but based on your salary and numbers you posted, I don’t think you are as frugal as you may think you are.
                    How can you say that without knowing how long they have been working for ? I am in the same age range , would have been very happy to have similar savings .

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