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  • Buying most expensive house in the neighborhood

    Dual physician couple in low to medium cost of living city in southeast. Started jobs in july and both like our jobs. 2 kids age 2 and 2 weeks, currently renting a house.
    Combined income 600k and likely to increase over time.
    No current debt (scholarships and generous parents).
    Around 150k in roth IRA/401k combined, 8k taxable and about 120k saved in HYSA for downpayment. Probly another 20-30k in checking account depending on the month and when bills have been payed.

    We've started seriously looking at buying a house and we like the neighborhood we are renting in and would like to stay. It is within 5 minutes of the hospital which is great for call, walkable and close to downtown/restaurants. Problem is its one of the more expensive neighborhoods in the city and full of lots of old houses that would need a lot of work and neither of us are really handy or want to put in that effort. The newer/nicer/bigger homes that we like are in the 750k-1mil range (3500-4500 sq ft). We could drive 15 minutes away and get houses that are nicer/bigger for half the price but don't like the feel of the cookie cutter subdivisions as much and less convenient for work. I've never liked the idea of owning the most expensive house in a neighborhood but to get the house we want in the area we want its looking like thats what we'll have to end up doing. Also there are very few houses for sale in the neighborhood and when a good one comes up it seems to go off market within a day or 2. (some of the more expensive ones just linger for awhile making nervous about resale value if we were to need to move)

    Really just looking for some assurance that this isn't a huge financial mistake and to see if anyone has been in similar situation and had any regrets or advice.

  • #2
    Originally posted by ddd View Post
    Dual physician couple in low to medium cost of living city in southeast. Started jobs in july and both like our jobs. 2 kids age 2 and 2 weeks, currently renting a house.
    Combined income 600k and likely to increase over time.
    No current debt (scholarships and generous parents).
    Around 150k in roth IRA/401k combined, 8k taxable and about 120k saved in HYSA for downpayment. Probly another 20-30k in checking account depending on the month and when bills have been payed.

    We've started seriously looking at buying a house and we like the neighborhood we are renting in and would like to stay. It is within 5 minutes of the hospital which is great for call, walkable and close to downtown/restaurants. Problem is its one of the more expensive neighborhoods in the city and full of lots of old houses that would need a lot of work and neither of us are really handy or want to put in that effort. The newer/nicer/bigger homes that we like are in the 750k-1mil range (3500-4500 sq ft). We could drive 15 minutes away and get houses that are nicer/bigger for half the price but don't like the feel of the cookie cutter subdivisions as much and less convenient for work. I've never liked the idea of owning the most expensive house in a neighborhood but to get the house we want in the area we want its looking like thats what we'll have to end up doing. Also there are very few houses for sale in the neighborhood and when a good one comes up it seems to go off market within a day or 2. (some of the more expensive ones just linger for awhile making nervous about resale value if we were to need to move)

    Really just looking for some assurance that this isn't a huge financial mistake and to see if anyone has been in similar situation and had any regrets or advice.
    If you can afford to take a 6 figure loss and emotionally walk away if you need to (change in job, etc), it’s a consumption luxury item.

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    • #3
      Do you think you'll stay in the area 5 years? If yes, I'd get a 3 month EF in place, get your downpayment to 200k or 20%, and then save another few thousand dollars for moving costs/new furniture/whatever. By that point you'll have been at your jobs a year and should be good to buy. But no I don't think your plan is crazy.

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      • #4
        I’d give it another 6 months or so at least. I waited 2 years. Save some additional cash, make sure the jobs and neighborhood are a good fit.
        financially you can certainly afford it. I wouldn’t want a fixer upper either and loathe a commute, so it seems like a good plan from my perspective.

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        • #5
          I would stay put renting a little longer and be open to possibly other neighborhoods.

          There is no way I would purchase a fixer-upper. You have enough going on with jobs and kids than to spend your time worrying about another leaking toilet /faucet. Even if you hire people to fix things, it still takes your time...but just in a different way.

          It's hard to see right now, but your kids will eventually be out of your house riding a bike or scooter. Avoid a busy street and look for a cul-de-sac.

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          • #6
            Financially you can afford it. Just another vote for renting for the next few months or a year to see how the job goes. Buying only makes sense if you plan on staying 4-5+ years in most markets.

            By waiting, you save for a potential larger down payment and possibly find another neighborhood that makes more sense to purchase in. Maybe you’ll be ok with the cookie cutter subdivision to save 2-3 years of working.

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            • #7
              Too early. Six months of job experience in 2H 2020 is a stretch. Give it possibly two full years?

              Just don’t see a lot of benefits to upping budget on housing, assumed. Lease/purchase would be a different question. Basically, why buy if you don’t have a need?

              Full disclosure: Something doesn’t make sense on the math: 1/2 yr earnings (with a newborn) would be $300k and the assets equal the total earnings!
              Not enough info! You have a great asset base, don’t screw it up. Need to see the plan going forward.

              Comment


              • #8
                I think you're in a good position to do whatever you want. Just don't force the issue. People buying houses get all caught up in the limited availability and get excited/anxious and overlook details. Take your time. I don't like commutes but 5 vs 15 minutes wouldn't be a deal breaker. I have enjoyed neighborhoods with large trees over new cookie cutter homes though. When you want to take a walk in the summer and there is zero shade it can be a bit miserable.

                If you are just looking financially, you can run a rent vs buy calculator.

                Comment


                • #9
                  Dont rush buying a house out of FOMO ("all the good ones get taken in a day"). Same goes for buying a car the same day you walk into a dealership.

                  Agree with above. You're in a good financial spot. Wait a few more months to make sure job stays happy/good fit and to explore the outer suburbs before making your decision. 6 months is too soon to REALLY know the area and jobs. Build up your down payment. Good luck!

                  Comment


                  • #10
                    from your post i have a solid guess at to where you are.

                    if you are indicating where i think you are, then i would have zero hesitation about buying a house in that hood. PM if you want.

                    $1M price tag in a central neighborhood in basically any decent sized city is unlikely to be unreasonable from a price standpoint. it's also a very reasonable purchase price for your income. and it's not like mid sized cities are struggling right now.

                    Comment


                    • #11
                      Hmmmm. Not sure. I regretted buying a house after 6 months into my first "real" job so I would probably rent for a little longer. Hard to say but realize a house is a consumption item and a money sink. You must live some place (so you get imputed rent = quasi investment like) but owning costs more than renting and it ties you down.

                      I love owning a house, but I have bought money pits in the past. Resale is a real thing and you want to stay in a house for 5 years.

                      It might be OK but you will be stuck there and/or lose money if you sell before 5 years. Spouse opinion is also very important here.

                      Financially you can afford it.

                      Ideally renting for at least a year (2 is ideal) helps ensure that the job is a keeper (usually) and it lets you figure out where you want to be.

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                      • #12
                        What is the school district for the neighborhood like? If it's poor that will affect resale value and you will have to budget for private school for your kids.

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                        • #13
                          Originally posted by ddd View Post
                          Really just looking for some assurance that this isn't a huge financial mistake and to see if anyone has been in similar situation and had any regrets or advice.
                          mortgage <2x income.
                          dont put down 20%.

                          Comment


                          • #14
                            Thanks for all of the responses. Seems general consensus is to give it a bit more time before making the plunge. I had previously intended to wait one to 2 years, maybe I'm just getting antsy when there seems to be such a limited supply of the houses we like in the location we like. Also the real world is nothing like the people on this forum so when every single one of your friends owns a house and has done well with it you start to question yourself a little bit.

                            In regards to Tim question on finances we were definitely fortunate to have lots of family support plus full scholarship from one of us to get to residency debt free. I've been a follower/lurker of WCI since before the forum was even a thing so we had 5 years of residency to slowly save/compound plus signing bonuses for jobs. I'm embarassed to say it but it would actually be higher if I hadn't tried to time the market during the inital covid drop. I couldn't see how the market wouldn't continue to drop so I transferred almost 1/2 of our retirement accounts to money market on March 19th with the intention of putting it back in the market one week later after it had dropped further. I finally got it all back in around 2 months later but definitely still kicking myself for going against everything I've learned. I guess rather be burned now and learn a valuable lesson than in 10 years when it could have turned into a 6-7 figure mistake.

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                            • #15
                              Originally posted by MPMD View Post
                              from your post i have a solid guess at to where you are.
                              Lol, i was just thinking the same thing. Wonder if we’re right?
                              Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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