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Buying most expensive house in the neighborhood

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  • ddd
    replied
    Thank you all for the responses. After reading them all I think the wisest move is to wait a little bit longer to buy the house. We are probably going to end up buying one of the more expensive houses in the neighborhood but it seems the only way it really becomes a drastic mistake is if we end up moving within a few years and can't sell or home prices have crashed. Waiting to be sure really diminishes that risk.

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  • jfoxcpacfp
    replied
    Originally posted by Kamban View Post


    I pretty much could have written that word for word. I too lived in a small house for 17 years that when people came and saw me and my house they asked - are you sure you are a doctor.

    Now that I am FI and work to keep my mind from going crazy, I built the most expensive house in my neighborhood. Double of what some of the other houses are valued. I don't care. Even if it is a loss when I am gone , I would have enjoyed my wealth. The good thing is that in MCOL the most expensive house gives you a ton of space and upgrades that a tiny house in Bay Area will not, for the same price.
    I like this! Just to reinforce your statement for other readers, Kamban is FI, which completely changes the decision process.

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  • Hank
    replied
    I don’t like HOAs and neighborhoods where everyone has a near identical house. Therefore, you’re going to get a broader range of house prices.

    Assuming the houses aren’t all cookie cutter, you’ll have a range of sizes, prices, and possibly ages. Safest to keep your house between the 20th and 80th percentile. For me, I’d rather be closer to the 20th percentile in a nicer neighborhood with better schools and a shorter commute.

    There’s some risk of peer pressure and desire to keep up with the Jones when most of your neighbors make more than doctor or attorney level income. That said, it’s useful for the kids to learn that you don’t need new German cars every year or two, designer jeans, and membership at more clubs than you actually attend.

    On the other end of the spectrum, the nicest house in the ghetto is the one most likely to get robbed. There are valid reasons not to have a house at the 90th percentile or above in price. Selling in a timely manner for a fair price is tougher if your house is too far outside of the fat part of the Gaussian distribution. At least the 10th or 20th percentile house has appeal both as a starter home or as a possible flip or tear down.

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  • Fullhouse11
    replied
    My family and I thoroughly enjoy our pricy old house, low to medium cost of living, medium sized city. Walkable to restaurants, outdoor festivals, concerts and events (when it’s not covid) and downtown. When we purchased the home, in our mid 40s, we had already lived 14 years in a new (our first post fellowship), somewhat cookie cutter house.

    You make your house your home, so either way, you will grow to appreciate your decision. We have a bit of a remodeling bug, so we spent money redoing a 6 year old kitchen in the ‘new house’ anyway. You may also continue to stalk the houses that got away in a neighborhood that you admire. I’m biased, I’d go for the older house, plan on some extra money going toward the most important people in your neighborhood; the plumbers, electricians and painters.

    Take some time to talk to people who have kids in the public school system, I would bet there is a game that they play. We have always chosen religious private, but the public kids in our neighborhood go to a magnet school with college prep classes in high school. Middle school appears to be a little dicey in my opinion, but the affluent in our neighborhood send their kids there, so I’m sure they figure it out.

    Another benefit of an older area is the diversity of people. Older, younger, professional, quirky folks who could talk hours about old fireplaces, picture rails, and original light fixtures. Being physicians will no longer be the most interesting thing to talk about.

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  • StateOfMyHead
    replied
    Another consideration in favor of continuing to rent which may or may not be applicable but in my area it is a seller's market right now which I prefer to avoid.

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  • Kamban
    replied
    Originally posted by Hawkeye225 View Post
    Not going to address anything else but this. I personally own the most expensive house in our neighborhood and I don't care. I used to want the least expensive home in the neighborhood which we did for years but at this point in life, it's highly unlikely that we will ever move and it checks virtually every box we could ask for. Very thankful to be here. Life is about living, not always saving.

    I pretty much could have written that word for word. I too lived in a small house for 17 years that when people came and saw me and my house they asked - are you sure you are a doctor.

    Now that I am FI and work to keep my mind from going crazy, I built the most expensive house in my neighborhood. Double of what some of the other houses are valued. I don't care. Even if it is a loss when I am gone , I would have enjoyed my wealth. The good thing is that in MCOL the most expensive house gives you a ton of space and upgrades that a tiny house in Bay Area will not, for the same price.

    Leave a comment:


  • nephron
    replied
    There's nothing wrong with purchasing the biggest most expensive house in the neighborhood. I assume that there will always be a demand for it if it were in an optimal commuting location as there will always be at least one person like you who makes a good income and is looking for a short commute. My main concern would be the school district. The school district by definition will be poorer then if you had a comparably priced house but it was the smallest house in the neighborhood. I don't know how much difference it makes, but your kids will end up with different friends in your school district if all the kids are going to Ivy leagues vs not graduating from college. That's not some elitist attitude, there always are exceptions, but when you look at colleges kids end up going to after high school, there is usually an obvious difference between the richer districts vs the poorer ones.

    Leave a comment:


  • Tim
    replied
    OP , thanks for the asset clarification. I think you have done a wonderful job of getting ahead.
    •Progress of peer group- this feeling is virtually universal. Fact: physicians have a longer runway to takeoff. Deal with it. Delayed gratification rather than keeping up with the Jones.
    • gross - taxes - 20% retirement = spending
    Follow that rule every year and it is difficult to make mistakes.
    • The second contract is a better representation of your long term job satisfaction. The odds of staying are drastically better. That’s the reason for two years employment.
    •You will be able to have anything you want, just not everything.
    You will always be able to afford the most expensive house, it’s only a question of timing and how much you want to spend.
    • Peds 20% down comment is the current interest rate is lower than the typical mortgage insurance premium and anticipated long term market investment returns assuming you invest it. Revisit that when you are ready to buy a house.

    Leave a comment:


  • Random1
    replied
    If you are employed , I would wait until you renegotiate your contract. I think at that time , you will have a good idea if you are going to stay. It is alot easier to move when you dont have a house to sell. In the mean time , enjoy a care free apt with your wife and kids. Much more enjoyable than trying to fix brokien items and mow the lawn in your free time.

    Leave a comment:


  • Hatton
    replied
    Well I figured it out also. My concern for the OP is the newness of the job and the fact your wife is 2 weeks postpartum. 6 months is not enough time to know about jobs. Will your wife want to work FT with 2 young kids? This could really factor in to your numbers. If you wait 6 months from now or 2 years from residency I think you will be in a better position.

    Leave a comment:


  • burritos
    replied
    In 2000 we bought a house 1.8x our income 1 yr into my job and 1 month into my wife's job. It was purchase with no benefit of the WCI like wisdom. Looking back on it, we probably should have bought bigger. It still turned out well. Sometimes it does, sometimes it doesn't. Lots of room for learning with dual physician income. Go with your gut. It got you this far I suppose.

    Leave a comment:


  • Hawkeye225
    replied
    Not going to address anything else but this. I personally own the most expensive house in our neighborhood and I don't care. I used to want the least expensive home in the neighborhood which we did for years but at this point in life, it's highly unlikely that we will ever move and it checks virtually every box we could ask for. Very thankful to be here. Life is about living, not always saving.

    Leave a comment:


  • wideopenspaces
    replied
    Originally posted by ddd View Post
    To complete the financial picture, we both have term life insurance and individual own-occ disability plus group disability (though did initially get sold a fake own occ by NWM agent 4th year of med school which is actually how I got started reading WCI) we have not started specifically saving for college but plan to open 529 for both kids this year. Public schools are great in the area we want to live even though a lot of the parents send their kids to the nearby private school. We both went to public schools and plan on doing the same for our kids unless crazy circumstances arise. Plan on saving enough for them to go to whatever undergrad school they want debt free (so probly somewhere around 200k per kid) and hopefully they pick a state school or get scholarships and the money can be used for grad school.


    I guess the other question is that the majority are saying to save up more cash for downpayment while Peds is saying don't put down 20%. I'm assuming this is because of the low interest rates and making more in the market. It makes sense but to be honest I like the idea of 20% downpayment with 15 year mortgage to try and get it paid off as soon as possible. May not make the most sense financially but I'm in the camp that would prefer the pyschological aspect of being debt free. I'd like to think I have the dedication to save/invest the excess monthly payment but it would be really easy to see that extra amount in the checking account and decide to fly business class whenever we are able to go on vacation again.
    I'm pretty sure you can put 20% down on a 15 yr mortgage AND fly business class, tbh. You're doing great! Personally I like the 15 yr mortgage because you see real progress in the mortgage each year and for me it's a good compromise between a 30 yr and paying it off ASAP.

    As far as FOMO, I have a bit of a real estate addiction and let me tell you, I can always find another house I'd like to buy. When the time is right you will find the perfect house.

    Leave a comment:


  • ddd
    replied
    To complete the financial picture, we both have term life insurance and individual own-occ disability plus group disability (though did initially get sold a fake own occ by NWM agent 4th year of med school which is actually how I got started reading WCI) we have not started specifically saving for college but plan to open 529 for both kids this year. Public schools are great in the area we want to live even though a lot of the parents send their kids to the nearby private school. We both went to public schools and plan on doing the same for our kids unless crazy circumstances arise. Plan on saving enough for them to go to whatever undergrad school they want debt free (so probly somewhere around 200k per kid) and hopefully they pick a state school or get scholarships and the money can be used for grad school.


    I guess the other question is that the majority are saying to save up more cash for downpayment while Peds is saying don't put down 20%. I'm assuming this is because of the low interest rates and making more in the market. It makes sense but to be honest I like the idea of 20% downpayment with 15 year mortgage to try and get it paid off as soon as possible. May not make the most sense financially but I'm in the camp that would prefer the pyschological aspect of being debt free. I'd like to think I have the dedication to save/invest the excess monthly payment but it would be really easy to see that extra amount in the checking account and decide to fly business class whenever we are able to go on vacation again.

    Leave a comment:


  • jfoxcpacfp
    replied
    Originally posted by billy View Post

    The "real world" you quoted is likely just a perception, not a reality. A deeper dive into your friends financials would probably reveal a different story (not that you should pry, but appearances often are deceiving in HCOL careers- drs, lawyers, finance).
    You are SO RIGHT. Just went through this with a CPA client whose partners were bragging about their remarkable tax advice from their CPAs and how buying 6000 lb vehicles had been wise and miraculous. Frustrating sometimes.

    Leave a comment:

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