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  • Future lake house

    I will try to be as concise as possible, our goal is to live on a lake. We have a beautiful house right now and will not make this move until the time is right and the property is right. The time could be right in 6 months or 10 years and we are okay with that. We have narrowed our search to one part of one lake. The one part of the lake is based on school district, repeatedly and historically one of the best public school systems in our state.

    Houses in this area used to be cottages and now range from about $1-5M. A couple houses burned down and the very ideal lots sold for a little over 800k. There will be basically three options:

    1. buy a house that is move in ready and keep as is or slightly renovate

    2. buy a house and do a major renovation at time of purchase or down the line

    3. tear down and start from scratch

    I am guessing we would likely fall into option 2 or 3 since a lot of the houses are very old and small and would not suit us. Many of the new houses are massive and much bigger and more opulent than we would want. We are looking to have a very simple house with nice finishes, nothing crazy. We will not be spending big money on bars and wine cellars and a lot of the other things you see in expensive houses. We are thinking approx 4000 square feet. I think to get what we want we are looking at $1.5-2M. We are pretty set on not going beyond 2x gross income for our mortgage. We have three little kids.

    Finances:

    We made a little over 600k in 2016, this will be a little higher this year and will likely trend up to about 750k in the next couple of years and could be more after we finish paying the buyouts of two recently retired partners. We will not be using the possibility of my income increasing in the decision making process. Most of this income is mine, my wife works casually and makes about $40/hr working about 12-16 hours a week.

    Student loans will be paid off in about 18 months, likely January of 2019, due to large year end bonus. At that point we will only have our mortgage which is currently about 350K (house value around 475k).

    We max out 401k, backdoor roth, HSA. The rest of the excess goes towards student loans (wifes undergrad is paid off (150k), wifes grad school, dental school). We have about 250k in 401k, roth, HSA and like to keep about 50k in cash. The value of my partnership is about 750k and share of our building is 200k.

    Questions:

    1. I am most comfortable paying off student loans, saving for 20% down payment, then buying. This will likely take about 4 years. I only have 2 people outside of my wife who I would consult with on this. They have posed the idea of slowing down on student loans and having a down payment ready for when the right place comes on, since we are looking at such a small area (12 houses have been listed in the last 4 years). As I explained my comfort zone, they argued you may be delaying paying student loans off for a couple years but you are making a "forever" decision to get into the home you want and also used the current low interest rates as an incentive to move faster. Thoughts on this?

    2. I do not get real excited about physician mortgages. I feel like if we cannot afford to do it the conventional way, then we should wait. Any reasons why my thinking would be short-sided? My wife hates thinking about money and says if it stresses me out she does not want to do it. I brought up a physician mortgage to her and we are on the same page.

    3. We built our current house and loved doing it. we are looking forward to that process of building or renovating. We have some general meetings lined up to get a better idea of what that process looks like so we have a better understanding when the time comes. We are also talking to people we know on the lake to learn more about things we may not realize, unforeseen expenses, etc. Does anyone have experience with a major renovation or lake living? If so, what thing should we be learning more about that we may not think of?

    4. I need to put pen to paper and run more numbers for my wife and I to go over. We know this will be a sacrifice financially, but need to get into more details about how much of a sacrifice it will be. How much longer will we (mostly I) need to work? Is that worth it? This is the gut check section where I am really interested to hear your thoughts. Is this nuts? Are we crazy? etc. We really are open and want to make sound financial decisions as we pursue this.

    I am sure I am forgetting a lot, and will have more questions. Thanks for any input, advice, criticism.

  • #2
    1. Good idea. Get rid of your student loans, then live your doctor lifestyle. Don't let the fact that rates/home prices might rise dramatically scare you into buying when the time isn't right for you. By the way, it's not entirely clear to me but I think we're talking about the main home, not a second one, right? If we're talking about a second one it is completely ridiculous to buy that before student loans are gone.

    2. The only issue is maybe rates/home prices go up dramatically before you buy, in which case you would have been better off buying earlier with worse terms. Lots of docs buy their main home before the student loans are gone and so use a physician mortgage and I think that's okay, but just realize that decisions like that do slow down your financial progress.

    3. You're a rare breed. Building a home is tough on marriages. I don't think being on a lake is too different, other than flooding issues, dock/boathouse issues etc.

    4. Sounds like this is a big financial priority for you. Others have different priorities (travel, early retirement, sending their kids to the most expensive schools etc) You can do anything you want, but not everything. I don't think it's ridiculous to live on a lake with a $600K income.

     
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    • #3




      1. Good idea. Get rid of your student loans, then live your doctor lifestyle. Don’t let the fact that rates/home prices might rise dramatically scare you into buying when the time isn’t right for you. By the way, it’s not entirely clear to me but I think we’re talking about the main home, not a second one, right? If we’re talking about a second one it is completely ridiculous to buy that before student loans are gone.

      2. The only issue is maybe rates/home prices go up dramatically before you buy, in which case you would have been better off buying earlier with worse terms. Lots of docs buy their main home before the student loans are gone and so use a physician mortgage and I think that’s okay, but just realize that decisions like that do slow down your financial progress.

      3. You’re a rare breed. Building a home is tough on marriages. I don’t think being on a lake is too different, other than flooding issues, dock/boathouse issues etc.

      4. Sounds like this is a big financial priority for you. Others have different priorities (travel, early retirement, sending their kids to the most expensive schools etc) You can do anything you want, but not everything. I don’t think it’s ridiculous to live on a lake with a $600K income.

       
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      1. That was not clear, yes this would be our primary and only home.

      Thanks for the input. We made the decision along with our best friend who is in real estate that we would go see every house that comes on the market in that area in order to be better informed when the time is right. I think it will be a good education, but it has allowed the thoughts of doing this sooner rather later creep into our minds. This has made me a little uncomfortable and has also been hard on my wife who has a tendency to see our family's future in a property pretty easily. For example, yesterday we saw a place with a perfect lot, livable house (very dated but immaculately maintained), great footprint for renovation. This is the only house on the market right now, came on Saturday. It caused a lot of stress for my wife because it felt like a missed opportunity since we are not ready. Then I start thinking about physician mortgages, etc, etc. It is a hard balance between educating yourselves and not falling in love with places.

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      • #4
        Well I have a lake house.  The lake I live on is managed by TVA so flooding is not really a concern.  On the flip side TVA has very strict rules about stuff like docks, boat houses, seawalls, tree removal.  Fisherman can fish right up to your property line 24 hours per day 365 days per year.  Anything wooden that needs paint will need to be painted more often too.  My house is very remote and rural.  That means no cable, no wifi except via hotspot. Lakes are windy so outdoor stuff seems to need replacing more often too.  My husband owned the house when we married so I never went through the building process. This lot is 5 acres so more yard work to maintain it.  The views are fantastic and I love the birdlife, otters, turtles etc.  I would pay down the loans and continue to max out retirement and in a couple years buy a lot.

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        • #5
          Jealous.  Would love to live on a lake.  Sounds like Minnetonka.

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          • #6
            How much are your student loans and what rate?

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            • #7




              How much are your student loans and what rate?
              Click to expand...


              Good question, I was writing this throughout the morning and had to get up and walk away about ten times, not sure how I omitted that. I would have to look up the exact numbers. But these are approximate:

              -Dental school loans: ~220k in the 3% range (variable)

              -wifes grad school: down to ~50k in the 3% range (variable)

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              • #8
                all I will say, is you should never shop for anything until you are ready to purchase.  When you have decided that your finances are in order and you would be willing to buy the perfect house today, then go figure out what the market is.

                The act of walking in homes and imagining yourself living inside them is exactly why real estate agents suggest it, car dealers have you test drive, and boat dealers want you on the lot looking at boats.

                I would limit myself from even looking at the market until you are absolutely ready; otherwise, you are comparing your life with a life that you have idealized and it will A) make you less happy and B) encourage you to purchase something on emotion rather than logic.

                Fortunately with your income you can afford to purchase a lot on emotion, but given the fact that you are posting for advice on a financial forum I assume you are hoping to make a rational decision.

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                • #9




                  all I will say, is you should never shop for anything until you are ready to purchase.  When you have decided that your finances are in order and you would be willing to buy the perfect house today, then go figure out what the market is.

                  The act of walking in homes and imagining yourself living inside them is exactly why real estate agents suggest it, car dealers have you test drive, and boat dealers want you on the lot looking at boats.

                  I would limit myself from even looking at the market until you are absolutely ready; otherwise, you are comparing your life with a life that you have idealized and it will A) make you less happy and B) encourage you to purchase something on emotion rather than logic.

                  Fortunately with your income you can afford to purchase a lot on emotion, but given the fact that you are posting for advice on a financial forum I assume you are hoping to make a rational decision.
                  Click to expand...


                  incredibly wise

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                  • #10
                    1. Keep paying on student loans.
                    2. I'd save up the 20% to force you to save the money and have a smaller mortgage. Sounds like overall house price will be ~$1.3M...?
                    3. Can't help
                    4. If this is what you want to spend your money on in exchange for working a few more years, do it. Don't even regret it. Do what makes you happy. If you end up not liking it, sell it and downsize. If the houses are selling, it wouldn't be a catastrophic decision. Just an expensive lesson.

                    Lastly and most importantly, how's the job security? If the economy crashes tomorrow, what will happen to your job and salary? Food for thought...

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                    • #11
                      Willpmd: we are feeling this. The intent was educating ourselves and the result has been along the lines of what you are describing. Thankfully our real estate agent is our closest friend and there is no pressure. He is also the opposite of emotional, almost to a fault. However, it is still causing stress. It is a tough balance between preparing ourselves and protecting ourselves from the inevitable emotional response. Thanks for your response, very thoughtful and applicable.

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                      • #12
                        Jhwkr542: I think my job security is about as good as it can be. It certainly could be affected by a major economical change, but probably pretty minimally.

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                        • #13
                          Post Deleted and user blocked by Moderator WCI for spamming.

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                          • #14
                            Me and brother buy a lake house last year where I spend my quality time.

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                            • #15
                              My advice:

                              1. If you are on an even keel now, don't add financial stress to your marriage by taking this step before you can do it with ease. To the extent that you would like to get out to the lake sooner, consider renting for a few weeks, or more, each summer.  That is far less expensive than buying, it will help you to get a more fine tuned understanding of the local market, and it may give you the inside track on buying the house you're renting.

                              2. Houses on the water involve greater upkeep expenses, so be sure to factor this into your plan.  Anything that can rust will rust, and things wear out much more quickly.

                              3. Homes that are generally owned as a vacation homes (even though you would be using this house as your primary home) are harder to sell, in my experience, especially if the stock market turns negative.

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