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Dangerously falling in love with first potential home purchase.

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  • #16
    OP, pretty clear that you're gonna buy the house. I also could have predicted verbatim the advice that has been offered. For more supportive posts, there is probably a realtor/luxury home forum somewhere.

    Sometimes thses things work out for the best, maybe you'll be one of those cases. Suggest you look at the post on net worth/age to get a feel for the experience level of the participants on this forum before discounting the opinions. For the most part, we have all been there, done that, or seen it before.

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    • #17
      I agree with all the other wise posters that this purchase would be a mistake.  You mention that you work with your brain and will have to "man up" for the maintenance.  Do you have any idea what it takes to maintain 20 acres?  Unless it is totally wooded you will need not a lawn mower but an actual tractor.  Can you drive one?  Is it fenced?  Big expense if it is not.  Most of your free time will be devoted to caring for this 20 acres plus home maintenance.  It can be hard to make friends in a rural area if you did not grow up in a rural area.  You will be overwhelmed by moving to a new community and a new job with a new baby, why add to the stress with 20 acres of maintenance?  Just my thoughts after unloading 20 acres in a rural area recently.

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      • #18




         

        What happened to the WCI rule about home buying less than 2x salary?
        Click to expand...


        It’s still there, but it’s the 4th or 5th rule after the other common sense rules such as live like a resident for 2-5 years, pay off your student loans, make sure to work in an area for 1-2 years to make sure you’ll like it before committing yourself to such a large purchase.

        A big house a happy wife will not make. If your wife’s professional and social needs are not met, you cannot make up for it with “but our house is awesome!”

        Your future job may have all the right ingredients on paper but it really boils down to the people with whom you work and how the leadership treats you. Very difficult to suss that out especially if the area is in desperate need of your specialty/skills to recoup money they’re hemorrhaging away and if you’re the only one of your kind. If there are others in your field you can try to get their input but then again it can all be different when you show up, start working, start interacting with the others, and/or hit any snafus.

        And if your father is in no place to loan you money, then for goodness’ sake, don’t take his money.

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        • #19


          Appreciate everyone’s sensible advice and caution and trying to talk me down. But… Home would theoretically be resellable as it’s in an area with many other physicians albeit in the boonies. Agreed this is a classic early attending physician behavior but tempted to finally live a little after restricting myself for years. What happened to the WCI rule about home buying less than 2x salary? There are more expensive houses out there. What about the idea of how hard it is to lose weight when youre making yourself hungry or to save money when you are austerely restricting yourself? I dont have very many expensive habits. I really doubt I will hate the job. It seems ideal for me. Top starting salary, benefits, good people in the dept, residents i.e. outlet for teaching. Seller is taking a haircut after a divorce. Agreed relatively sparse area doesnt support expensive houses well but Id be getting it on the relative cheap compared to prior original owners. Granted, the key is if my wife will be happy as she has been uprooted. Far from family with young children could be tough. A nanny would be in order. She has a phone interview for visiting professor role at nearby college so fingers crossed.
          Click to expand...


          @Radman- good counterpoints.   If you've read my POVs in this forum, I'm quite a  'get in early into the market hawk', yet throwing up the word of caution.

          Large land rural homes take time to move and are not good airBNB candidates without lots of work.  Work long has this been on the market and comps available?  Even in firesale divorces, pricing can be aggressive, but rarely bottom barrel.  eg.  My sister got 20+ grape farm in awesome valley with custom house for dirt cheap--essentially got the nice custom home and barn for 50% cost.  If 30+ days on market, you have your answer on marketability of that property.

          Income/Expense ratio - yes this is within your outer band reaches.  It also hampers your negotiations on salary.  That additional 3 weeks vaca won't be so easily on the table next round when partnership/academic advancement is up -- the cards on their side, not yours.

          Finances - if you do decide to dive in despite all the flag waiving -- 30yr fixed or interest only.   You have 6% loans and do the math on the payoff vs 10 year mark on this.  By locking in 30y lower interest, it gives you the flexibility to blow up that debt quickly ---  mind you -- this takes fiscal responsibility and constraint and you're already breaking the 'live a little' rule right out of the gates.

          Job - you just don't know. You may hate your manager or boss or chief.  Your wife perhaps doesn't get a job and hates the prospect of being Prof Kahn.

          Happy wife/family -  do NOT underestimate this.  I keep mentioning about being fortunate of having wife work 10 years to pad the cashflow, fund retirement, and pay the nanny salary -- it continues to be the single largest regret she has to have been working too hard; and the family too far the initial years.

           

          --Let your wife and family drive the conversation on this.  Have THEM go up there for the weekend and test drive and look at the property.  Then take their temperature and her's.  Sit down and have a very frank discussion on the anchor drag that home ownership has.

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          • #20
            I agree sounds like the OP made up his mind.

            House sounds great, but you will be house poor and in over your head furnishing and maintaining it and the land.

            I’m curious why you think having a lot of doctors in the area will make it easy to resell? You aren’t moving to Silicon Valley — almost by defintion of you being in a rural area there is plenty of land and opportunities for cheap housing. You will be on the very high end of the salary scale. You will be underwater the moment you purchase

            While your father may know the cost of a new build, there must be a reason they aren’t charging $1.1 million. Maybe they know there is no market there for a home that expensive so already marked it down. Or maybe people with $ just build new homes because there is so much open land — your 20 acres could be 20 x 1 acre lots for new homes. It sounds like you need more analysis of the market.

            Frankly there’s no way I would make this purchase. You are going to a new job where you likely will be working a lot and have 2 young kids and your wife will have no network. You really want to start off in a home far from everyone that she’s going to have to take care of along with a new baby while finding a job that doesn’t exist?

            Just move, rent a regular size house close to work. Make a ton of friends, save up a ton of salary. Then if you are staying, you can buy a house from another one of those many doctors or build your own on some open plot of land.
            An alt-brown look at medicine, money, faith, & family
            www.RogueDadMD.com

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            • #21
              This isn't "living a little." Buying a house for over 3/4 of a million dollars before even earning an attending paycheck is a lifestyle explosion. Many people have given good, solid advice.  I hope you seriously consider it before making this purchase.  You will probably be allright either way, but you may want to wait until you at least like the job/area before buying.

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              • #22
                4900 sq ft + a basement? That's a big house...I would hate to be the one to clean it.

                I would be very cautious buying a house this big for 2x salary right out of the gate. I've seen docs with the 5k sq ft house leave after a few years and houses like this are really hard to sell, especially in a down housing market. I would have been uncomfortable with this kind of purchase without seeing my first real paycheck.

                That said I don't think it is off the hook 5 alarm fire crazy. If you do buy it make sure it's your only house purchase (until you downsize), you don't go through a divorce or become disabled. Oh, and don't burnout from medicine and go part-time like I did

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                • #23
                  This house will prevent you from accumulating wealth, but in 6 months you will be able to afford the monthly payments.

                  You will be amazed at how quickly the 450k salary disappears as you try to put your money to use, especially as you have to furnish this house, buy the toys to "romp around in", and pay taxes.  All the while, you will have HSA, 401k, roth, 529 to fund.

                  We were in a similar situation a few years ago.  I told my wife if we bought a house, it would have to cap at 300k.  Next thing you know we are looking at 450k houses.  Thank goodness the financing fell through and we rented for a year.  We still ended up buying after just 1 year and we bought a 600k house.  I still kind of regret moving as quickly as we did on the house the 2nd time around.  There is always something else to do in the house and if you are going to try and keep your wife happy, you will be draining all your money to make the house the dream house you think it is.

                  If you want to be wealthy in the end, don't buy the house.

                   

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                  • #24
                    This is a disaster you are getting into. Wife's job prospects in that area are slim. You will have 2 kids. You have a student loan. You don't know how you will like the job. Parents are not nearby. It is rural. 850K houses don't sell well or fast in rural areas contrary to what any realtor will tell you.

                    Yet you want to buy that?. I don't see any reason why you can't rent for 2 years. And please, don't bring in the same argument that no good home are available for rent in that area.

                    In the end it is your choice. Good luck.

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                    • #25




                      Appreciate everyone’s sensible advice and caution and trying to talk me down.

                      But…

                      Home would theoretically be resellable as it’s in an area with many other physicians albeit in the boonies. Agreed this is a classic early attending physician behavior but tempted to finally live a little after restricting myself for years.

                      What happened to the WCI rule about home buying less than 2x salary? There are more expensive houses out there. What about the idea of how hard it is to lose weight when youre making yourself hungry or to save money when you are austerely restricting yourself? I dont have very many expensive habits.

                      I really doubt I will hate the job. It seems ideal for me. Top starting salary, benefits, good people in the dept, residents i.e. outlet for teaching.

                      Seller is taking a haircut after a divorce. Agreed relatively sparse area doesnt support expensive houses well but Id be getting it on the relative cheap compared to prior original owners.

                      Granted, the key is if my wife will be happy as she has been uprooted. Far from family with young children could be tough. A nanny would be in order. She has a phone interview for visiting professor role at nearby college so fingers crossed.
                      Click to expand...


                      Doesnt matter what someone else paid for it. You also dont actually know anything about the job until you've worked there and know it intimately which can take years. Even then, things can and most certainly will change.

                      Just because someone else paid 50k for a beanie baby in 1999 doesnt mean you can give it away or its a good deal today. Most houses in my area are still cheap relatively to the unfortunate people who bought in 2006-7, by 25% or so still. Does not make them a great deal. Its a market and everything is relative.

                      I am currently in love with many houses in different places. Like @wideopenspaces my spouse thinks Im wild, I have saved homes on zillow in several cities, and a couple fourplexes as well. You'll always find something when you're more ready.

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                      • #26
                        For many of us in HCOL, 850k is cheap. In addition, buying at a discount from 1.1 million is great. If that house was available near me, yes I would buy it. But, real estate is a local market and such a situation may only work here. I could probably turn around and sell it quit for a profit.

                        However, doesn’t sound like that’s the case where you are moving. Of course, I’m making huge assumptions that your area doesn’t appreciate quickly. Secondly, I’m also assuming there are a paucity of sellers looking for a million dollar purchase.

                        I agree with others. Rent and wait.

                        Comment


                        • #27




                          Appreciate everyone’s sensible advice and caution and trying to talk me down.

                          But…

                          Home would theoretically be resellable as it’s in an area with many other physicians albeit in the boonies. Agreed this is a classic early attending physician behavior but tempted to finally live a little after restricting myself for years.

                          What happened to the WCI rule about home buying less than 2x salary? There are more expensive houses out there. What about the idea of how hard it is to lose weight when youre making yourself hungry or to save money when you are austerely restricting yourself? I dont have very many expensive habits.

                          I really doubt I will hate the job. It seems ideal for me. Top starting salary, benefits, good people in the dept, residents i.e. outlet for teaching.

                          Seller is taking a haircut after a divorce. Agreed relatively sparse area doesnt support expensive houses well but Id be getting it on the relative cheap compared to prior original owners.

                          Granted, the key is if my wife will be happy as she has been uprooted. Far from family with young children could be tough. A nanny would be in order. She has a phone interview for visiting professor role at nearby college so fingers crossed.
                          Click to expand...


                          Yes! You make this argument perfectly! I mean, if there are more expensive houses out there, then you are really taking one for the team! After all, who can afford those other expensive houses, if a Big Fancy Dawkter like yourself can't? Those more expensive houses are where you belong, and the piddly little $850k one is basically slumming it. Especially since 2X your salary would be $900k. Honestly, you probably should keep looking for one that's $900k. A rule is a rule!

                          On the other hand, everyone likes a good bargain, and you have to spend money to save money. Walking away from this house would be like walking away from a $950 Louis Vuitton handbag for only $593. Who in their right mind would just throw away that $357? I mean, seriously. From all you've said, this house is like accepting a $300,000 wad of cash, amiright? One that comes with the need to hire a nanny...and a housekeeper...or two...and some lawn maintenance guys...and pay up to $40,000 per year just in maintenance (not even upgrades)...but let's face it. You're a DAWKTER now. And, need I say it again? If you can't afford it, who CAN?

                          Have fun! Falling in love with a house is the #1 consideration in real estate deals! But FYI, I'd go with like a 50-year mortgage if you can get one. Honestly, the more interest paid, the fancier you are.  8-)

                          (Sorry for the sarcasm! I do love your optimism and enthusiasm though! Signed, the happy semi-rural wife of a guy making decent money, in a house with a much smaller mortgage...who had to google that Louis Vuitton stuff, OMG I have no idea about that crap...)

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                          • #28
                            Let’s take the notion that this is some kind of great deal right off the table.  The house is available for $850k because, you guessed it, the value of the house is, ... wait for it, ... ~$850k.  If the house were radically mispriced, anyone with capital and a better sense of the local RE market than someone who has never lived in the town and rarely visited would have bought it.

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                            • #29
                              Some people have to learn the hard way.

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                              • #30
                                Is there such a thing as a lightly used baller minivan?

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