CYAI - A $4.5M house and a $2.5M rental?!?

[jfoxcpacfp]

It is with great trepidation* that I announce the latest fortnight installment of "Can You Afford It?". This CYAI was submitted by a dual-doctor client couple of our CPA firm, so I had a very personal interest. No strings pulled and I didn't even know they were clients until I contacted them with the expected posting date. I think you'll find this one interesting and may even come to a different conclusion - hope to hear your thoughts!

In case this is your first time reading this announcement, I receive nothing in exchange for these analyses other than the ad that XRAYVSN asked to put up. This is an enjoying exercise that I will continue until it is no longer enjoyable - or we quit receiving submissions. If you'd like me to analyze and post an opinion/recommendation on your goal, you can sign up here. You will remain anonymous. My clients gave permission for me to state that they are clients or I wouldn't have done so.

*given that the previous edition spawned 10 pages of content and controversy here on the forum.

[VagabondMD]

I had to take a pass on this one. The fact that docs are living in $4.5M houses, paying $50k in property tax, paying 11% state income tax, etc. is so far from my experience and my world that I could not wrap my mind around the whole thing.

[fatlittlepig]

LOL. I love it when doctors who should be winning do stupid things like this. Dumb dumb dumb.

[CordMcNally]

Maybe one of the worst parts about living in a place like San Francisco is that you start thinking these numbers you see are normal.

[jfoxcpacfp]

CordMcNally wrote:

Maybe one of the worst parts about living in a place like San Francisco is that you start thinking these numbers you see are normal.

Click to expand...

Possibly so. For some people, it's just home. And for a fraction of those people, a really nice home trumps a lot of other spending. If they can afford it (and I realize that is a really big "if", I don't see anything wrong with it.) To each his or her own! I think this story has a pretty plausible ending, fortunately.

[Peds]

Can someone post the details here so I don't have to see that site? Thanks.

[VagabondMD]

Peds wrote:

Can someone post the details here so I don’t have to see that site? Thanks.

Click to expand...

"Peds style"-

$900,000 two docs income in SF, early 40's want to retire in 20 years

$2.6M in retirement and taxable accounts plus $1.8M equity in $2.5M house

Want to upgrade to $4.5M house and maybe keep the old house as a rental

[Peds]

Yea 2.5MM is a clunker there.

Ty.

[CordMcNally]

Vagabond MD wrote:

Peds wrote:

Can someone post the details here so I don’t have to see that site? Thanks.

Click to expand…

“Peds style”-

$900,000 two docs income in SF, early 40’s want to retire in 20 years

$2.6M in retirement and taxable accounts plus $1.8M equity in $2.5M house

Want to upgrade to $4.5M house and maybe keep the old house as a rental

Click to expand...

Plus pay $85k/year in property taxes, which I can't even fathom. I tried to fathom it, too.

[Panscan]

I usually poopoo these things but they're not in bad shape. Over 2.5m in retirement accounts at 41.. Their cost of living is gonna be pretty high but if they truly work for 20 more years they're gonna have a good chunk. I think keeping second house would make it tougher.

50k in property tax makes my chest tight. I guess there's a lot of risk there with such a high mortgage if something happened to either spouse. I would get great insurance.

[Kamban]

Sell the $2.5M house and use it to buy the $4.5M house.

But I am not sure why they have to sell the $2.5M home and buy the bigger home. If this is upgraditis, when will it end.

[StarTrekDoc]

Sis was in the exact same boat 6 years ago.  Lived in the lower bay and moved into The City -  They sold their home and used it to buy a very nice Alamo square location home renovate and had plenty to dip into their ranch vineyard project.

529:  250k doesn't get you far in dual income family VHCOL looking at 20years of private schooling--  SF schools unless magnet, can be quite pricey and I don't see that factored in on the little ones --  Also the dual income may not last forever -- little ones grow up and the elementary years coming up, the parents may actually want to participate more --- all depends.  That's a factor that's unknown and family really needs to consider that into the equation on the dual income longevity portion.

Lastly - rental.  AirBNB restrictions are significant in the city.  So if their current primary is there, long term rentals are the only possibility.  Depends on location of the $2.5M.   All things are local in SF Bay Area.   $2.5M can be a very nice home vs a decent in a very good school district.   Lots of local factors.

My sister has done fine.  The $$ numbers they burn and run through are crazy, but it works and been sustainable for awhile now.

Just concerned on dual income status with kid going to school situation more than anything.

[fatlittlepig]

LOL, they almost have a 2.5m house almost paid off so now it’s time to get a 4.5m house. For their income and spending, retirements savings are paltry. The part of keeping the first house... wow that’s really dumb.

[abds]

Wouldn’t they have to end up asking around $25,000 a month in rent for the first house? I don’t know anything about owning a rental/income property, or SF, but that seems crazy to me. Are many people paying that to rent a house there?

Seems like they should sell it to get the new one. Or of course just stay where they are.

[abds]

Johanna have you ever thought about posting a summary in your initial post like Vagabond did for us? Maybe with a little more detail (or maybe not).

I often find these interesting but there is a zero% chance I’m clicking the link to that page.