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200K townhome vs 300K single family house. First time home buying advice.

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  • 200K townhome vs 300K single family house. First time home buying advice.

    I’m 20 months out of residency. No debt. Full participation in 401k and retirement accounts. I have about 200K sitting in the bank in savings. Annual income 300k. Wife is a homemaker. I support extended family overseas. So I can’t save more than a 100K a year. We currently rent a small apartment that is very small for a couple with a 5 y/o child. It was acceptable when I was a resident but now it’s really damaging our social status. We want to buy our first home. I live in a slow market. I plan to move to another state in 3-5 years. I can’t move now as I’m on employment sponsored immigration track. Which option should I take.

    1. 2200 ft Townhome for 200K.

    Pros: just the right size, outside maintenance taking care of by HOA, no need for a loan!

    Cons: I can’t rent it out when I move out because of HOA, slow appreciation if any, average time to sell 1 year.

    2. 2800 ft Single family home for 300K.

    Pros: I can rent out for ~ 2000 when I move out, average time to sell 3 months.

    Cons: I would have to take a 100K loan for the first time in my life!, slow appreciation ~2% a year.

     

    Where would put your money?

    * I couldn’t find an acceptable single family house for 200K in my area.

  • #2
    Why can’t you just rent a larger place? I don’t understand why purchasing is the only option.

    If you plan to move in 3-5 years you either need to be prepared to take a loss or to be a landlord if the market is in a bad place. And your choices limit your ability to be a landlord.
    An alt-brown look at medicine, money, faith, & family
    www.RogueDadMD.com

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    • #3
      I understand your situation. We have supported a lot of family since my wife went into residency.

      If you are looking to move in three to five years I agree you should consider renting a house. 5-7 years is usually the break even point for owning. When you own you will have to pay closing costs and realtor fees. You will also have unplanned maintenance and probably some home remodeling too.

      If you must buy, I would buy the one that you could rent if need be. $300,000 isn’t bad and a $100k mortgage is very manageable.

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      • #4
        I agree that you should rent a larger place.  You are in a good position right now with no debt.  I would invest the money.  Buying a house or townhouse will end up costing you money if you are sure to move in 3-5 years.

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        • #5
          I agree, rent the bigger place. Or any place with a good school district.

          Don't be worried about social status. Who cares, since you will move in 3-5 years. Preserving capital is more important.

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          • #6
            Social status? Who cares. That will only lead to trouble and you're not there in the near future anyway. More importantly if these people you're concerned about cant handle you living in an apt they arent worth your time anyway.

            You have savings, a nest egg and no debt. Your status is fine.

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            • #7
              Agree. Social status=hedonic treadmill and keeping up with Dr Jones.

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              • #8
                Thank you guys for the advice. It does make a lot of sense not to buy because I’m definitely not staying.  I’ll look into renting a bigger place. I will take more extra shifts this summer when my mother in-law visits so I can stay away as much as possible from the social status harassment!  :lol:  This should help with the savings too  

                By the way, it’s really nice to have this forum to share such experiences. It’s like a support group to stick to your goals through the bumpy roads.

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                • #9
                  I agree that the OP should rent. Being a long distance landlord is not going to be fun or even necessarily doable as a doc.

                  I wouldn't come down on this person as getting on the "hedonic treadmill" for wanting to move out a "small apartment" when he is 2 years out of residency with no debt, great income, and sig NW.

                  The only issue here is the move, I don't care where you are a $300k house with 66% down on a $300k income is not exactly social climbing.

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                  • #10




                    I agree that the OP should rent. Being a long distance landlord is not going to be fun or even necessarily doable as a doc.

                    I wouldn’t come down on this person as getting on the “hedonic treadmill” for wanting to move out a “small apartment” when he is 2 years out of residency with no debt, great income, and sig NW.

                    The only issue here is the move, I don’t care where you are a $300k house with 66% down on a $300k income is not exactly social climbing.
                    Click to expand...


                    Not at all, its only that hes absolutely planning on leaving. Makes it bad only there. Otherwise could get much more very reasonably.

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                    • #11
                      I think the comment that their place was really limiting their social status was what other posters were focusing on in the treadmill comments. Social status as a motivation can be dangerous because there is (virtually) no upper bound.

                      Would definitely strongly consider renting a larger place given the time frame you're looking. At least compare the costs of renting versus buying.

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                      • #12
                        Rent.

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                        • #13
                          I definitely agree with @Rogue Dad. Rent a bigger place until you're in a more permanent situation to buy. Good luck!

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                          • #14




                            I think the comment that their place was really limiting their social status was what other posters were focusing on in the treadmill comments. Social status as a motivation can be dangerous because there is (virtually) no upper bound.

                            Would definitely strongly consider renting a larger place given the time frame you’re looking. At least compare the costs of renting versus buying.
                            Click to expand...


                            Yeah I know I just don't think the move from an apartment to a decent-sized house even for "social status" is unreasonable. Sometimes I think this forum can lean a little too hard on calling "hedonic treadmill" on people who are doing fairly conservative, low-level life upgrades.

                             

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                            • #15
                              Rent is right choice. What treadmill are you guys taking about though? He said he’s saving $100k a year while supporting family overseas and earning $300k a year. Aside from the fact that he is moving in 3-5 years, buying a $200-300k house is far from splurging.

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