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Anxious about buying doctor house

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  • Anxious about buying doctor house

    Family of 5, HCOL, currently renting in the not very good school district, ready to settle down in the good school district. It’s a very old district, where an outdated 4 bedroom 3000 sq ft house built in 1929 would run 750k minimum. As a result, looking at houses closer to the 1.3-1.5M.

    Full partner, fully bought in. Current income fluctuates between 500-600. Spouse doesn’t work, but probably will when kids are older (would add another 50ish)

    Cash on hand: 550k

    529 over 150k per kid

    Student loans are paid off. Cars paid off. No debt of any kind.

    Running the numbers, it looks like this house would be doable while still meeting other financial goals and putting away for kids. But I’m having terrible anxiety about being strapped with an unbearable load should my future income decline. Not to mention if I’m underestimating the upkeep and maintenance.

    Seems like my only alternatives are private school (which cumulatively isn’t all that much cheaper than a house and doesn’t end with owning a house) or moving (not really a viable option.

    Would I insane for buying a house like this?

  • #2

    Would I insane for buying a house like this?
    Click to expand...

    I think people who live in HCOL areas are insane but I'm sure they think I'm insane for living in a LCOL area.

    As long as your spending is reasonable, you can certainly afford the house. It's all a give and take. You may have to give up some vacations or not be able to put quite as much away into retirement as you like but as long as you are meeting your retirement goal then you'll be fine. If your mortgage and spending money on the house (you WILL have to spend money on the house) is going to keep you up at night then it may not be worth it for you.


    • #3
      You can afford it. This is just the price of doing business in a HCOL area. With the downpayment, you'd have a mortgage under $1MM. I guess the alternatives from the information is the bad school district, rent some more, or move. Up to you. I'd have no problems buying if you like the area and are entrenched


      • #4
        As typical not enough information: age? Net worth? Yearly spending? Job stability? Retirement assets? Frugal vs liberal lifestyle? Need to know to give informed advice.


        • #5
          You have at least 1/3 down payment saved and a very healthy education fund. Having no debt after buying in to your partnership, along with your obvious ability to save are obvious (at least to me) indicators of frugality. $150k per child at such young ages appears to be plenty if invested appropriately - curious why you are continue to save for them at this point? Are you sacrificing retirement saving (including taxable accounts)?

          Paying for private school in order to live in a lower cost neighborhood can have far more financial impact than some realize. This case study I based on a physician family who are planning/CPA clients may be helpful.
          Financial planning, investment management and CPA services for medical professionals | 270-247-6087


          • #6
            Also how old are the kids. If they are young and you have 250k in 529 you are probably done saving. Even if they are in high school that is quite a bit per kid.

            That will also favor in for how long for private vs public school.

            Your standing on retirement makes a big difference as well. I assume it is well funded since you have so much in 529s but you know what happens when you assume.


            • #7
              You seem to have a great start with your 529 (i'm not planning on funding mine even close to that), no debt (presumably no loan for partnership), and a whole bunch of cash.  If we are to extrapolate that you are as well set up with retirement accounts with a high net worth, it begs the question what are you going to do with all your money when you "meet your goals?"  Are you just going to keep on saving forever?

              If your kids are as young as they sound (wife doesn't work but wants to sounds like young children), you can probably stop funding 529s.  How much do you think you need?  If you think you need 300k for an education, why is it you think you can't afford more house?  Those mindsets don't seem consistent.

              If it were me, I would probably consider the old house and fix it up over time.  Surely you have some handyman skills


              • #8
                Kids are 5 3 and 1

                Spouse had a high paying job which helped us frontload the 529 accounts. She Won’t go back to that type of job though. So while we have been able save like maniacs, it’s not going to be sustainable with a house of that price

                We’re in late 30s, I love what I do and have no intention of retiring early.

                Will have near 1 million in retirement accounts by 40 barring a market correction. Have been putting away 20% gross most years

                I wouldn’t call us frugal, but not really flashy either. Want to be able to take a big family vacation a year, buy the occasional unnecessary overpriced gadget, etc


                regarding handyman skills, I’ll be happy if the house doesn’t burn down when I change a light bulb


                • #9
                  A 4 bd 3000 sq ft house for 750 sounds pretty good to me if the alternative is spending 1.5 million which means you have a 1 mm mortgage. I know what I would do.


                  • #10
                    A 4 br 3000 sq ft house that was built in the past 30 years would run 1.2 million


                    if you want the house with its original knob and tube electricity and lead paint, you could get that for 750


                    • #11
                      Buying a less expensive house and fixing it up need not require YOU to do the fixing.

                      Although you have to pay others to do even simple things, this is better financially. It may gall you to see the hourly rate you have to pay for some simple tasks. But the handypeople and builders work for lower rates than you do. You are far better off putting in an extra hour of work at your day job and paying someone to update your house than spending an hour of your time doing the upgrades yourself.

                      Buying a less updated house and gradually making changes can be a far better financial maneuver. First, since the expenditures are gradual, you can cash flow them, rather than borrowing the money. No interest. If your income does go down, then pause your upgrades. No incremental debt means you are paying nothing for these upgrades while you are paused. Secondly, you can pick and choose item by item what you want done and who you want to do it.

                      Third, and most important, there is a premium paid to buy a home in perfect cosmetic condition. You can end up with the same house for less money by avoiding this. Buy a house that does not have that premium, make the changes yourself. You will end up with something of equal value having spent less money.

                      I would make all the same arguments even if your wife returns to a high income job. As a cautious person, I would recommend she do this, rather than work for $50,000 but of course I know nothing about what she did or why she does not want to return to it.


                      • #12
                        Not my cup of tea. I’d rather keep renting than take on a lifelong project


                        I’m well aware that this is a huge luxury to avoid the fixer upper.

                        I’m just asking the forum if it’s a luxury I can afford


                        • #13
                          You never mentioned in the original post that the 750 house needed significant work. If that’s the case that would be a strong no from me.


                          • #14
                            If the 750K needs significant overhaul I would opt for a house in the lower range that you quoted 1.2 at the very most.


                            • #15
                              Any thoughts of doing a doctor loan and putting 15% down and cash flowing renovations while continuing to rent? It could be lean for a while, but you would end up moving into a house you're happy with.