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Anxious about buying doctor house

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  • #16
    Ha the OP has 3 little kids and admits to not being handy and people still want him to fix up an old house.
    Fixing up a house sucks. It sucks to do it. It sucks to live there. It sucks to pay someone to do it. There could be a money pit behind every wall. Leak in basement, asbestos, lead paint, cracked foundation, mold, old electrical work, poor insulation...
    If you like that stuff then by all means. But it is like telling someone who hates cold weather that they should move to Alaska.

    OP sounds like you are on track. Buy what is right for your family and enjoy some of the fruits of your labor. Just always remember the consequences of an expensive home. More maintenance and less money for other things.
    Good luck.

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    • #17


      Cash on hand: 550k
      Click to expand...


      It seems like you have planned this for a while.

      I think it is the right decision.

      I would buy a house in good district rather than paying for private school.

      Housing market has cooled down.  So, take your time and choose the right house for the right price.

      If you have to sell, you will lose <10% from the transection.

      Good luck.

       

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      • #18
        Mystified by some of the answers, OP this is fine.

        OP is worth ~$1.5M at this point with college clearly taken care for each kid.

        OP is talking about a mortgage that worst case would be a little under 2X in a good school district for 3 kids.

        I think people get a little sticker shock when they see a $1M price tag. That's fine but it doesn't mean it's unaffordable.

        If OP drops savings rate to 10% (they are not suggesting doing that but for sake of argument) and ends up paying off this house on time they will be nearing retirement with $7-8M in assets (if they get 6% on retirement savings).

        This is fine, buy the house.

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        • #19
          Of course OP can afford this house.  He comes on here with net worth over 1.5 million (almost 2 million if you include 529, and who knows what his partnership valuation is) and he isn't yet 40.  He has 50% down payment for a 1.1 million house if he wants AND he will still have 1 million invested AND he has his kids' college already paid for.  And yet he is still anxious about buying a house?!?  What's the money for if not buying this house?

          The suggestion of buying the older house is not a financial one.  It is a way to address the "anxiety."  I think he just wanted a lot of people to tell him how great he was doing.

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          • #20
            Non-issue carry-on.

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            • #21
              Yeah I'd buy the house for sure. Enjoy!

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              • #22
                Definitely go for it.  Get a home your family will be happy to live in for the next 15 or 20 years as you raise your children.  And let go of any guilt and enjoy the house.

                We did just that in a top school district and it worked out great. Yes, it was more expensive in the highly desirable school district, and yes, it felt like a lot of money at the time as we live in a VHCOL city.

                At the same time it was worth it over the 21 years we lived in the house because our kids got a great education, we had comfortable space for everyone, and our 20% downpayment returned 12.5x in cash when we sold 21 years later after paying down the mortgage over those years.  In our area, renting and buying cost about the same in those days, so our mortgage payments were coming back to us in part as we paid off the principal and grew our equity.

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                • #23
                  In your situation the most valuable thing is your time with your kids and family. Place that first and the money will sort itself out.

                  I would also consider continuing to rent. Sometimes in HCOL areas renting can be a better deal than buying if you invest the difference. Buy the finished house. You have enough money. Spend your time with your family not with house projects. I bought a fixer upper and its my biggest life regret. Biding my time until I can move.

                  Also, when do you want to retire?

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                  • #24
                    Can you rent in a better school district? How much do you pay for rent? How stable is your rental?  How much is private school?  How bad are your local schools?  How much money do you have elsewhere (not in-hand or in 529)?  Why do you worry about income going down?  A 1.5M on 600k income isn't insane at face value, but it's not always that simple.

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                    • #25
                      I see no issue here for the costlier home. You have plenty saved for the kids, plenty for a downpayment. Fixing up a house is not worth it in terms of time and capital investment. If you are doing that and banking on an increase in its value you should cross check how much you value stress and costly surprises.

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                      • #26
                        Hi, you're in a great situation. My wife and I bought our house in 2007 (approx. 2.2X gross income) in a VHCOL area with very good public schools. If you buy the more expensive home, you'll still be able to fully fund your retirement accounts and save in after-tax investments. We paid our mortgage off in 2018, and it's been an amazingly positive experience on many levels.

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                        • #27
                          Why is this even a question? Unless you are waaaay overspending in other parts of your life this should be easy to afford. My judgement may be clouded living in a vhcol area, but I don’t see an issue. Buy what you want! I’d buy something smaller/older and hopefully somewhat updated, but I’m not you so buy newer if you want! Do you track expenses and know how much you save/have leftover each month? It seems like this should be easily affordable.

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                          • #28
                            How much would it cost to rent in the good school district? In many HCOL areas, the cost of renting can be half the cost of owning. I am not sure I would rent, but I would at least look at the numbers.

                            And how are the property taxes in your target school district? In our area, appreciation of expensive homes is a thing of the past because of onerous, non-deductible property taxes and lack of affordability.

                            In the past, buying and living in a house long term led to a reasonable return on investment, with the mortgage for leverage and appreciation due to inflation. Now, in a low inflation environment, with a younger generation saddled with student debt, and with high and rising property taxes that are no longer deductible, the future of single family home appreciation is likely to be far less than it was over the last generation.

                            The real estate market in my area is fascinating. There is tremendous upward pressure on the prices of affordable homes. At the same time, there is tremendous downward pressure on the price of the expensive homes. All at the same time, in the same school district. Smaller homes (2,000 square feet) are going to multiple bids for $500/square foot, larger homes (4,000 square feet and up) with high property taxes are languishing on the market and cutting prices, going for $300/square foot despite the finishes and quality typically being far superior to the smaller homes. In this market, small and modest is beautiful. Large and luxurious is being left out in the cold.

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                            • Brains428
                              Brains428 commented
                              Editing a comment
                              While I'm in a LCOL area, the same thing is happening. Smaller newer homes are more expensive. Larger, older homes with more ornate finishes are dropping in price. I feel like the strength of the 2019 market has further increased home prices. The problem for the builders... the population here is growing minimally and those that can afford 500k and higher homes are early in retirement and physicians. I'll be interested to see if any of the new builds will budge in price.

                            • Hatton
                              Hatton commented
                              Editing a comment
                              I noticed this as well in my MCOLA area. New very small homes with minimal yard sell very quickly. Older homes with lots of upgraded features will sit for months. I consider my home a consumption item and not an investment.

                          • #29
                            In my area I could have bought a very nice home on a lot of property. We looked at several. However we noticed that they were sitting for months and even years. We ended up getting a more typical upper middle class home in a development. Much more affordable making early retirement a possibility. Much lower maintenance cost in time and money. Mowing 5-10 acres takes a while or costs a real lot. And I do not think it will be hard to sell when we eventually do. It is not the most expensive house on the street.
                            Also the added benefit that my kids love having neighbor kids to play with. I never experienced that growing up because I was way out in the country. But My son has literally 6 of his classmates under a 2 minute walk.

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                            • #30
                              From a family perspective:
                              schools, neighborhood, then house. Realistically, there are disadvantages when you go too high up the scale. Fewer neighborhood kids and experiences. Price wise, an acceptable house in a good neighborhood that has good/great schools.
                              A great house doesn’t mean that much. To kids a bedroom is a bedroom, time to get out and go do something. With who?

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