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Do you regret buying a big dumb house?

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  • Originally posted by Lordosis View Post

    yes half price sounds nice. I would call that a distressed good deal
    Might not be debt but there are other costs with large homes. And do not forget opportunity cost!
    Kamban’s house is a situational purchase. The size, layout, and amenities are something he desired and could afford and paid for, but were greatly influenced by the family needs in this phase of life. Plenty of “space” for parents, spouse, high schooler, and lastly a porch for his morning coffee.
    It is about a 10 to 15 year value. Not from the “cost to build”, but the utility of the space will change.
    Rooms will be repurposed or sit idle. I doubt he would remodel to a 2/2 ! The house was by no means an investment, that’s why he paid cash. The utility and value will decrease. When and if he decides to downsize, someone else will enjoy it.
    No debt is the way to go for spending.
    For any house, there is a consumption factor. The more you spend the more you consume. Consume tomorrow's earnings is perfectly fine. Just remember you pay taxes on those earnings. Once you tax effect the earnings needed for a mortgage payment and the upkeep, it's pretty expensive consumption for a 15 or 30 year mortgage. Rationalize however you want. Housing is illiquid and expensive. Buy what you need until you can pay cash is the best path for spending.


    • Originally posted by Lithium View Post
      While I am averse to taking on new debt, the alternative of accepting the drag that comes with keeping seven figures in fixed income prior to purchasing is even more unappealing to me..
      Yes, I can understand that point of view. But it is not that you have just saved cash and not invested anything at all. And that seven figures is not all cash and kept for 10+ years.

      I have invested aggressively over the years and also have a good amount in stocks. But for a 7 figure house I decided to put aside a small amount each year towards it. But the majority of the money came from not re-investing the distributions and savings from the excess earnings for the past 3-5 years. At this stage in my life I don't want to take on a mortgage, however low the rates are. I want a house free and clear. I have enough to live out my life and leave enough for my spouse and child. What is the point of investing more and more. People here point to stop working when you have won the game. My mantra is keep working for mental benefit but stop taking additional liabilities (house mortgage ) when you have won the game.

      Don't worry, your views will change in a couple of decades when you have enough wealth and don't want to take on more loans or want more and more money.


      • Originally posted by Lithium View Post
        While I am averse to taking on new debt, the alternative of accepting the drag that comes with keeping seven figures in fixed income prior to purchasing is even more unappealing to me.

        I'm not sure how you can get around this, unless you account for the value of your primary residence as part of your fixed income (assuming that it grows more or less with inflation).

        I've decided for the time being I'd rather eschew home ownership altogether, for this and other reasons. At least until I live in a part of the country with cheaper home prices.
        I have a lot of cash in a money fund right now. It is helping me stay sane. I totally agree with Kamban that your view on money and houses changes with age.


        • It is funny because you are right as we get older and our wealth accumulates we will be more free with it and come to realize that more is not always better. BUT, In order for that to happen we need to get that ball rolling when we are young so that we have the wealth to accumulate in the first part.

          In a perfect world with a predictable return and knowing exactly how long you will live it would be easier to even these things out over our lives. I am likely living more frugal then I have to because there are so many unknowns.


          • We were just about to break ground on a build before COVID shut down our office, literally the day before. Ive since postponed the build.


            • Originally posted by MoneyMoth View Post
              I regret the decision, my wife doesn't.

              We did a new construction home that is slated to be completed in the summer (I'm rooting for delays now as the longer it is delayed, the longer it takes for the intereset only construction loan to convert to a permanent mortgage)

              We had the money (invested, not in cash) to pay off the mortgage but obviously that was before the market crash

              We do have a sizable cash position that I had intended to use to greatly reduce the mortgage principal but obviously will not be going that route. The cash position is now our emergency fund which should float us for > 1 year even with the new/large mortgage payment ready to kick in this summer

              I am still employed for now, but with a 90% reduction in volume and pay

              I was of the mindset to buy the house in cash. I should have listened to my gut. Hopefully will escape this intact and consider it a lesson learned: from here on out, cash only. (Fortunately, we have no other debt and an already paid off house so a painful Plan B would be to sell the new construction home and hope not to take too much of a loss on it. I don't see too many people buying $3M homes though in this economic climate.....)
              Right there with you, bought an old house with a loan just under 2X (previous....) income and threw in $250k to remodel thinking it would be a 20 year home but now I'd trade it for something half the size in a second. Planning to wait it out and see what happens for a few years, count it as an expensive lesson that despite reading all the WCI posts I still had to learn myself the hard way. Guess it's true what they say about electric fences.....


              • Originally posted by shadesofgrey View Post

                Guess it's true what they say about electric fences.....
                Don't pee on them?


                • Best advice from an attending in residency , dont buy a big doctor house , you will be working your whole life to pay it off. Buy an average house in an average neighborhood and you will be fine.