Yet another real estate thread

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d33pt

Diamond Member
Jan 12, 2001
5,654
1
81
I want to live in San Diego. As many of you know, the market here boomed, and is now flattening out, but prices are still nowhere near affordable.

My current situation: Rent $1250 2BR duplex
My salary ~70k
Wife's salary ~50k
Liquid savings ~150k
Debts 0

I can buy a small house for about $450-500k in a decent neighborhood. If I use 95% of our savings for down payment to get the payments lower, it would still be about $2000/month before taxes and utilities.

I can buy a condo in the $200-250k range. With the same down payment, mortgage payments would be about $550/month, plus HOA (let's estimate high for HOA, $300). So total $850/month, chump change relatively.

There are a ton of condos sitting right now, and as an investment it won't be a good idea. But I'm not looking to flip it. I'm looking to live in it for a long time. I would love a house for all the things that make a SFH great, but the low monthly payment of the condo is really attactive.

I would just hate being house poor. We make a decent living, but we're also both tired of the corporate rat race. Basically a low monthly payment gives us freedom to leave that. One person can quit the job and try something new or crazy. Both can take lower paying jobs with more freedom/fun and less stress. I don't want to be tied to a job because I need to make my house payment. I see many people like this, and it's quite sad.

Your opinions needed. Some people would say it's stupid to buy a condo right now. Others would say it's stupid to put all your eggs in one basket. I know i'm not going to make money from the condo. I understand that I may even lose a little bit of money in the short term. In the long term, 5-10 years, I'll probably just break even. But it's a place to live, it's cheaper monthly than renting and never goes up, and it's comparable to the rentals i've been living in for the past 7 years. We're not planning on having any kids, so we don't need a huge place. Right now i'm leaning towards the condo. Thanks.
 
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notfred

Lifer
Feb 12, 2001
38,241
4
0
Let's say you buy a $500k house, and put $125k down. That leaves you a $375k mortgage. You'll be paying about $2500 month, right?

Ok, so you make $120k/year. Let's say 30% of that goes to taxes, which leaves you $84k/year. Divide that by 12 and you get $7k take-home pay per month.

So, pay your mortgage on the house and you're left with $4,500/month to spend on everything else.

That $4,500/month that you'd be left after your mortgage payment is still over *TWICE* what I bring home, total, every month.

So basically, fvck you if you think that $4,500 to pay for food and gas and electricty and a car payment or whatever makes you poor.

Even if your wife quit working *completely* you'd probably still be able to live on the $1,500 month you'd have left after your mortgage payment ,but it'd be pretty tight.
 
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d33pt

Diamond Member
Jan 12, 2001
5,654
1
81
Originally posted by: notfred
Let's say you buy a $500k house, and put $125k down. That leaves you a $375k mortgage. You'll be paying about $2500 month, right?

Ok, so you make $120k/year. Let's say 30% of that goes to taxes, which leaves you $84k/year. Divide that by 12 and you get $7k take-home pay per month.

So, pay your mortgage on the house and you're left with $4,500/month to spend on everything else.

That $4,500/month that you'd be left after your mortgage payment is still over *TWICE* what I bring home, total, every month.

So basically, fvck you if you think that $4,500 to pay for food and gas and electricty and a car payment or whatever makes you poor.

Even if your wife quit working *completely* you'd probably still be able to live on the $1,500 month you'd have left after your mortgage payment ,but it'd be pretty tight.
Click to expand...

You make it sound like I'm rolling in dough. After tax, 401k, and health benefit payments, my take home monthly is about $3300. Hers is about $2600. Much less than your $7000 calculation. Tax takes out more than 30%.

Also let's account for the full payments of owning a home. You have the home depot trips, you have the yard to take care of, there's also tax every year on $500k, about $5000. Many little things that add up. Let's just say I lost my job. Instantly that's $3300 income gone. With a $3000 payment every month towards your house and related items, wouldn't you be sweating a bit? Especially since all the savings are gone.
 
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Descartes

Lifer
Oct 10, 1999
13,968
2
0
I think you answered your own question. You don't want to be house poor, so don't. There's really nothing worse than feeling so financially obligated that you limit your life choices.

I'd go with the condo or find somewhere else to live.
 
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d33pt

Diamond Member
Jan 12, 2001
5,654
1
81
Originally posted by: Descartes
I think you answered your own question. You don't want to be house poor, so don't. There's really nothing worse than feeling so financially obligated that you limit your life choices.

I'd go with the condo or find somewhere else to live.
Click to expand...

Yeah, I just wanted confirmation in case i was making a totally stupid decision. I wasn't here to brag about my income or savings as notfred seems to think with his hostility. I'm at this point in life, where I've figured out it's not all about money and material possessions. They do end up owning you instead. True, you need money to live, but it truly doesn't buy happiness. 3cho may disagree, but that's how I feel at this point. I do want to live in San Diego though. I am happy there, and I think it's a good place to be. Moving to the boonies would be taking a step backwards for me.
 
Dirigible

Dirigible

Diamond Member
Apr 26, 2006
5,961
32
91
Not wanting to be house poor is a valid concern. If a condo works for you, I see no problem with it.

With the high transaction costs in real estate, you don't want to jump in and out. Think of your life for the next several years. Do you want to have kids soon? If so, you probably don't want to buy a small condo. Are there other changes you could see happening?
 
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Noirish

Diamond Member
May 2, 2000
3,959
0
0
you can definitely afford one, you haven't considered your tax benefits.

you make $120k altogether.
say, each of you put $15k into 401k, that leaves you with $90k taxable income.
say, 33% goes to tax, you still take home $60k a year ($5k a month).

now, if you get a $450k loan, it's probably going to be $3000 a month.
that's close to $36k a year in interest initially.
but you only pay $30k in tax, OMG, you'll get at least $20k back after tax filing!

I wish I bought years ago...
BTW, go buy a single home so you have less neighbors to hate.
 
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V00DOO

Diamond Member
Dec 2, 2000
3,817
2
81
With 120K a year income and 20% down payment, you should be able to comfortably afford a $500K home. I have seen people buying a more expensive home that make way less. I don't know how they do it. Also don't forget to factor in the 6K in property tax.
 
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dirtboy

Diamond Member
Oct 9, 1999
6,745
1
81
Put alot down if you're going to buy, because when prices fall, you don't want to be upside down.
 
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T9D

Diamond Member
Dec 1, 2001
5,320
6
0
I'd pay the extra money for the house. I think in the end you'll be happier in a house.

I live in a condo now. It's ok. But I gave up having a house so I could have no mortgage payment at all. But I really really miss having a house. I mss working in the yard. I hate having people above me and beside me. I love being in one of the most prestigious towns in Oregon though. I've decided to sell off this place and some of my other places buy a house. If you are staying there for a long time make it worth it and get the place you'll really be happy in. It's your "home" and a big part of why people even work.
 
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