I make tc 285k lmts @ salesforce, base of 210k
Wife makes 200k as a consultant, base of 150k
We are 28..No kids and no debt, we have about 550k in cash and index funds
Thinking of buying a home for 1.3m in bay area
Good/bad idea? What do you think is a reasonable budget
- Yo man, nothing to contribute but just wanted to congratulate you on a successful life so far
- Humble self brag. Wanted a lot of oohs, aahs and congratulations I guess. I just don't buy they don't know how much they can afford! Boo.
- Adobe ZxcvbasdfgWe were similar profile about 10 years ago. We bought 1.1 M with 400k down. A few years down the road, we bought 2 rental properties so life is now comfortable and 1 income can support the family (with a kid now).
I am older than most here and conservative. I went through 2 recessions so I am usually careful not to get too tied up with mortgage and property tax.
- I think you can put downpayment of 10% and that should do. Considering that, you can easily afford a house with $2M in value and still be fine. Don't get tripped on paying up the mortgage quickly than needed. Congratulations for the success. Happy for you guys.
- Let me try to clarify. It is my personal opinion and may not be the best advise. The mortgage rates are 4-5% while you can invest that same money elsewhere and likely earn more than what you will pay for mortgage. US Tbills pay 3%, certain fixed income securities pay 4% and several stocks will guaranteed pay more than 4%. So that's why I recommended.Dec 7, 20180
- New goodgulfFirst off, you are kicking ass, at age 28 I was in grad school getting a PhD with a net worth of less than $4000 (my IRAs did not grow much after I created them). Unlike our parents or grandparents, to buy a home in your 20's today is an extreme rarity.
You live in the city and so houses there are how much? I would buy something in a crappy school district (you could save $200k - $400k) as a starter home, and plan to get something bigger when your kids hit kindergarten-age (4.5 or 5 years old?) This is how our grandparents did it. If houses cost $900 / sq-ft today in a low-rent district, then you qualify for a 1400 sq. ft starter home if you spend $1.3m congrats. Typically a loan is 2.5 - 3x household income so you technically qualify for $1.840k (including downpayment) house but it's a bad idea to stretch on your first home.
1. The stock market will crash within 12 months and so move your house money into cash right away. Google for "Yield curve inversion" to find out when/why. Track the 10y-2y bond spread to predict when the crash comes; it comes 6 months after the spread goes negative.
2. The housing market takes 16-20 QUARTERS from peak to trough; peak was probably 6-12 months ago so we are only 2Q into the downturn, so go into cash to keep your powder dry. House prices in the Bay Area track the stock market very closely, as nobody uses raw salary to buy houses; houses are bought and paid for with stock options / RSUs. So wait for the stock market to bottom before doing the purchase.
3. If you are desperate just buy anytime and make sure to sell at the same time in the business cycle in the future. Winter is a good time to buy a house; prices goes up every March.
- I agree with goodgulf. You’re in a great position already. I’m a little more conservative than most so my target price in your situation would be $1.1M. Now is a great season to buy. Some people are getting offers accepted below asking price during the winter. You have 20% down without going broke. I would want to get a big chunk of money out of the market rn, a house is a good way to do that. A mortgage of $4700-5400 would still be very affordable for you and your wife.Dec 9, 20180
- Google / MgmtLovedooSounds ok. But do realize that you need to account for property taxes which are no longer deductible, maintenance, utilities, and $25K in furnishing/furniture. Plus you would want a nice fancy car for you and your wife to match the new house and lifestyle. Especially an electric car. With 25% down, you should do fine.
- OP how much yoe do you have ? Also it seems like you started working long back to have that kind of savings
- I started working 22 and my first job had 100k income, went to school in canada so no debt, went through an ipo for the first company, and made 100k, wife did as well and made 100k, invested in index funds, went pretty aggresive bought 80k of amazon last year and 20k netflix
- Pharmacyclics / OtherSairaatmoreDepends on which area are you looking at. with that base and savings, upto $1.5M in a good school district(I know you said no kids still) or $1.3M with private schools nearby and close to work., Campbell, North San Jose/Milpitas(away from the Milpitas Monster)
- Adobe Rav47IMO it would be a good idea to buy a house but you could wait out for 6 months to a year to get some possible discounts. I would plan to get the mortgage down to 750k to optimize tax deduction. You should plan to keep $150k for rainy day which leaves $400k for downpayment. This gets you a house for close to 1.15 million. You may be able to get a decent house in east bay if the market falls another 5 - 10%.