200k NW, 180k TC - buy a condo in SF or rent and invest?
Total cash comp 180k 200k NW is mix of cash, 401k and VTSAX. Too much in cash (65%) RSU is negligible Age 29 Single, renting 1br in SF for $3300 right now. Should I buy a condo or put more money into stocks? Dont think I have a work ethic for investment property out of state, so my options are to buy a condo and try to ride appreciation (and lose less money that otherwise just goes to rent) or pump more into index funds. Comfortable paying around $5500 - $6000 per month for property all in. (~50-60% after tax paycheck) Considering something between $800k for 1bd or $1m for 2bd so I can rent the spare bedroom for cash flow.
After mortgage, what are you going to live on, money wise?
401k is technically part of NW, but I wouldn’t consider it when calculating NW as you most likely shouldn’t touch it until retirement age. As far as your situation, I would buy a condo as well, but keep in mind several things. First, a condo appreciates slowly, compared to a townhome or sfh. It also depreciates the fastest in a down market, and in the case of an earthquake you are screwed without earthquake insurance which is costly (even with such insurance, I am not sure it covers full). Second, you do not get cash flow in the very sense of the term in SF. It will reduce your mortgage payments, but cash flow means you make a profit from your monthly payments. This only happens if you own rental property in the midwest, where your tenant pays more than the mortgage. Also, keep in mind that many people are expecting a recession sooner rather than later. This can have serious implications if you were to lose your job, if these people end up right.
thanks for a thoughtful response!
Just marry rich or find a roommate to save money. Real estate prices are too high.
Yeah let’s buy the worst kind of real estate at the tail end of a historic expansion. What could go wrong?
Stay away from real estate in Bay area now, appreciation will be very low in the short term. Be ready with cash, enter the market when SP crashes.
How are you planning on affording a condo in SF? And what is your TC including RSU
RSU is paper money. Don’t expect to see it any time soon. Aiming for 800k-1m 2bd condo which according to Compass should be around $3800/mo at 3.51% with 150k down? Adding price range to the original post. Thanks!