I have about 3YOE and annual income this year will be $285k, base offer (assuming full bonus and no RSU growth is $235k). I currently have about $250k saved up, with $50k of that being in 401k and about 190k being in stocks, and $10k in savings/checking. No debt, ~780 credit score. Ive been living at my parents since the pandemic started, and after going from an apartment back to having a yard and a garage and no noisy neighbors stomping around, it’s hard for me to convince myself to go back to an apartment and renting a house, rent wise, is insane. It’s like $5-6k a month to rent a 2br house in the neighborhood I want where the lower end houses are selling for 1-1.2mil. I don’t really wanna drain all my savings to buy a house, but getting tired of living at home and I figured I’d get a 10.1% no PMI mortgage from rocket mortgage. I entered my financials into their approver and said I was willing to spend 150k on down payment + closing costs and it says I’m good for up to 1.1 which is enough house for me in my neighborhood as a lot are listing at 1m and even lower. I figured I maybe wait until next March when my net worth is closer to $350k. But, the only difference will really be I have a more comfortable safety net, I wouldn’t want to put any more or less down. Would I be crazy to buy a 1m house down with 10%, down when my net worth is $250k and my income is $235k? Come March, assuming stock market literally doesn’t even move, I’d have $350k nw, and will hopefully have 10%ish higher TC because of performance reviews. The only reason I’m hesitant is that I’d only have about a 6month safety net before having to dip into 401k, assuming worst case scenario of losing my job the day after closing (unlikely with recent promotion and ongoing projects), and assuming I don’t have any issues w the house that needs immediate resolution. Whereas if I do this in March, I’d have a 1 year safety net, which feels a lot more comfortable. On paper it all seems to make sense, and even in disaster I could rent it out and be cash flow positive, but for some reason part of me thinks it’s fiscally irresponsible and everyone I talk to about it is acting like you need to have 1mil NW to buy a 1m house and that it’s not even possible without it. Also before anyone asks, I don’t want to live in any other neighborhood/state/city. The city I’m looking at is within commuting distance from many top tech companies, has solid internet, has houses I really like and is a great place to be for my hobbies/interests.
Where in BA can you buy a house for 1mil?
Plenty of places. There’s a website called Zillow.com if I remember correctly. Check it out. Granted, none of these locations are a short drive to big tech companies.. for that you’d need to bump your budget up to 1.5M at least
How so? Truly asking, as I don’t wanna come across as pretentious, but don’t know which part of this seems pretentious
Isn't Twitter fully remote? Go to TX or something
Family and friends are all in the Bay Area, Ive lived here my whole life, love the climate and all of my hobbies are based on the area here.
Kudos to you BTW, you're doing amazing and plenty of smart decisions in your thought process. What's the area you're looking to buy into? Heads up that asking price is rarely selling price these days and there could be a 100-300k difference between listing and selling within the 1M "entry level" homes. It's up to your readiness, but March is really close and I'd consider waiting if that helps relieve any stress. You could afford it, but why rush it in this uncertain market if you know you'd be more comfortable in 4 months?
Thanks for the response! Ive been saving houses on Zillow for a few months and watching the houses I like get sold they’ve generally been selling for maybe 50-100k over, which I’m still comfortable with. I just don’t want to go over 1.1 It’s moreso the missed opportunities. Ive seen some houses Ive really loved sell. If I started looking for houses right now, I wouldn’t go for just anything, but go for only houses I’m really loving. But I’d be worried that a house goes up, it’s perfect and my offer goes through and then i actually wasnt prepared, or maybe rather my financial progression gets stifled. Whereas if I wait for March, those concerns aren’t really there, but maybe I missed out on several houses that would’ve been perfect. I also realize it is a competitive market and I won’t just get any house I want, so I feel like if I start looking now, I might not even be in a house until March, even with putting in a ton of offers, while if I start March, I might not find anything until the end of the year.
Don't fomo into a house purchase
You should be good. 6 month safety net should be fine. You are working at Twitter so are capable of getting a job soon and you have the option of moving back to parents and renting your place out to cover some expenses while you get a new job. Why don’t you rent in that locality and invest this money (in real estate or elsewhere) where there is a chance of a higher return and perhaps more liquidity? You seem pretty young and your priorities and house expectations can change in the next 5-10 years.
Thanks for the insight. My investment strategy would be to rebuild my portfolio with rsu’s/income as Ive been doing now, and would refi to finance additional rental properties with equity in my home. Given that, it feels odd to rent an expensive home, while making a little bit of cash flow on other properties. I’d rather build equity in a home and then use that equity to finance properties that produce cash flow. Is that backwards thinking?
Owning a house is time consuming. So make sure you factor that, it’s not just the money. You might do better to reinvest that time in building skills that will help your career.
It’s actually not about how much u make (it is slightly) but more about how much u spend what is your debt-to-income ratio and your credit score and also do you want to be house poor or not?
Buy now or regret
If you anticipate your TC to be higher, then buy now, don't think you'll be the only one with higher TC next year.
Which city is this ?