Does buying a 2M house make sense?

Roblox
rblxean

Go to company page Roblox

rblxean
Jul 9, 2021 30 Comments

We are a family of 3 and moved to the US around 3 years back. I am an L6 software engineer. Managed to join Roblox a few months before the IPO. Before that, I was in a not-so-high-paying job. Right now TC is around 1M, factoring in RSU appreciation, and our monthly household take-home salary is around 16.5K after maxing out 401K. Expenses (excluding rent) are around 3K. That leaves around 13.5K per month for rent or mortgage, investments, and other discretionary expenses. Our net worth is around 600K, held in stocks and cash. Right now we are renting a SFH near Redwood city for nearly 4K a month. I am deliberately keeping my Roblox RSUs out of the equation here since I want to give them an opportunity to grow.

Given this scenario, does it make sense to buy a 2M home by making a 400K downpayment and entering into a mortgage that will cost me around 8K a month including the loan EMI, home insurance, and property tax put together? This will reduce my liquid assets to 200K and leave around 5K of investible surplus per month. Is this stretching my finances too thin, or does this sound alright? This is my first time buying a home so a little hesitant and unsure of things.

Looking forward to hearing the views of the blind community and learn from your experiences.

[Edit]: I am considering buying homes that have 2K-3K sq ft built-up area and > 6K sq ft lot size, in the Tri-Valley area with good school districts like San Ramon, Fremont, Pleasanton etc. The idea is to be able to settle down in the home for as long as necessary if the home prices dip in the near future, which seems very possible now.

#personalfinance #realestate #bayarea

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TOP 30 Comments
  • Google
    bugjuggler

    Go to company page Google

    bugjuggler
    From a purely financial standpoint, you can definitely afford it and it's far from stretching you too thin. So if it makes you happy and you can afford it, I don't see why not. That being said, I'm not so sure it makes sense from an investment point of view. 8K/month is a lot of money, and you're gonna be on the hook for that for a very long time. Do you look at it as your forever home? Are you thinking of having more children? Raising kids in the Bay Area will make you poor. Also take into account that while you can technically afford it, you'll be paying a highly speculative price for an avg home in one of the most inflated areas of the country (if it's in a normal area in the Bay, 2M will buy you ~2K sq ft - not really that impressive. It's a small, middle class home for US standards). This is to say that as an investment it might not really build any significant equity. Personally, I wouldn't do it because 2M is not enough to get something that would make me happy anywhere in the Bay. But you might have different goals. In any case, tread lightly!
    Jul 9, 2021 2
    • Airbnb
      xpxox

      Go to company page Airbnb

      xpxox
      This is exactly my thinking. With all of the changes happening right now and the degree to which the housing market is overinflated, it’s particularly risky this year.
      Jul 9, 2021
    • Roblox
      rblxean

      Go to company page Roblox

      rblxean
      OP
      Great point and very similar to what I was thinking. That's why I stopped looking along the whole Caltrain route and started concentrating only on the Tri-valley areas with great school districts. I am seeing 2M can buy better looking and larger homes in these areas than along the caltrain route.
      Jul 9, 2021
  • Google
    rjPP31

    Go to company page Google

    rjPP31
    Put 30-35% down and decrease your monthly payments. 2M is new 1 million. You would not get in nice locality (less crime neighborhood) anything less for decent sqft.
    Jul 9, 2021 4
    • Google
      rjPP31

      Go to company page Google

      rjPP31
      @wawY45 first go and check if your job is still there. My suggestion was to put slightly more down as he can afford to decrease per month payments. TC may not stay same as one of the partners can stop working. It’s up to them to follow advice or not. But folks like you are the ones they need to stay far. I have 3.5M house and net worth 12m+. I know what I am typing here. Don’t send loose remarks next time.
      Jul 9, 2021
    • Roblox
      rblxean

      Go to company page Roblox

      rblxean
      OP
      Wow ! How did you build that 12M+ NW? I think many here would benefit by learning from your journey.
      Jul 9, 2021
  • That should work. I bought a 1.5M house when both me and my wife just started our career with TC 350k in total. It was super easy
    Jul 9, 2021 1
  • Google
    jKdQ87

    Go to company page Google

    jKdQ87
    Your TC will be much less in few years, you will face a cliff. So no.
    Jul 9, 2021 1
    • Roblox
      rblxean

      Go to company page Roblox

      rblxean
      OP
      Roblox has no cliff. Annual refreshers are 0.25 times the initial grant, so that after 4 years you can get the same equity vested per year as now, everything else remaining the same. Take this info with a pinch of salt though, since refreshers are yet to be given out for the first time since IPO. Also, I was trying to look at this whole home buying thing purely from the cash component perspective.
      Jul 9, 2021
  • Roblox
    c78

    Go to company page Roblox

    c78
    That seems risky from a diversification perspective. You would be selling 2/3 of your portfolio to make that down payment if you exclude Roblox equity.
    Jul 9, 2021 2
    • Roblox
      rblxean

      Go to company page Roblox

      rblxean
      OP
      What do you think our WFH policy will be like in the future. I was considering buying in the Tri-valley area, hoping that I will have to commute only 3 days a week from September.
      Jul 9, 2021
    • Roblox
      c78

      Go to company page Roblox

      c78
      I think two days remote will stick around. That's just a guess, I don't have any inside knowledge. I would worry about crossing that bridge when traffic gets back to normal. Your commute might be bad.
      Jul 9, 2021