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09.03.19, 16:45 PM General Topics
43 replies
Who wants to weigh in on a house purchase? What's the maximum house price you would consider based on the following: salary of $500k, guaranteed bonus of $500k, equity in current home +/- $2m, additional income via investment distributions of $12k a year, sporadic company distributions of $15k-$30k a year, public school. And sometimes random pops from additional work projects--this year that was about $100k, but clearly that's not every year and can't be counted on. But it does pad the savings account. What would you spend? [ Reply | Watch | Flag ]
General Topics 09.03.19, 04:45 PM Flag
 

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You have no other expenses other than housing debt? No nanny, private school, camp, etc.? Give me a handle on what you spend per month on those items then I'll respond. [ Reply | More
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General Topics 09.03.19, 04:46 PM Flag
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No other debt, no nanny, no private school (currently spend $75k a year on private, but they will transition to public when we move). A few day camps in the summer, but nothing major. Credit card averages $10k a month, but pretty much everything goes on there. [ Reply | More
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General Topics 09.03.19, 04:51 PM Flag
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OK then (and I'm conservative) I'd try to stick with a loan of $3-4MM (so you could buy something for $6MM assuming you want to use all your equity for your purchase). [ Reply | More
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General Topics 09.03.19, 04:55 PM Flag
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Fist pump!!! I'm very very conservative and was targeting a total purchase price in the $3-5m range. But the area we are moving is quite expensive and the houses I really love are more like $6m. Buying a $6m house seems insane, but when I really crunch the numbers we can afford it. The house I'm totally in love with is listed for $6m, so hopefully we could negotiate down a little. Thank you! [ Reply | More
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General Topics 09.03.19, 04:57 PM Flag
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You go girl!! [ Reply | More
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General Topics 09.03.19, 05:06 PM Flag
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Thanks! [ Reply | More
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General Topics 09.03.19, 06:05 PM Flag
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Where are houses 6mm?!? [ Reply | More
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General Topics 09.03.19, 06:18 PM Flag
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California [ Reply | More
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General Topics 09.03.19, 06:34 PM Flag
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Brooklyn heights [ Reply | More
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General Topics 09.03.19, 07:19 PM Flag
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She said suburbs. [ Reply | More
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General Topics 09.03.19, 09:17 PM Flag
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There are areas where it's the case, but these are nicer homes, there are also cheaper homes in same areas, which are not dumps, but obviously would indicate that you are on the lower end of wealth for the area, like the econo-family on the block. It's sort of like most expensive parts of Manhattan but without all the older people who bought decades ago or rent control or the subsidized poors or the schmuck families squeezing into small apartments to balance things out. Moving to SFH areas of extreme wealth is way tougher. [ Reply | More
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General Topics 09.04.19, 09:46 PM Flag
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Most expensive zip codes of the country, check out that list. [ Reply | More
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General Topics 09.04.19, 10:18 PM Flag
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Be careful about moving to burbs and assuming you will be happy in public all the way through - you may decide you don’t like the schools especially by high school. Also, consider what the property tax will be on a 6mm home. That could easily be 75k a year [ Reply | More
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General Topics 09.03.19, 06:08 PM Flag
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I have thoroughly scoped the schools and am happy with them all the way through high school. Property taxes are $43k/year which I have factored into the payment. [ Reply | More
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General Topics 09.03.19, 06:34 PM Flag
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You don't know what's going to happen to public education system 5 years down the line, and if you move to an area with very wealthy people, they won't be fighting for it, as they have enough for private schools. With your income you should also be saving for a rainy day should you need private schools, most simply don't have this choice, so they relocate or deal with it. [ Reply | More
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General Topics 09.04.19, 10:17 PM Flag
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You seem to be under the impression that no one there sends their kids to public school. Not true. [ Reply | More
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General Topics 09.04.19, 10:31 PM Flag
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Majority of people overall do public schools, because vast majority cannot afford private education, but also cannot afford to spend millions on homes either. Among those buying these multi million dollar suburban homes there are many who do send kids to private schools despite good public school options. Wealthy have options and some do take different routes. [ Reply | More
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General Topics 09.05.19, 12:01 AM Flag
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I would not be comfortable at that level at that income. Maybe half that. [ Reply | More
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General Topics 09.03.19, 05:49 PM Flag
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May I ask why? [ Reply | More
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General Topics 09.03.19, 06:01 PM Flag
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Who has a guaranteed bonus year after year? If I made 1mm I would not get 4mm in mortgage. What is your retirement savings like? [ Reply | More
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General Topics 09.03.19, 06:19 PM Flag
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DH does! Retirement has $2.5m and we are early 40s. [ Reply | More
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General Topics 09.03.19, 06:35 PM Flag
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You should not be spending 6mm on a house with a 4mm mortgage. I would say max 4mm. [ Reply | More
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General Topics 09.03.19, 07:19 PM Flag
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4mm house, 2mm mortgage. [ Reply | More
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General Topics 09.03.19, 07:19 PM Flag
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No job is guaranteed, not sure why you think so, so many people lost their jobs in Finance, unless your DH owns the company or has some equity share or it's a passive income of some sort, there is no guarantee you keep making this money for decades to come. Always be more conservative and don't overextend, if you have extra money, invest it, you can invest in RE too, but not have it buried in your home where you will have to sell it to cash out and be displaced. [ Reply | More
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General Topics 09.04.19, 10:04 PM Flag
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Do you have enough college savings? [ Reply | More
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General Topics 09.03.19, 08:23 PM Flag
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$75k per kid. DH also has stock options that are worth about $10m. I know everyone here always says they have no value, but I disagree. We just received a large payout on a portion of them. [ Reply | More
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General Topics 09.04.19, 12:12 AM Flag
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If private you’ll need 300+ [ Reply | More
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General Topics 09.04.19, 07:24 AM Flag
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Absolutely. the next time the stock options pay out, we are going to fully load each college account and be done. They still have many years to grow. [ Reply | More
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General Topics 09.04.19, 04:51 PM Flag
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You are clearly loaded and can afford a very comfortable luxury living pretty much anywhere. What exactly are you trying to decide on, why don't you throw some numbers around first as everybody's standards are different. You cannot afford uber rich estates or urban sprawling pads or yachts and vacation homes in Hamptons. But you most definitely don't need to compromise on any comforts. [ Reply | More
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General Topics 09.04.19, 04:58 PM Flag
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I don't really understand your comment? I'm not looking for sprawling estates or yachts. The area we are looking is very expensive, but has wonderful public schools. The $6m price tag is for a very nice 5 bedroom home, but nothing over the top. What numbers should I be throwing around? [ Reply | More
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General Topics 09.04.19, 07:22 PM Flag
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What you just did. How the hell are we supposed to know how much "nice 5 bedr" costs in where you are looking to buy? That's way more than what I would expect a suburban house in a good school district has to cost in order to be nice, there are only very few neighborhoods in the country overall with such prices. These public schools be better worth it, you are paying enough to afford private schools. [ Reply | More
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General Topics 09.04.19, 09:25 PM Flag
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We saw a smaller 5 bedroom for just under $4m but didn’t like it. Terrible back yard, bad flow, hallway bathroom for the upstairs bedrooms, lower level appliances, closet doors were mirrored. Major sacrifice in quality. And no, we can’t afford a $3-4m house and still pay $150k a year in Private tuition. We could buy a much less expensive house in a different area and hope we get into the very competitive private schools. But what if we don’t?? Then what. I’d much rather put that money towards a mortgage than tuition. And. This is the area we really love. [ Reply | More
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General Topics 09.04.19, 09:45 PM Flag
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So, you are saying you are looking to buy in a very exclusive area where 4 mil is a fixer upper and you don't already have at least 20 mil in NW? [ Reply | More
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General Topics 09.04.19, 09:49 PM Flag
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It’s not a fixer upper but would feel like a huge step down. [ Reply | More
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General Topics 09.04.19, 09:50 PM Flag
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It's an older home, not a new luxury construction and areas where this costs 4 mil are populated by much wealthier people than yourself, with older homes still having some original owners who maybe bought decades ago and are not as wealthy, but these people are being phased out with new wealth and new construction. I personally would not be comfortable living in such areas without 20 mil in NW. It's just my opinion. [ Reply | More
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General Topics 09.04.19, 09:59 PM Flag
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So where are we supposed to go? The area has so many great things going for it and is one of the few good public school systems. I don’t want my kids in private so options are limited. I didn’t pick it because it’s posh. Other neighborhoods come with a $150k private school bill. That amount alone is a $2m mortgage. [ Reply | More
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General Topics 09.04.19, 10:08 PM Flag
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Where do you live that there are no neighborhoods in between those with crappy schools and those where a basic house costs 4mil? I have friends in SV and it's simply not the case, there are more modest homes in good school districts. [ Reply | More
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General Topics 09.04.19, 10:19 PM Flag
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I have a hard time believing that people paying multiple millions for a suburban home do so for access to public schools as a primary reason. People who cannot afford Beverly Hills or prime Palo Alto or Central Park facing buildings somehow manage to educate their kids in good public schools. [ Reply | More
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General Topics 09.04.19, 10:21 PM Flag
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In CA, they live in the valley and commutes hours each way to work. [ Reply | More
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General Topics 09.05.19, 07:02 PM Flag
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As a general rule, wealthier people have smaller percentage of their overall wealth in their primary residence, they have more investments, because they can afford a nice home and at the same time still have a lot left over. For MC it's a different story as homes cost disproportionately a lot more than what they can save, so most MC have majority of their NW buried in their residence if not all of it. You are definitely not MC, so should aim to not have more than 1/3 of your wealth buried in your residence. If you have a NW of 10 mil, for example, you can buy a comfortable home for 3-4 mil pretty much anywhere, no need to compromise on quality, but it may not be extreme luxury or super impressive. You can certainly choose to have a home worth 7 mil which would be much much nicer and look wealthier to others, but reality is you end up with less investable wealth. It's really what's more important for you. [ Reply | More
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General Topics 09.04.19, 09:37 PM Flag
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I would not invest multiple millions into a house in the burbs unless I were really really wealthy, to the point where income would not matter and where I could afford private schools, as in these areas people who are more recent arrivals and populate all the newer homes often do private schools. Also many affluent suburban areas are now starting to be a subject the diversity initiatives, which tend to be hitting lots of affluent large metro areas with educated population. You never know if by the time your kid goes to HS it would even be a good HS or if you would be forced to bus your kid many miles out anyway. [ Reply | More
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General Topics 09.04.19, 09:54 PM Flag
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So where are we supposed to live then?! [ Reply | More
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General Topics 09.04.19, 09:58 PM Flag
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Not in a place where prices are out of your range? Maybe to a less impressive house which you have to renovate to make more comfortable for you? IDK, people make these decisions all the time, you are not loaded enough to have to never make any sacrifices. You either move to a next door zip code that maybe isn't on the list of the country's top 10 priciest exclusive enclaves, or you buy a fixer upper and make it work. You make enough to save for private HS should that need arise in the future if you don't sink it into your home. If you buy a 4 mil home vs. 6mil you should have that insurance in case public education system becomes a disaster. [ Reply | More
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General Topics 09.04.19, 10:14 PM Flag
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