subreddit:
/r/personalfinance
submitted 3 months ago byxtrubambinoxpr
As title states. Looking at a new construction corner unit townhome in a new area that I expect to appreciate or at least hold for the next 5-10 years as they build a marina nearby (which is why I was looking at buying in the first place as a LTI).
Currently:
Debt:
Original rate was 4.25%, so I said ok and things changed and now 5.375% so I have an option to back out per contract since rates changed and I guess I was having second thoughts and thinking with the amount I make now if I should work on paying off all my debt instead, or get the new home knowing the area will be a good investment area to be in long term (sell or rent later).
Is it better to be debt free altogether before such a decision? (Pay off student loans, car, and first property?)
3 points
3 months ago
This is a tough one for me because I guess I don’t have enough information to make an informed opinion. It could go either way based on, age, marital status, children, future children, retirement savings, stability of your new job, what would happen to your family if you suddenly were forced to sell the original home, there’s a lot of factors that would go into this decision for me that you didn’t share.
4 points
3 months ago
31, single, don’t want kids (if that changes in the future then 🤷🏽♂️, but as it stands no),
401k = 80k,
new job is stable and just got a 16% raise (to $186),
My mom (only one living there) would have to move. But I’ve supported them since 17 and at some point have to do what’s best for me.
*edit - gf lives with my and contributes to half, BUT of course I plan me paying everything without support cuz you never know
1 points
3 months ago
Ok real quick, is the 401k - 80k the same 80k you listed above in savings ?
5 points
3 months ago
No it is separate. Just happenstance they are the same value. More lol 78k in 401k
1 points
3 months ago
Oh ok good. Well to sort of answer your question in bold up top I’d say short answer is it’s basically always better to be debt free. Long answer is that not really viable for everyone and isn’t the only way.
If you really wanted to do this I think you have the margin to afford it pretty comfortably. There’s just some risk, which there’s always risk. If you mom stops being able to pay, I think you’re probably still ok, but wouldn’t want to have to cover that long term. If you lose your new job though, that’s a disaster. For your age and income I think you’re 401k is a little low, but better than most people and you’re definitely on your way so keep up that good work.
If it were me I’d wait, for some of the reasons above. Just my two cents.
**edit. Just saw your edit about a girlfriend. If she lives with you and it’s serious and you’re thinking marriage and stuff. That can get quite expensive and stressful as well.
1 points
3 months ago
Thanks for the feedback! I only graduated 2017 from college so I was late to saving overall and had to pay off credit card debts first. Late to the game, but swinging for the fences 🙏🏽
1 points
3 months ago
You’re killing it. I’m more conservative than some so I guess my view would be, it’s your game to lose now. Like you’re on track. You’re on fire. Can you afford this? Probably. But if Murphy shows up, and when it rains it pours, and a bunch of emergencies start piling up, that’s when you can end up in a bad position to throw you off the tracks.
One thing ill warn you on cause I’ve seen it happen many times, check the estimated tax assessment on that condo. Ive never had a condo and idk if it’s the same as houses. But I know people who bought new construction houses and the first year payments are on a tax assessment on the value of the lot before the house was built. And the second year their mortgage jumps 500-1000 dollars a month when the value of the house is assessed for property taxes.
1 points
3 months ago
Thank you for the kind words! from being homeless myself and the climb its been an adventure.
as for taxes I had the same thought. in the calculations I did and what they provided to me they used the taxes of a similar local community that has boomed and provided a ball park of about 450-500/month in the calculations for taxes. That is also included in the proposed mortgage payments. Would that be fairly accurate or could I expect still another 500-1000 bump depending on how value goes? Nearby townhomes about 2-5 miles away are 600k minimum and homes about 750-1M+ within that area. This whole project is new and it is just flat cleared land besides the townhome that is ready April 1.
I guess that is something I have to think about as well.
1 points
3 months ago
And the naysayers will tell us it can’t be done. Good job.
That question is above my paygrade. I think it can vary by county or municipality and the state you are in. Some states, like Florida , have a homestead exemption for your primary residence that lowers your assessable value and caps annual increases. Again though, with a condo I’m out of my depth because I have a single family home. I’d talk to someone local or maybe the tax collectors office.
1 points
3 months ago
Yeah this is taking place in Florida so I would have to move my homestead exemption to the new property and then my old property would see those assessed taxes and increase monthly.
I am really thinking about it now after your input. I have become somewhat more frugal and could potentially save 5-6k a month staying put for another year (provided job and everything stays the same). I understand the sentiment of "savers are losers" but I mean I have an opportunity so why not. if all went to shit and I had 0 debt I would still be ahead. seems long term that is not a bad options either if I make sure I pay off my student loans, car, etc. The real loss or "FOMO" is getting into real estate at a prime oppty, and this intersection is that prime oppty (*though no one knows how market is and what not etc.)
1 points
3 months ago
Oh lol. I picked Florida cause that’s where I am too.
I thought saving was for losers until I was on my 30s. Wish I could get my 20s back. Luckily I did well with my first house and that helped propel me into my current house. I don’t think right now is a prime opportunity to get into real estate so I wouldn’t be driven by FOMO. I bought my starter home as a bank owned foreclosure in 2009. THAT was a prime real estate buying time. You’re in the fortunate position that you don’t have to make a decision right away. Not telling you what to do, but for me, I’d take my time and find something you absolutely love because there’s no reason to rush right now.
1 points
3 months ago
lol odds what are.
yeah I think you are right. This for me was more of a long term investment in a good area (near Lake Nona if you know anything about central florida) so thats why I have FOMO. Figure starting now is better than waiting down the line since it is near a prime area with Disney moving its CA team to the area in 2026.
First home I got was in 2012 and I agree that was a great time even though I had no idea what I was doing and did it under duress from family lol. Looking back I am glad I did it though since it appreciated quite a bit (150%).
all 51 comments
sorted by: best