Advice On Moving Up In House

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broncocountry25
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Advice On Moving Up In House

Postby broncocountry25 » Thu May 18, 2017 12:16 pm

Hello,

I am new to being active on the forums here. I am seeking advice on finding a balance between moving up in house and saving excess funds in taxable account for early retirement. For some quick background I am married, and currently own a townhouse worth about 375K in Denver, CO. I am 27 and so is my wife. We are both fairly early in our careers but have good incomes as of now at roughly 147K base with bonus of up to 50K annually. We have worked hard to get where we are and stretched ourselves to get into a home in 2014 and are happy we did. The balance of life is much better and we are happy to have a home called our own that is much nicer then what we would be renting for relative costs. All in with HOA we pay about $1,700 a month.

This among with other things like no other payments allows us to really save and still enjoy life in our 20's currently with no kids (eating out and traveling.) This is the first year we have been able to max out our tax advantaged accounts and officially start a taxable account, because our income increased greatly due to bonus and some raises. Without getting into all the detail unless someone asks for more this is our situation.

175K invested in market.
253K loan on 375K house (current value.)
No other payments, expect incomes to modestly rise the base portion and then most likely top out at about 250K as we don't really feel its worth it to go back to school. The other big x factor is possible large payouts from sale of company assets that get distributed to employees. This piece could propel us to a much earlier retirement but can not be counted on.

So with all that said, my whole point of posting is to ask others that are further along maybe 40-50 what would you recommend we do. Save more for upgrade of house or just keep on keeping on with taxable investing and then down the road when we have kids take a look again. The homes that would be worth a move are in the 600-700k range. It would increase quality of life but I want to know from others experience does it change it that much? For those that purchased a nice home when younger do you regret it or are you still happy. Obviously if it has gone up a ton in value great but this piece is more for our happiness and I don't see it as part of the investment equation to support us down the road.

Any input is appreciated! :beer

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ruralavalon
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Re: Advice On Moving Up In House

Postby ruralavalon » Thu May 18, 2017 2:06 pm

Welcome to the forum :) .

I know nothing about the Denver real estate market, and even if I knew the market would not want to predict where it is going.

broncocountry25 wrote:So with all that said, my whole point of posting is to ask others that are further along maybe 40-50 what would you recommend we do. Save more for upgrade of house or just keep on keeping on with taxable investing and then down the road when we have kids take a look again. The homes that would be worth a move are in the 600-700k range. It would increase quality of life but I want to know from others experience does it change it that much? For those that purchased a nice home when younger do you regret it or are you still happy. Obviously if it has gone up a ton in value great but this piece is more for our happiness and I don't see it as part of the investment equation to support us down the road.

Any input is appreciated! :beer

You did not mention any specific or general shortcomings of your current townhouse. I suggest not buying a house until the need is apparent, such as children on the way. Just keep on with taxable investing.

At any stage of life it's helpful to keep expenses low, and avoid unnecessary expense.

We live in a more moderate cost of living area where condos or townhouses were not an an available choice, we bought a small 3 bedroom house at age 26 when we had two children, we bought a much larger 4 bedroom home when we had three children, and strayed there for 25 years. We did not regret waiting to get the larger nicer home.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

broncocountry25
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Re: Advice On Moving Up In House

Postby broncocountry25 » Thu May 18, 2017 2:23 pm

ruralavalon wrote:You did not mention any specific or general shortcomings of your current townhouse. I suggest not buying a house until the need is apparent, such as children on the way. Just keep on with taxable investing.


I really appreciate the input, and agree with you. I think the major shortcomings are we have a dog and like being outdoors and we only have a little side yard. Many days I would be grateful to come home and sit in the back yard, but I may be overthinking this in my head. Second, would be the market is red hot in the lower price range in Denver so I feel like it would be a good time to sell, but I guess this can be similar to market timing in stocks which I never try to do. It would also be nice to live somewhere more walk able instead of driving into other places for dinner.

ruralavalon wrote:At any stage of life it's helpful to keep expenses low, and avoid unnecessary expense.


I think this is what I was hoping someone would say, but there is so much discussion about being in a cool house from everyone that maybe I am just getting my first major dose of keeping up with the Joneses. My age group is strange, I think it makes sense to be patient and buy when there is a need rather then just wanting it now.

Thanks again for responding, this site is great.

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bottlecap
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Re: Advice On Moving Up In House

Postby bottlecap » Thu May 18, 2017 2:35 pm

I wouldn't sweat planning for your next home in 13-23 years.

Just keep saving and talk occasionally on what you might do if and when you have kids.

JT

NiceUnparticularMan
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Re: Advice On Moving Up In House

Postby NiceUnparticularMan » Thu May 18, 2017 3:07 pm

We bought our first house when I was about 29 and we had no kids yet. We then had one child about six years later, and a couple years after that we moved up into our second and current home. We have since had another child and have no plans to move again (like ever, if we can help it).

We definitely enjoy the bigger, nicer house, particularly with the two kids--the old house would have been tight for a family of four (by modern standards). But I am glad we only did this once, and that we did it after having at least one kid, and having some idea about schools and such.

So personally, if I was planning on having kids any time in the next 5-7 years or so, I would probably hold off on a move. But then again, you only live once, and I do think there is a lot of value in things like walkable neighborhoods, the right amount of outdoor space (more not necessarily being better without limit), and so on.

broncocountry25
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Re: Advice On Moving Up In House

Postby broncocountry25 » Thu May 18, 2017 3:17 pm

bottlecap wrote:I wouldn't sweat planning for your next home in 13-23 years.


Tends to be a problem for me, natural planner!

broncocountry25
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Re: Advice On Moving Up In House

Postby broncocountry25 » Thu May 18, 2017 3:17 pm

NiceUnparticularMan wrote:We bought our first house when I was about 29 and we had no kids yet. We then had one child about six years later, and a couple years after that we moved up into our second and current home. We have since had another child and have no plans to move again (like ever, if we can help it).

We definitely enjoy the bigger, nicer house, particularly with the two kids--the old house would have been tight for a family of four (by modern standards). But I am glad we only did this once, and that we did it after having at least one kid, and having some idea about schools and such.

So personally, if I was planning on having kids any time in the next 5-7 years or so, I would probably hold off on a move. But then again, you only live once, and I do think there is a lot of value in things like walkable neighborhoods, the right amount of outdoor space (more not necessarily being better without limit), and so on.


That makes sense and I am glad to hear you are so happy with your house! I agree it is silly to try and make a move and am really glad I asked for advice.

jtravisdavid
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Re: Advice On Moving Up In House

Postby jtravisdavid » Thu May 18, 2017 3:38 pm

Seems like you guys are in good shape. A different house at this point may only cause you problems/complications.

EvelynTroy
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Re: Advice On Moving Up In House

Postby EvelynTroy » Thu May 18, 2017 3:44 pm

Bronco -
I would highly recommend this booklet - if you haven't read it. This is one of those references that can be read again and again. Excellent advice for your overall financial well-being as you plan for your future.

[url]https://www.etf.com/docs/IfYouCan.pdf
[/url]
Evelyn

AlwaysAStudent
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Re: Advice On Moving Up In House

Postby AlwaysAStudent » Thu May 18, 2017 4:06 pm

I am younger than the age group you indicated but I would agree with the advice given to wait. We are in our mid 30s and bought our current (bigger) house when it was just the 2 of us and most days I wish we would have waited. There were only 2 of us (plus the dogs) and we bought a 2700 sq ft, 4 bedroom house on 18 acres. The amount for regular, routine cleaning, increased utilities, extra furniture, maintenance, etc especially when you are not even using half of the house, is ridiculous. There are now 3 of us and there are still 2 bedrooms that are never used and the 3 year old still does not use the playroom/den like we had pictured in our head. I honestly think that a bigger house (anything bigger than 2 bedrooms) is not necessary until a couple is planning on kid #2 or kid #1 starts getting old enough that they don't want to be in the same room as mom and dad every waking hour anymore. We have now lived in this house for 5.5 years and still do not use all the space in it. I am only now (when we are starting to think about expanding the family again) starting to appreciate the size of the house.

On a financial stand point it was a great purchase, we got it for under appraised value, only partially complete, and with the appraisal that we just got this month the value is triple what we paid. As nice as that is, it was pure luck, finding the right house at the right time and putting a lot of sweat equity into it. This might be one of the reasons that I like the house a lot more now.

COFF
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Re: Advice On Moving Up In House

Postby COFF » Thu May 18, 2017 4:38 pm

Hello Fellow Denverite.

This is a constant discussion that my wife and I always have. I am 35 and she is 33, we bought our house in Denver in 2011 (Thank God!) What the market has done over the past several years to say the least is crazy! It is scary to see what people are paying for single family homes! Just thought I would share a little of our information because we live in the same geographic area and also make similar incomes. We are lucky enough to have a single family home in a relatively nice part of town, we bought our house in 2011 for 220K and after a lot of sweat equity and increase in the market I think we could sell our house for low 600K today. Would I ever pay for 600K for our house? I don't know it is nice but 600K is a lot of money! What scares me is the rapid increase in home prices over a short time span, don't know if the market is able to handle that increase in prices so quickly. We also had a new addition to our family earlier in the year and let me tell you what a game changer that can be. Daycare in Denver is extremely expensive and competitive almost as competitive as the house market. We pay about 1650 a month for full time daycare at a very nice center (PS we also had to put down a down payment for daycare when my wife was 4 months pregnant, good thing we did that because 2 weeks later they were all full!.) Between the wife and I we make about 275K a year and I still feel like there is not a ton of money left over after taking advantage of all our tax def accounts. The biggest thing I think you need to solve is whether or not you are going to increase your family size. If there are things that you don't like about your home like the size, location, yard space or things that can't be changed I would seriously think about moving before starting a family. Once the new bundle of joy arrives you will have very little time in terms of fixing or adding to your current residence. The only reason we would ever move is because the wife has a commute to the DTC which in the morning only takes about 30 minutes but in the afternoon can be upwards of 1 1/2 hours. Think about the added cost buying a 700K home will be including the cost of taxes and insurance. Just my 2 cents. Best of luck moving forward.

broncocountry25
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Re: Advice On Moving Up In House

Postby broncocountry25 » Fri May 19, 2017 5:01 pm

COFF wrote:Hello Fellow Denverite.

This is a constant discussion that my wife and I always have. I am 35 and she is 33, we bought our house in Denver in 2011 (Thank God!) What the market has done over the past several years to say the least is crazy! It is scary to see what people are paying for single family homes! Just thought I would share a little of our information because we live in the same geographic area and also make similar incomes. We are lucky enough to have a single family home in a relatively nice part of town, we bought our house in 2011 for 220K and after a lot of sweat equity and increase in the market I think we could sell our house for low 600K today. Would I ever pay for 600K for our house? I don't know it is nice but 600K is a lot of money! What scares me is the rapid increase in home prices over a short time span, don't know if the market is able to handle that increase in prices so quickly. We also had a new addition to our family earlier in the year and let me tell you what a game changer that can be. Daycare in Denver is extremely expensive and competitive almost as competitive as the house market. We pay about 1650 a month for full time daycare at a very nice center (PS we also had to put down a down payment for daycare when my wife was 4 months pregnant, good thing we did that because 2 weeks later they were all full!.) Between the wife and I we make about 275K a year and I still feel like there is not a ton of money left over after taking advantage of all our tax def accounts. The biggest thing I think you need to solve is whether or not you are going to increase your family size. If there are things that you don't like about your home like the size, location, yard space or things that can't be changed I would seriously think about moving before starting a family. Once the new bundle of joy arrives you will have very little time in terms of fixing or adding to your current residence. The only reason we would ever move is because the wife has a commute to the DTC which in the morning only takes about 30 minutes but in the afternoon can be upwards of 1 1/2 hours. Think about the added cost buying a 700K home will be including the cost of taxes and insurance. Just my 2 cents. Best of luck moving forward.


Thank you for the local input, that is a very helpful perspective as you are roughly a decade ahead of me. Those are brutal daycare costs, that honestly is a bit terrifying! I think it makes sense to stay put and not complicate things. We truly enjoy a laid back life right now other then the stress of work, no sense in reaching at this point. Once we have kids it will most likely cost even more for daycare! Better focus on how one of us can not work at that point.

There always seems to be a balance between enjoying life now and saving massive amounts so it isn't necessary for the high costs you must pay in order to achieve the good income.

Happy to hear you are in a good set up though and are enjoying your place!

broncocountry25
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Re: Advice On Moving Up In House

Postby broncocountry25 » Fri May 19, 2017 5:02 pm

AlwaysAStudent wrote: We are in our mid 30s and bought our current (bigger) house when it was just the 2 of us and most days I wish we would have waited.


Its settled we will hold off! Not in my 30's yet nor am I thinking about having kids for at least 5 years so I am adding unnecessary stress! Thanks.

broncocountry25
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Re: Advice On Moving Up In House

Postby broncocountry25 » Fri May 19, 2017 5:07 pm

EvelynTroy wrote:I would highly recommend this booklet - if you haven't read it. This is one of those references that can be read again and again. Excellent advice for your overall financial well-being as you plan for your future.


Good food for thought, thank you. I am 100% on board with everything in there already, I would not be where I am today if I wasn't already working hard at this and saving more then 50% of income.

Only thing I do differently is 95% VTI & VTSAX with 5% in individual stocks for my own guilty pleasures.

broncocountry25
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Re: Advice On Moving Up In House

Postby broncocountry25 » Fri May 19, 2017 5:08 pm

jtravisdavid wrote:Seems like you guys are in good shape. A different house at this point may only cause you problems/complications.


Agreed, thanks.

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Watty
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Re: Advice On Moving Up In House

Postby Watty » Fri May 19, 2017 10:58 pm

broncocountry25 wrote: It would increase quality of life but I want to know from others experience does it change it that much?



.....Its settled we will hold off! Not in my 30's yet nor am I thinking about having kids for at least 5 years so I am adding unnecessary stress!


Not to beat a dead horse but having more bathrooms in a house than people is pretty much the definition of "the point of diminishing returns." when it comes to increasing the quality of your life.

Be sure to do your own research on waiting until your mid 30's to start trying to have kids if you want them.


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