How to save BIG in a HCOLA

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Topic Author
Streptococcus
Posts: 374
Joined: Thu Jan 03, 2013 12:17 am

Re: How to save BIG in a HCOLA

Post by Streptococcus » Wed Jan 29, 2020 2:45 pm

KlangFool wrote:
Wed Jan 29, 2020 2:34 pm
Streptococcus wrote:
Wed Jan 29, 2020 2:24 pm
Is renting long term a viable (efficient) financial option in NoVa? We plan on buying a home only if it makes sense financially.
If renting makes more sense we will just be renting. We have a “gypsy” lifestyle and plan on moving to “the beach” :beer in 6 years when all the kids are in college.
Streptococcus,

I buy because I could buy the same townhouse with 30 years 20 % down payment with PITI at 20% to 30% lowered than the market rent.

Rent at $2,200 to $2,300 per month. PITI at less than $1,800 per month.

KlangFool
Got it. Thanks a lot for the estimates

Topic Author
Streptococcus
Posts: 374
Joined: Thu Jan 03, 2013 12:17 am

Re: How to save BIG in a HCOLA

Post by Streptococcus » Wed Jan 29, 2020 2:48 pm

GmanJeff wrote:
Wed Jan 29, 2020 2:44 pm
Streptococcus wrote:
Wed Jan 29, 2020 2:24 pm
Is renting long term a viable (efficient) financial option in NoVa? We plan on buying a home only if it makes sense financially.
If renting makes more sense we will just be renting. We have a “gypsy” lifestyle and plan on moving to “the beach” :beer in 6 years when all the kids are in college.
You certainly can rent but it may be reasonable to expect both rents and home prices to rise over time, as they historically have done in the D.C. suburbs of NoVa. Loudoun probably will continue to increase in population as the Silver Line is completed in the next few years, and as more businesses relocate in the Tyson's/Reston/Dulles Silver Line corridor. That may result in increased demand for housing in Loudoun, which new construction may not be able to keep up with as open land is developed. On balance, I'd think you're likely to come out ahead if you buy rather than rent, but you can optimize your chances of doing so by purchasing a well-located home in a good school district. My sense is that you'll do better in Loudoun than in Prince William - different demographics and markets, broadly speaking.
Really appreciate your comment

KlangFool
Posts: 16587
Joined: Sat Oct 11, 2008 12:35 pm

Re: How to save BIG in a HCOLA

Post by KlangFool » Wed Jan 29, 2020 3:25 pm

GmanJeff wrote:
Wed Jan 29, 2020 2:44 pm
Streptococcus wrote:
Wed Jan 29, 2020 2:24 pm
Is renting long term a viable (efficient) financial option in NoVa? We plan on buying a home only if it makes sense financially.
If renting makes more sense we will just be renting. We have a “gypsy” lifestyle and plan on moving to “the beach” :beer in 6 years when all the kids are in college.
You certainly can rent but it may be reasonable to expect both rents and home prices to rise over time, as they historically have done in the D.C. suburbs of NoVa. Loudoun probably will continue to increase in population as the Silver Line is completed in the next few years, and as more businesses relocate in the Tyson's/Reston/Dulles Silver Line corridor. That may result in increased demand for housing in Loudoun, which new construction may not be able to keep up with as open land is developed. On balance, I'd think you're likely to come out ahead if you buy rather than rent, but you can optimize your chances of doing so by purchasing a well-located home in a good school district. My sense is that you'll do better in Loudoun than in Prince William - different demographics and markets, broadly speaking.
GmanJeff,

<<You certainly can rent but it may be reasonable to expect both rents and home prices to rise over time, as they historically have done in the D.C. suburbs of NoVa. >>

Yes and no.

Yes, the price had increased in NoVa over the last few years.

No, the price had just recovered to the 2004/2005 level. So, there had been a near-zero increase from 2004/2005 to 2020, This is across 15 to 16 years.

So, depending on your point of view, the statement may not be true.

OP can find this out easily. Just look at the price of the house that had existed during 2004/2005 for the neighborhood that he is interested in.

KlangFool

EnjoyIt
Posts: 4173
Joined: Sun Dec 29, 2013 8:06 pm

Re: How to save BIG in a HCOLA

Post by EnjoyIt » Wed Jan 29, 2020 3:33 pm

Streptococcus wrote:
Wed Jan 29, 2020 2:45 pm
KlangFool wrote:
Wed Jan 29, 2020 2:34 pm
Streptococcus wrote:
Wed Jan 29, 2020 2:24 pm
Is renting long term a viable (efficient) financial option in NoVa? We plan on buying a home only if it makes sense financially.
If renting makes more sense we will just be renting. We have a “gypsy” lifestyle and plan on moving to “the beach” :beer in 6 years when all the kids are in college.
Streptococcus,

I buy because I could buy the same townhouse with 30 years 20 % down payment with PITI at 20% to 30% lowered than the market rent.

Rent at $2,200 to $2,300 per month. PITI at less than $1,800 per month.

KlangFool
Got it. Thanks a lot for the estimates
That needs to be compared to the cost of selling the house. 6% to the real estate agent and $x for repairs making it sell worthy. A $500k house May cost $30k in real estate fees and another $10k or more to make it sellable. Add in the maintenance costs of owning a home many value at 1-2% a year which will add up $5k-$10k.
Also, when you own people tend to make customizations which don’t add resale value. Something that you would not do to a rental. All that adds up significantly which may make renting a better alternative if you are 100% garuanteed to move in 6 years.

Maybe worth doing the math.

Edit: edited to correct typos and math error
Last edited by EnjoyIt on Wed Jan 29, 2020 4:24 pm, edited 1 time in total.
A time to EVALUATE your jitters. | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418

Topic Author
Streptococcus
Posts: 374
Joined: Thu Jan 03, 2013 12:17 am

Re: How to save BIG in a HCOLA

Post by Streptococcus » Wed Jan 29, 2020 3:40 pm

KlangFool wrote:
Wed Jan 29, 2020 3:25 pm
GmanJeff wrote:
Wed Jan 29, 2020 2:44 pm
Streptococcus wrote:
Wed Jan 29, 2020 2:24 pm
Is renting long term a viable (efficient) financial option in NoVa? We plan on buying a home only if it makes sense financially.
If renting makes more sense we will just be renting. We have a “gypsy” lifestyle and plan on moving to “the beach” :beer in 6 years when all the kids are in college.
You certainly can rent but it may be reasonable to expect both rents and home prices to rise over time, as they historically have done in the D.C. suburbs of NoVa. Loudoun probably will continue to increase in population as the Silver Line is completed in the next few years, and as more businesses relocate in the Tyson's/Reston/Dulles Silver Line corridor. That may result in increased demand for housing in Loudoun, which new construction may not be able to keep up with as open land is developed. On balance, I'd think you're likely to come out ahead if you buy rather than rent, but you can optimize your chances of doing so by purchasing a well-located home in a good school district. My sense is that you'll do better in Loudoun than in Prince William - different demographics and markets, broadly speaking.
GmanJeff,

<<You certainly can rent but it may be reasonable to expect both rents and home prices to rise over time, as they historically have done in the D.C. suburbs of NoVa. >>

Yes and no.

Yes, the price had increased in NoVa over the last few years.

No, the price had just recovered to the 2004/2005 level. So, there had been a near-zero increase from 2004/2005 to 2020, This is across 15 to 16 years.

So, depending on your point of view, the statement may not be true.

OP can find this out easily. Just look at the price of the house that had existed during 2004/2005 for the neighborhood that he is interested in.

KlangFool
Thats interesting!!

KlangFool
Posts: 16587
Joined: Sat Oct 11, 2008 12:35 pm

Re: How to save BIG in a HCOLA

Post by KlangFool » Wed Jan 29, 2020 3:40 pm

EnjoyIt wrote:
Wed Jan 29, 2020 3:33 pm
Streptococcus wrote:
Wed Jan 29, 2020 2:45 pm
KlangFool wrote:
Wed Jan 29, 2020 2:34 pm
Streptococcus wrote:
Wed Jan 29, 2020 2:24 pm
Is renting long term a viable (efficient) financial option in NoVa? We plan on buying a home only if it makes sense financially.
If renting makes more sense we will just be renting. We have a “gypsy” lifestyle and plan on moving to “the beach” :beer in 6 years when all the kids are in college.
Streptococcus,

I buy because I could buy the same townhouse with 30 years 20 % down payment with PITI at 20% to 30% lowered than the market rent.

Rent at $2,200 to $2,300 per month. PITI at less than $1,800 per month.

KlangFool
Got it. Thanks a lot for the estimates
That needs to be compared to the cost of selling the house. 6% to the real estate agent and $x for repairs making it sell worthy. A $500k house May cost $30k in real estate fees and another $10 or more to make it sellable. Add in the maintenance costs of owning a home many value at 1-2% a year which will add up $30k-$60k.
Also, when you own people tend to make customizations which don’t add resale value. Something that you would not do to a rental. All that adds up significantly which may make renting a better alternative if you are 100% garuanteed to move in 6 years.

Maybe worth doing the math.
EnjoyIt,

1% to 2% of 500K = 5K to 10K.

KlangFool

WhiteMaxima
Posts: 2143
Joined: Thu May 19, 2016 5:04 pm

Re: How to save BIG in a HCOLA

Post by WhiteMaxima » Wed Jan 29, 2020 3:49 pm

DIY. HCOLA is usually expensive on everything. labor, eat out. If you DIY, you can save big.

EnjoyIt
Posts: 4173
Joined: Sun Dec 29, 2013 8:06 pm

Re: How to save BIG in a HCOLA

Post by EnjoyIt » Wed Jan 29, 2020 4:24 pm

KlangFool wrote:
Wed Jan 29, 2020 3:40 pm
EnjoyIt wrote:
Wed Jan 29, 2020 3:33 pm
Streptococcus wrote:
Wed Jan 29, 2020 2:45 pm
KlangFool wrote:
Wed Jan 29, 2020 2:34 pm
Streptococcus wrote:
Wed Jan 29, 2020 2:24 pm
Is renting long term a viable (efficient) financial option in NoVa? We plan on buying a home only if it makes sense financially.
If renting makes more sense we will just be renting. We have a “gypsy” lifestyle and plan on moving to “the beach” :beer in 6 years when all the kids are in college.
Streptococcus,

I buy because I could buy the same townhouse with 30 years 20 % down payment with PITI at 20% to 30% lowered than the market rent.

Rent at $2,200 to $2,300 per month. PITI at less than $1,800 per month.

KlangFool
Got it. Thanks a lot for the estimates
That needs to be compared to the cost of selling the house. 6% to the real estate agent and $x for repairs making it sell worthy. A $500k house May cost $30k in real estate fees and another $10 or more to make it sellable. Add in the maintenance costs of owning a home many value at 1-2% a year which will add up $30k-$60k.
Also, when you own people tend to make customizations which don’t add resale value. Something that you would not do to a rental. All that adds up significantly which may make renting a better alternative if you are 100% garuanteed to move in 6 years.

Maybe worth doing the math.
EnjoyIt,

1% to 2% of 500K = 5K to 10K.

KlangFool
whoops. that was a typo. Thanks for catching. I will correct the comment.

The point still stands. It may still be worth renting over buying for 6 years. If it was less then 5 years most would say rent. At 6 years I would check the math vs renting. If it is a wash or close to it, it may just be a personal decision of what someone would prefer. Own and deal with the issues involved in owning vs renting and not caring. Sometimes I wish I was renting right now.

on a $500k house, one can be looking at spending $50k+. Add in property tax and interest. Can the pay down of principal overcome that in 6 years vs just renting?
A time to EVALUATE your jitters. | https://www.bogleheads.org/forum/viewtopic.php?f=10&t=79939&start=400#p5275418

rj342
Posts: 726
Joined: Tue Apr 30, 2019 12:21 pm

Re: How to save BIG in a HCOLA

Post by rj342 » Wed Jan 29, 2020 4:33 pm

Streptococcus wrote:
Tue Jan 28, 2020 9:48 am
... we actually don’t plan on retiring but work a little less, like taking 3-4 months off a year indefinitely. So being close to our number and our intention to not retire but just find jobs that would allow that amount of free time was a great factor in deciding to move to Virginia.
Curious, what is your field that you think you can swing the 3-4 months off a year? Presumably in your profession when you do work, just semi-retired?
Or do you have a plan to do something different that will give you that flexibility while still making non-trivial $$ when you are working?

Audioarc
Posts: 26
Joined: Tue May 01, 2018 3:13 pm

Re: How to save BIG in a HCOLA

Post by Audioarc » Wed Jan 29, 2020 5:04 pm

Good luck in NoVa. You won’t find much of a house for less that $500-600k. Dulles Toll Road, Hot Lanes, Greenway and 66 Tolls are very expensive. Try to find a place close to where you work. Traffic is murder.

scottr08
Posts: 18
Joined: Sat Aug 22, 2015 2:38 am

Re: How to save BIG in a HCOLA

Post by scottr08 » Fri Feb 07, 2020 8:19 am

TropikThunder wrote:
Wed Jan 29, 2020 1:13 am
scottr08 wrote:
Tue Jan 28, 2020 3:46 pm
Aldi ($20/week groceries for one)
Seriously? That's not even $1 per meal. Sounds miserable. :|
I mean, some weeks I go over by $5-10 (so that puts me at $30 a week max), but I am entirely happy with my meals! Eggs or cereal for breakfast, sandwich and fruit for lunch, and salad and pasta for dinner. Works for me, but may not work for others.

Leemiller
Posts: 1340
Joined: Sat Jun 01, 2013 12:42 pm

Re: How to save BIG in a HCOLA

Post by Leemiller » Fri Feb 07, 2020 8:59 am

The commute/traffic will be worse in reality than what people tell you. Renovating is extremely expensive - I haven’t priced it, but I’d guess building is too. Personally, I think it’s unrealistic to cut your income and move to a more expensive area while expecting to save at the same rate. As others have noted, housing is a main cost, but you can always get a townhouse vs SFH. I would not live in this area but for the high salaries my spouse and I make.

Topic Author
Streptococcus
Posts: 374
Joined: Thu Jan 03, 2013 12:17 am

Re: How to save BIG in a HCOLA

Post by Streptococcus » Fri Feb 07, 2020 11:45 am

Leemiller wrote:
Fri Feb 07, 2020 8:59 am
The commute/traffic will be worse in reality than what people tell you. Renovating is extremely expensive - I haven’t priced it, but I’d guess building is too. Personally, I think it’s unrealistic to cut your income and move to a more expensive area while expecting to save at the same rate. As others have noted, housing is a main cost, but you can always get a townhouse vs SFH. I would not live in this area but for the high salaries my spouse and I make.
I appreciate your comment. I know it is scary to think about moving to NOVA and saving money :shock: .I’m gonna be working in Sterling or Manassas and I know that Manassas is much less expensive/crazy than the Sterling/Ashburn area.

Sam1
Posts: 506
Joined: Mon Apr 09, 2018 7:24 am

Re: How to save BIG in a HCOLA

Post by Sam1 » Fri Feb 07, 2020 1:52 pm

Is your job close to the metro?

Northern Virginia is VERY expensive right now. Chances are your wife’s job will be in DC.

I’d consider renting a two bedroom in DC near the metro. Only have one car. Send your children to Wilson High School. That’s how you’ll save money.

If you want to live in northern Virginia you’ll need to live in an ugly house or have bad schools. The other option is to be house poor. It’s not a pretty suburb at all. You’ll be paying a lot of money to live in an ugly suburb.

Dinosaur Dad
Posts: 193
Joined: Wed Feb 22, 2017 6:05 pm
Location: Connecticut

Re: How to save BIG in a HCOLA

Post by Dinosaur Dad » Fri Feb 07, 2020 2:02 pm

My two cents: we lived in a small house within a HCOLA while our child was growing up. Neighborhood wasn't one of the top in our town but certainly acceptable to us, and convenient to everything. We elected to sacrifice on house size, fixed up basement, efficiently used every square inch. Looking back, this enabled us to save money, ensure good schools for child, give us more time as a family vs commute time. I guess you pick what you're willing to sacrifice. I'm glad we picked family time and saving.
"Take calculated risks - that is quite different from being rash." | General George S. Patton

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