Buy or Rent / Move or Stay (NJ/PA)

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paulsalem
Posts: 75
Joined: Mon Feb 06, 2017 12:26 pm

Buy or Rent / Move or Stay (NJ/PA)

Post by paulsalem »

My wife and I are considering buying our first home which to me is overwhelming because of the number of variables. We plan on sending our son to a private school in Princeton, NJ (75 Mapleton Rd) come fall 2021 with no busing, but car pools exist. Tuition is $20,000 / year. We are planning a move to be close to the school, right now we're an hour drive from it.

Financials
  • Married (both 37) + 4 year old boy.
  • My income: $225,000 from megacorp (I'm a corporate pilot and only drive to the airport 1-2 times / month so I don't have a daily commute and can live nearly anywhere in the NYC area.)
  • Wife is stay at home mom but does some in home (ours or clients) fitness instruction with no significant income to date.
  • Currently rent nice apartment for $1,850 / month, month-to-month lease in Hunterdon County, NJ. I'm happy wife wants more space and yard.
  • Debt: $10,000 car loan ($500 / month)
  • Retirement Accounts: $400k
  • Cash Savings $0, but $75k is from mega backdoor roth contributions. We've been throwing all that we can in the market now and also donating a lot
  • 2019 spending (not including rent, charity, savings): $60,600 + $25,000 tithe/charity commitments = $85,600
  • 2020 retirement savings planned: $80,000 (401k + backdoor roths + mega backdoor roths + HSA maxed)
I've never owned a home and don't really have a desire to. I like the flexibility that renting gives me, and having a known cost for housing every month with no surprise maintenance costs. I also like the inability to spend money renovating. But I feel like since we're planning on being in one location for 15 years we should seriously consider buying.
  • Should we move now or wait until next summer? (son will begin school in Fall 2021)
  • Should we buy (withdrawing funds from retirement for down-payment) or rent near the school or buy or rent across the border in Yardley, PA which is a longer drive in heavy traffic (30-45 in rush hour) but cheaper prices and taxes?
  • Budget?
Thanks.
Last edited by paulsalem on Fri Jun 12, 2020 6:23 am, edited 1 time in total.
potatopancake
Posts: 38
Joined: Fri Jul 13, 2018 4:38 pm

Re: Buy or Rent / Move or Stay (NJ/PA)

Post by potatopancake »

paulsalem wrote: Fri Jun 12, 2020 5:53 am [*]Should we move now or wait until next summer? (son will begin school in Fall 2021)
[*]Should we buy (withdrawing funds from retirement for down-payment) or rent near the school or buy or rent across the border in Yardley, PA which is a longer drive in heavy traffic (30-45 in rush hour) but cheaper prices and taxes?
[*]Budget?[/list]

Thanks.
I would rent for a year or two near child's school. Save for downpayment during this time. Do not withdraw retirement savings for house payments. Budget may change based on new COL. Flemington is affordable, Princeton less so. See what your expenses are over the next year and figure out what you will be able to budget with new home. My .02.
JLJL
Posts: 484
Joined: Wed Jan 08, 2014 11:10 pm

Re: Buy or Rent / Move or Stay (NJ/PA)

Post by JLJL »

You say you have $0 cash savings. Does that mean investible cash, or literally no cash including emergency fund? Is corporate piloting pretty secure these days? I wouldn't feel comfortable with no cash, although I suppose some of your Roth money is accessible without penalty at this point?

One really needs more than just a down payment of cash on hand to buy a house. As you say, there are many costs of ownership and being cash poor is dangerous and just feels awful. I doubt you'll find many responses here that advocate for withdrawing retirement savings for a house down payment that you haven't been able to save for.

My strongest feeling about all your questions though would be that I would not consider a 30-45 minute traffic commute for a young child's schooling if I could avoid it. I would rent near the school and build up cash for emergency and/or future home purchase over the next few years.

Kudos for all your charitable giving.
lakpr
Posts: 6727
Joined: Fri Mar 18, 2011 9:59 am

Re: Buy or Rent / Move or Stay (NJ/PA)

Post by lakpr »

I live in Princeton, NJ ... any reason why you aren't considering renting in Princeton and sending your kid to the public school? Princeton schools are rated excellent ... you can save the $20k in private school tuition
mw1739
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Joined: Mon Mar 21, 2011 5:44 pm

Re: Buy or Rent / Move or Stay (NJ/PA)

Post by mw1739 »

Are you willing to decrease your retirement savings and/or charitable giving to afford a house? I don't see how the math works out with your current savings level and giving.

I don't live in the area, but regularly work in the Princeton/Ewing/Yardley area and would rank them Princeton, Yardley, Ewing in terms of places I'd want to live. No idea about housing costs or school rankings in those areas.
katrid11
Posts: 99
Joined: Wed Oct 31, 2018 10:11 am

Re: Buy or Rent / Move or Stay (NJ/PA)

Post by katrid11 »

My thoughts are:

1) rent a townhouse nearby for the next 1-2 years while saving for a downpayment. A townhouse should give you enough room and a small yard to know if this is a lifestyle you want.
2) in 2022/2023 buy a small home or townhouse that fits your lifestyle.

I would not move to PA to try to save money. Stay close enough to the school so your kid can hang with friends afterschool.

Also Princeton has amazing schools - why not settle in the best school district and rent/buy a small house and save $20k a year?
Topic Author
paulsalem
Posts: 75
Joined: Mon Feb 06, 2017 12:26 pm

Re: Buy or Rent / Move or Stay (NJ/PA)

Post by paulsalem »

Thanks for all your advice. We've decided to rent as many suggested and I feel at peace with that decision.
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Watty
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Re: Buy or Rent / Move or Stay (NJ/PA)

Post by Watty »

JLJL wrote: Fri Jun 12, 2020 6:58 am I would rent near the school and build up cash for emergency and/or future home purchase over the next few years.
+1

Renting for at least a year would also let you try out the school so that you can make sure that it is working out well and it is worth it. Even if it is a good school it might not be a good fit for him.

I would take the option you were thinking about with the long commute off the table. There are multiple problems with that since you would need to make the commute twice a day to drop your kid off at school and then again in the afternoon to pick them up. There may also be occasional after school or weekend activities so you would need to drive for that too. You will also have times when you need to go pick him up if he is sick at school or if they close the school early because of the weather. On the days when you would drive him to school it might not make sense to return home since you would only have a few hours until you needed to head back to the school for the afternoon pickup.

Even if it is just 30 minutes each way that is an hour a day that your kid will be sitting in a car and that is also not good for him.
virginiabirdie
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Joined: Thu Jul 09, 2015 10:51 am

Re: Buy or Rent / Move or Stay (NJ/PA)

Post by virginiabirdie »

Also consider how much your salary has to move up in the future. I wish we had stretched to buy a nicer place when we were younger and could have enjoyed it more.

Also, private in Princeton seems unnecessary. They have wonderful schools.
virginiabirdie
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Joined: Thu Jul 09, 2015 10:51 am

Re: Buy or Rent / Move or Stay (NJ/PA)

Post by virginiabirdie »

Also consider how much your salary has to move up in the future. I wish we had stretched to buy a nicer place when we were younger and could have enjoyed it more.

Also, private in Princeton seems unnecessary. They have wonderful schools.
Nutmeg
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Joined: Wed Jul 26, 2017 12:52 pm

Re: Buy or Rent / Move or Stay (NJ/PA)

Post by Nutmeg »

paulsalem wrote: Fri Jun 12, 2020 5:53 am My wife and I are considering buying our first home which to me is overwhelming because of the number of variables. We plan on sending our son to a private school in Princeton, NJ (75 Mapleton Rd) come fall 2021 with no busing, but car pools exist. Tuition is $20,000 / year. We are planning a move to be close to the school, right now we're an hour drive from it.
Has your son already been admitted to the private school, more than a year in advance?

When my family applied (years ago) to private kindergarten for our four-year-old, he wasn’t even tested until eight months before the first day of school.

I wouldn’t recommend moving until after he has been admitted.
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