Whats the smart move for family that has outgrown home?

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ElmoHongZito
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Whats the smart move for family that has outgrown home?

Post by ElmoHongZito »

We were a family of 3 with one on the way in South Florida when we purchased our 3 bedroom townhouse in 2011 for $217k. Since then it has been paid off and Zillow says it is worth $495k today.

We have been wanting to upgrade to a single family home for years now but would have to move out of our neighborhood because the homes around here are built on tiny lots (around 5k sq ft and below) and I care about having a front and backyard if I am going to take on that amount of additional debt. If we move out of this neighborhood we would probably have to switch our girls (currently in 6th and 9th grade) to private school which is an added expense we do not have now.

Home prices in South Florida appear to be higher than they have ever been historically and I don't know what to do or really what I can afford. Would love to give my girls the experience of living in a single family home as a family with pool in the back but at the same time I like knowing that I have enough reserves to help them out financially in the future as young adults if they need it (which is something I never had).

Just wish I had someone that I could trust to steer me in the right direction and tell me what price home I could be looking at based on my overall financial situation.

Thoughts?
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galawdawg
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Re: Whats the smart move for family that has outgrown home?

Post by galawdawg »

Why are you looking to move, other than to have a yard and a pool?

How are the schools where you live now? Why would your daughters need to go to private school if you move but (presumably) don't need private school now? Do they have close friends their age? Do they have activities they enjoy participating in at their school and in the community?

Do you expect one or both of your daughters to leave home following high school to attend college and/or work?
bloom2708
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Re: Whats the smart move for family that has outgrown home?

Post by bloom2708 »

New tiny babies don't take up much space, so doing nothing may be the best option right now.

Save up for the down payment, closing costs, upgrades, etc.

It is hard to time anything and the house market is no different.

House shopping tends to lead to house buying, but you must do what is best for the family. Changing schools is very difficult. That alone may keep you in place. We have one kid left in high school, so we stay put.

Maybe spending a bit on new "right sized" furniture. Maybe small remodel projects can make a difference in your current home.

Creative bunk beds or room dividers may help kids that share rooms.

No right answer. Good luck.
onourway
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Re: Whats the smart move for family that has outgrown home?

Post by onourway »

How do your girls feel about switching schools? They are at ages where that is often rather difficult.

Also, realize that they are old enough that by the time you are settled in a new home, they will be nearly out of the house.

Depending on the answer to the above, if you can buy a house with enough left over to be comfortable I would go for it. Time flies!
alex_686
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Re: Whats the smart move for family that has outgrown home?

Post by alex_686 »

Start by figuring out your priorities.

You certainly can stay in your current home. For a long time our family of 3 lived in a tiny 2 bedroom home. I know of bigger families that live in tiny homes. It is a valid option. Be grateful for what you have.

Yes, bigger homes are more expensive. This is more true in the current environment. Also a valid option. We work to live, not live to work, save and invest.

First things first, come up with a plan. Figure out what you want, what you can afford. I would sit back and watch, wait for the right home to come to you.

Personally, I would be mildly disinclined to move with your eldest in their first year of high school. I am assuming that they are still adjusting, fitting in, and have a strong set of peer relationships that you do not want to disrupt. I will admit that I am biased towards smaller, cheaper homes. I would rather live in good neighborhood and spend my money on other things. Note, my wife and child are much happier with our newer bigger suburban home than our old city home.

Once again, haul out your ISP and figure out your goals.
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Katietsu
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Re: Whats the smart move for family that has outgrown home?

Post by Katietsu »

To summarize: You are a family of four consisting of two adults, a sixth grader and a ninth grader. You are happy with the current public schools. You live in a 3 BR townhome worth about $500,000 but are interested in giving your daughters the experience of a single family home with a yard and pool. However, you feel that you would need to change schools to a private school if you moved. You do not give any income or expense information.

I would not do anything immediately. It is not even clear that you have outgrown the townhome. Do you know if your daughters would want to change schools just to have a yard? In my experience, most teenagers these days do not spend much time in their yard. And most teenagers who are happy with their school and friends would not trade that for a pool. Are you sure that staying in the same school is not possible? I would be more concerned about the extra expense of private school than an additional mortgage payment.

Without knowledge of your income and potential expenses, I do not see how the forum members can address your financial concerns.
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vineviz
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Re: Whats the smart move for family that has outgrown home?

Post by vineviz »

ElmoHongZito wrote: Thu Sep 22, 2022 10:57 am
Just wish I had someone that I could trust to steer me in the right direction and tell me what price home I could be looking at based on my overall financial situation.
I think you need someone you trust to help you figure out whether you really need to move at all.

Clearly strangers on the internet have limited use in this arena, but if your bet is that you'll be happier in a larger home with a mortgage than you are now in the home you own without a mortgage I can say that the odds are not in your favor.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch
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Sandtrap
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Re: Whats the smart move for family that has outgrown home?

Post by Sandtrap »

Katietsu wrote: Thu Sep 22, 2022 11:25 am To summarize: You are a family of four consisting of two adults, a sixth grader and a ninth grader. You are happy with the current public schools. You live in a 3 BR townhome worth about $500,000 but are interested in giving your daughters the experience of a single family home with a yard and pool. However, you feel that you would need to change schools to a private school if you moved. You do not give any income or expense information.

I would not do anything immediately. It is not even clear that you have outgrown the townhome. Do you know if your daughters would want to change schools just to have a yard? In my experience, most teenagers these days do not spend much time in their yard. And most teenagers who are happy with their school and friends would not trade that for a pool. Are you sure that staying in the same school is not possible? I would be more concerned about the extra expense of private school than an additional mortgage payment.

Without knowledge of your income and potential expenses, I do not see how the forum members can address your financial concerns.
+1
great points
perfectly said

to op (original poster)
print this out and tape to office door
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crre
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Re: Whats the smart move for family that has outgrown home?

Post by crre »

we were a family of five in the same situation as you are now when i was given the advice to hold on a few more years. twenty years later i can say that it is the best advice i was ever given. we are still in our townhouse, in our wonderful neighborhood. all three kids are out of the house and there is enough room to comfortably host the grandkids, but not so much that we feel in a rush to downsize.

we used the money saved on fantastic experiences with the family. it also bought us priceless peace of mind.

good luck in your decision.
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Watty
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Re: Whats the smart move for family that has outgrown home?

Post by Watty »

What is your situation with being able to pay for your kids college so that they can graduate without student debt?

If you do not already have that covered then if you could get in a time machine and ask your grown up 30+ year old kids if they would choose to live in a house with a pool or have no student debt I am sure that they would choose not having student debt.

I agree with asking your kids if they would want to move and change schools. I needed to move for a corporate relocation when I had a 8th grader and that was real hard on him. He made some new friends in the new school but realistically he never really developed a strong core group of new high school friends.

He was also sort of out of step with the curriculum which was a bit of an issue too and we moved during the summer so he could start the school year in his new school. If your kids have to change schools in the middle of a school year then that can be even more disruptive.

The house we bought in the new area also has a huge back year that my son used very little. One problem was that the new subdivision has all sorts of different people with single people, couples with no kids, retired people, people with very young kids, etc. After we moved in we figured out that the 300+ houses in the large subdivision there were only about a dozen kids that were in my son's grade and none of them lived near us. The lack of neighborhood kids to pay with meant that there were few neighborhood kids to play with in the backyard.
ElmoHongZito wrote: Thu Sep 22, 2022 10:57 am Just wish I had someone that I could trust to steer me in the right direction...
Your 9th grader only has about three more years until they will likely head off to college. Unless she is having problems where a fresh start in a new high school would be a good thing then it is really too late to move for her.
epilnk
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Re: Whats the smart move for family that has outgrown home?

Post by epilnk »

I would prioritize keeping the girls in their schools over the front and back yard. The yards are important to you, but they wont be to them and this is a difficult time to change school districts, especially for the 9th grader. And when the 9th goes off to college, the 6th will be in high school so won't want to move either.

A front yard is just decorative, so a SFH with a back yard and pool should have most of what you need if you can afford that in your neighborhood. Or stay put for a few more years - 3 bedrooms is all you really need. But I wouldn't make the teens take the hit - theres a very good chance you would regret making them start over in a new school. And I'd far rather save the tuition money for college.
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Lee_WSP
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Re: Whats the smart move for family that has outgrown home?

Post by Lee_WSP »

If anything rent for a few years and rent out your home. If you love the lifestyle change, you'll make the finances work. If not, now you know.
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ElmoHongZito
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Re: Whats the smart move for family that has outgrown home?

Post by ElmoHongZito »

Thank you to everyone that has posted a reply. I read them all and really enjoy hearing other perspectives than just the voice in my head.

I think what frustrates me the most is that living in Miami I am surrounded by tons of people that have the house, the boat, the nice cars, the traveling, the friends, and what appears to be a work life balance all while having less than a couple months in reserves to maintain that lifestyle and not having much in terms of retirement goals or plans. Many sitting on some real estate equity because home values here have shot up like crazy.

In my case, I live in my little 3 bdrm townhome (in probably the only municipality that has decent public 6-12th grade schools in all of Miami) and I live a pretty humble lifestyle with my family of 4. Not because I don’t like nice things but because I grew up with very little to nothing and I don’t want to put myself or my kids in a situation where I risk losing all I have worked for. I need that security blanket which is why bogleheads method of investing appealed to me.

But I am not going to lie. Its easy to get the itch when you see your babies growing so fast and not exactly living the dream life you hoped they would experience while knowing that you have the means to live that lifestyle but would probably have to put reserves and retirement plans in the backseat.

Here is a quick breakdown of my net worth today…

Roughly 1.7 Million which includes…

- Paid off townhome valued at 495k at the moment

- 400k in the bank (I know, I have to get that out of there)

- 830k portfolio (600k of this is self managed and the rest is in IRA’s and previous employer retirement plan)

- 40k in florida prepaid university plan (both daughters tuitions will be covered 100% if they attend in-state public university)

My only debt is…
20k withdrawal from 250k HELOC
Roughly 70k Tesla being financed at like 2.49%

Income is difficult to determine yet since I left the workforce to start my own business (partnership) one week before covid and I don’t pay myself a salary. I invested 170k and in the 2.5 years since then have taken 325k split in 3 distributions. Wife is a early childhood teacher and makes around 50k.

I know with this post it may not appear this way however I am very grateful for what I have and unlike many people I come in contact with day to day I never forget where I came from.

Its just amusing how when the kids are still babies you figure you have more than enough time to catch up and give them the best quality of life that my very unstable parents were never able to give me. Then you blink and one of them is off to college in a few years.

Anyway its nice to be able to vent here and have reasonable smart people share their thoughts.
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Watty
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Re: Whats the smart move for family that has outgrown home?

Post by Watty »

One thing that may not have been mentioned is that you only have about 6 or 7 years until your youngest kid is ready to head off to college. If you buy a big family house now with a big yard and pool for the kids then you will likely find that it is too big for two people when you are empty nesters.
ElmoHongZito wrote: Fri Sep 23, 2022 9:01 am I think what frustrates me the most is that living in Miami I am surrounded by tons of people that have the house, the boat, the nice cars, the traveling,...

Roughly 70k Tesla ......
I think you can scratch "nice cars" off your envy list. :D
ElmoHongZito wrote: Fri Sep 23, 2022 9:01 am Income is difficult to determine yet since I left the workforce to start my own business (partnership) one week before covid and I don’t pay myself a salary. I invested 170k and in the 2.5 years since then have taken 325k split in 3 distributions. Wife is a early childhood teacher and makes around 50k.
One complication is that if you decide to move it might be difficult to qualify for a new mortgage with being self employed like that. That is likely not a show stopper but be sure to research that early in the process so you can work that into your plans.
ElmoHongZito wrote: Fri Sep 23, 2022 9:01 am I think what frustrates me the most is that living in Miami I am surrounded by tons of people that have the house, the boat, the nice cars, the traveling, the friends, and what appears to be a work life balance all while having less than a couple months in reserves to maintain that lifestyle and not having much in terms of retirement goals or plans.
There is no reason that you can't travel, when the pandemic allows it, or have nice cars.

You poor work/life balance it concerning though so you might want to consider if you can focus more on that while you still have kids living at home for a few more years. Buying a more expensive house might make that worse than better.

A boat is even a possibility but that would be a good topic for another thread since they can be real expensive with all the ongoing costs and work and you may only use it a limited number of hours each month.

My situation was a lot different but I live a pretty nice but middle class lifestyle but a lot of people that I know have fancier houses and cars. I ended up deciding to retire when I was 58 and that surprised a lot of people. It was interesting and a bit awkward to see the reaction of some people who had were my age who had more expensive lifestyles but were nowhere near being able to retire with that lifestyle even if they work a lot longer.

I didn't try to crunch your numbers but I would suspect that it might not be all hard for you to retire if you want to by the time your youngest kid heads off to college if not before.

You could also consider if moving to someplace else when you retire where the typical lifestyle values are closer to yours would be a good option for you. I have never lived there but Miami has a bit of a stereotype as being a place where the "lifestyles of the rich and famous" is important. Even places and hour or two away might be more down to earth.

There will always be people with more money and nicer things than you too so that may just be the way it is so you need to learn to accept that.
Last edited by Watty on Fri Sep 23, 2022 9:55 am, edited 1 time in total.
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HMSVictory
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Re: Whats the smart move for family that has outgrown home?

Post by HMSVictory »

What is the price of a single family home that you would like to own AND has a good public school system?

You have $500k equity in your current place... if you can move up in cash to a 700k or 800k house and get what you want I would in a heart beat.

I moved from a $750k house to $1M (in cash) and it was one of the best decisions I have ever made... also in a high cost of living area.
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ElmoHongZito
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Re: Whats the smart move for family that has outgrown home?

Post by ElmoHongZito »

HMSVictory wrote: Fri Sep 23, 2022 9:54 am What is the price of a single family home that you would like to own AND has a good public school system?

You have $500k equity in your current place... if you can move up in cash to a 700k or 800k house and get what you want I would in a heart beat.

I moved from a $750k house to $1M (in cash) and it was one of the best decisions I have ever made... also in a high cost of living area.
Not allot of inventory for sale but I would say right now between 1.2 and 1.5M. There is a municipality (old homes) not far from the girls school that I looked at. Since its a charter school we can live outside of our current municipality and still attend that school. I just don’t know if that is a smart move or what I even qualify for at this point in terms of financing. Plus, like I said, there is not much for sale there.
carloslando
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Re: Whats the smart move for family that has outgrown home?

Post by carloslando »

The 9th grader will soon be off to college and then even this 3-bedroom might feel too big. At least that was our experience.
We brought up two of our kids (& had in-laws living with us for 3 months at a time some years) in a 3-bedroom 1500sqft house and rarely felt the need for a large backyard, an extra room or a pool. Now that one kid is off to college in a different city and the in-laws no longer visit, this space feels too big.
Also, I am glad it is nearly paid off: the kid who is off to college was accepted at their 'dream/stretch choice' which was significantly over what we had budgeted in our 529, and not having a mortgage will help me cashflow the rest of the education expenses. You could turn that extra mortgage/taxes of having gone for a larger home towards a bigger retirement nest-egg (or help pull in the date when you want to be 'done', or take extra vacations to nice places and build memories before the kids are out of the house)
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HMSVictory
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Re: Whats the smart move for family that has outgrown home?

Post by HMSVictory »

ElmoHongZito wrote: Sun Sep 25, 2022 9:30 am
HMSVictory wrote: Fri Sep 23, 2022 9:54 am What is the price of a single family home that you would like to own AND has a good public school system?

You have $500k equity in your current place... if you can move up in cash to a 700k or 800k house and get what you want I would in a heart beat.

I moved from a $750k house to $1M (in cash) and it was one of the best decisions I have ever made... also in a high cost of living area.
Not allot of inventory for sale but I would say right now between 1.2 and 1.5M. There is a municipality (old homes) not far from the girls school that I looked at. Since its a charter school we can live outside of our current municipality and still attend that school. I just don’t know if that is a smart move or what I even qualify for at this point in terms of financing. Plus, like I said, there is not much for sale there.
I moved up in house 20%. I carefully considered it and went back and forth over it. 2x the price is throwing a big red flag out at me.

Can you pay cash for 1.2M to 1.5M without destroying / cleaning out your retirement? What is your annual income?
Stay the course!
er999
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Re: Whats the smart move for family that has outgrown home?

Post by er999 »

ElmoHongZito wrote: Fri Sep 23, 2022 9:01 am

I think what frustrates me the most is that living in Miami I am surrounded by tons of people that have the house, the boat, the nice cars, the traveling, the friends, and what appears to be a work life balance all while having less than a couple months in reserves to maintain that lifestyle and not having much in terms of retirement goals or plans. Many sitting on some real estate equity because home values here have shot up like crazy.

Miami has a lot of nice amenities but it always struck me as a city where people who made their money elsewhere went to spend money. Either short term when on vacation or long term residents after making (honestly or not) a fortune elsewhere. Think of star island — most of those people building those houses didn’t make their money locally as far as I know. There will always be people with more money particularly there.

If you like your neighborhood and your kids like their schools (and they are high quality) maybe stay put and spend some of the savings on buying or renting a boat once in a while or other less expensive amenities and see how you feel then. If your oldest only has three years to go and your baby isn’t born yet sounds like the townhouse isn’t too small yet and worse case some sharing of rooms for 2 years only.
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