Help me figure out if I can make this work... (San Francisco: for sale, rental)

[Spannerhead]

Originally Posted by Ruth4Truth

Wait, what? Why wouldn't you sell your place in TN? Planning to return, someday? Pay off those rentals in 15 years instead of 30, and you'll have a nice chunk of change coming in. It's easier than you think, by paying a little extra on the principal every month. You'd be surprised how that adds up.

Well we would, but we would have to find housing in CA in the meantime while we're waiting for the TN home to sell, and try not to jerk the kids around too much with moves and different schools.

Our timeline for unloading the NC rental property is 1.5 years. My brother and sister in law are renting from us and that's how long we've given them to complete the process of buying, otherwise we'll have to offer it on the market. But that's a whole other story.

[shooting4life]

Originally Posted by smashystyle

I don't think you could sustain your same standard of living on $115k. That said, I think people exaggerate the cost of living a lot. Most households in the Bay Area get by on less than $115k. Even in San Mateo County -- where San Bruno is and which is wealthier than average in the area -- the median household income (as of the 2010 census) was $87,751. That said, the way people get by is to live in way smaller/less nice housing than you're used to, by paying a high percentage of their income for housing, or by commuting a long way. One thing to consider is that San Bruno is on a BART line, so you could commute in from the East Bay where housing is generally more affordable. Here's an example of a house for rent pretty close to BART in Pleasant Hill, which has pretty good (though not great) schools: 3 Lone Oak Ct, Pleasant Hill, CA 94523 is For Rent - Zillow But that's an hour and six-minute BART ride each way.

People can afford to live in these expensive areas because they purchased their own decades ago. Their wages match their original purchase price, not the current market. Looking at median household income is a bad way to determine affordability. I make twice the median income and cannot afford a house in San Bruno. Another example is my grandparents live in the Belmont hills on their fixed income, (social security and a modest pension). They can afford to live their because the purchased the house when it was 17k and paid it off before they retired. They and the many like them bring the median wage for cities way down.

This of course is exacerbated by prop 13, but that is a topic for a different thread.

[smashystyle]

Hey, you could live in Hayward. It's been the talk of this forum lately, you could find a place in your budget, and maybe get to San Bruno in 30 minutes if you're lucky.

But seriously, it sounds like you've got some unique issues with your different properties. Normally, I would say that a family of four could get by on $115k, commuting to San Bruno. But you would need to sacrifice on commute, live in a smaller place (2 beds), or live in a not-as-nice (worse schools, but not dangerous) neighborhood. You can't have it all on that budget. Btw, I calculated your post tax income as $6500/month. It might be more if you have deductions, like mortgage interest.

[Fran66]

Originally Posted by Tulemutt

So, my question is: are you looking for a divorce?

I agree. If the wife is against the move, it won't work. Not to mention that there's something to be said about staying put in a place where you've lived all your life.

If you're bored with your life -- and you may be -- find another to liven it up with making such a drastic move.

I was serious when I said vacating in CA is more fun. Choose a city, like SF, and spend 10 days there. If you can afford, do it again in 6 months. (You can't see SF in just 10 days.) Then try LA or San Diego or Monterey. Or spend a trip driving down Hwy 1. And then there's Yosemite. And so much more. I realize this is a little off topic, but, oh well.

And who knows -- after a few vacations in CA, your wife may be more amenable to moving there.

[Ruth4Truth]

Originally Posted by Spannerhead

Well we would, but we would have to find housing in CA in the meantime while we're waiting for the TN home to sell, and try not to jerk the kids around too much with moves and different schools.

Our timeline for unloading the NC rental property is 1.5 years. My brother and sister in law are renting from us and that's how long we've given them to complete the process of buying, otherwise we'll have to offer it on the market. But that's a whole other story.

Well, if they buy, you can invest the money for income, and supplement your regular income with that. That could work.

[Ultrarunner]

Originally Posted by shooting4life

People can afford to live in these expensive areas because they purchased their own decades ago. Their wages match their original purchase price, not the current market. Looking at median household income is a bad way to determine affordability. I make twice the median income and cannot afford a house in San Bruno. Another example is my grandparents live in the Belmont hills on their fixed income, (social security and a modest pension). They can afford to live their because the purchased the house when it was 17k and paid it off before they retired. They and the many like them bring the median wage for cities way down.

This of course is exacerbated by prop 13, but that is a topic for a different thread.

Folks are buying homes at a rapid pace and they are not getting funny money loans to do so.

I just sold a nice 2000+ square foot home in Pleasant Hill with multiple offers and everyone had large down payments, excellent credit and employment... as in the law enforcement, fire, high tech and bio tech...

[calicoastal]

Originally Posted by Spannerhead

Thanks for the link and the input. FWIW I was anticipating the fact that our standard of living would decrease a bit (renting a 3B, 2BA townhome instead of owning a 3B, 3BA house, for example). The goal would have to take a small standard of living hit but keep the expense percentages roughly the same vis-a-vis our income, which would make it easier to pay down our debt (since that number is fixed) and give us a leg up salary-wise for the next career move. As someone else pointed out elsewhere, it's easier to control expenses than income. But if we can't even maintain a basic SOL, then it's a no-go.

Keeping the cost percentages the same isn't really a good way to go about it. As your income goes up, you can spend a greater percentage of your income on housing and still have more absolute dollars left over for food, entertainment, travel, savings, and so on.

For example, you make $75k/yr and spend around $2k/mo on your house if you include tax (5% in Chattanooga...?) and insurance. That leaves you around $51k/yr before taxes. Say you move to the Peninsula, make $115k/yr, and spend $4k/mo on housing. That leaves you around $67k/yr before taxes, despite the fact you are paying a much higher percentage of your income towards housing (42% in CA vs 32% in TN). You will have $16k more left over in CA before taxes. Even after taxes, you should end up ahead.

Thus the Bay Area can be a desirable place to live, financially speaking, despite high housing costs, as there are many higher paying industries here like tech, biotech, and finance. Other costs aren't much higher than other areas, in general, or make up a small fraction of overall expenditures.

[Ultrarunner]

Some of my friends that now live in other States like Texas spend a lot more on utilities... especially electricity than someone living in San Bruno, SF or Oakland.

The climate is so mild as to make A/C a rarity and many I know use little heat.

[shooting4life]

Originally Posted by Ultrarunner

Some of my friends that now live in other States like Texas spend a lot more on utilities... especially electricity than someone living in San Bruno, SF or Oakland.

The climate is so mild as to make A/C a rarity and many I know use little heat.

There are many places in the Bay Area, let alone California where that is not true. Though it is the case in San Bruno.

But energy prices are much lower in the other states to compensate for using more energy.

[Ultrarunner]

2300 square foot older home with single pane windows, 30+ year old appliances and typical gas and electric bill averages about $60 a month...

My friends in Texas have had $600 electricity bills...