Instructions to my son on how to buy a house in the SF Bay Area (San Francisco: rental market, student loans)

[WithDisp]

Originally Posted by TR95

Numbers, here you go. $900k house with 20% down equals PITI of $4,300/month at 3.625% interest rate. Someone making $200k grosses $16,700 per month, maybe just under $11,000 per month net. There is $6,700 left over per month to cover health insurance ($300), gas and electric ($175), cell phone ($150), gas ($100), 401k ($1,500), car payments ($600), groceries ($500), dinners out ($300), vacations ($500), kids activities ($1,000). Seems like it can be done on $200k to me. What did I miss? College tuition, sure guess that is another one. Good thing there is $1,500 left over. Haven't budgeted like this since our kids were small, but these are the ones I remember. Let me know, I'm open to suggestions if there is disagreement here as I'm done wasting my time on this.

For that to be accurate you'd have to pencil in saving PRE-that point for for the down.

So, same couple. Change their 4300 month PITI to 2500 a month rent. 180,000K (20% down) / 5 years / 12 month a year = $3000 a month.

So Prior to this point, that $4,300 is $5500.
There's still 300 left over to spare- BUT! BUT! BUT! BUT!

That's on a 200K salary! (or two $100K salaries).
Those are still Top Earners nationally.

Most people are NOT earning 100K.
The advice to son leaves out -

DONT WORK in the majority of the Bay Area industries.
Don't be a hotel manager, don't be a teacher, don't be a social worker, don't be an auto service advisor, don't be a house painter, don't be an airline flight attendant, don't be a ballet dancer, don't be a tour guide, don't be a postal employee, don't be a carpet salesman, don't be a cafe manager, don't be a retail manager, don't be a taxi driver, don't be a museum docent, don't be a security guard, don't be a customer service representitive, don't work in print journalism.

[TR95]

Originally Posted by WithDisp

For that to be accurate you'd have to pencil in saving PRE-that point for for the down.

So, same couple. Change their 4300 month PITI to 2500 a month rent. 180,000K (20% down) / 5 years / 12 month a year = $3000 a month.

So Prior to this point, that $4,300 is $5500.
There's still 300 left over to spare- BUT! BUT! BUT! BUT!

That's on a 200K salary! (or two $100K salaries).
Those are still Top Earners nationally.

Most people are NOT earning 100K.
The advice to son leaves out -

DONT WORK in the majority of the Bay Area industries.
Don't be a hotel manager, don't be a teacher, don't be a social worker, don't be an auto service advisor, don't be a house painter, don't be an airline flight attendant, don't be a ballet dancer, don't be a tour guide, don't be a postal employee, don't be a carpet salesman, don't be a cafe manager, don't be a retail manager, don't be a taxi driver, don't be a museum docent, don't be a security guard, don't be a customer service representitive, don't work in print journalism.

My reply was to someone that said you needed over $300k to do this. Don't care that they are top earners or not. My scenario is $200k. If you have a problem with my math and budget let me know. Otherwise, these people can save up for 5-10 years to buy their house, just like the majority of people that own houses do. I was 32 and considered myself luck to do it back then and it was only 10% down.

[MountainHi]

Originally Posted by WithDisp

\
Most people are NOT earning 100K.
The advice to son leaves out -

DONT WORK in the majority of the Bay Area industries.
Don't be a hotel manager, don't be a teacher, don't be a social worker, don't be an auto service advisor, don't be a house painter, don't be an airline flight attendant, don't be a ballet dancer, don't be a tour guide, don't be a postal employee, don't be a carpet salesman, don't be a cafe manager, don't be a retail manager, don't be a taxi driver, don't be a museum docent, don't be a security guard, don't be a customer service representitive, don't work in print journalism.

My reading of the OP gave the impression he was talking to precisely that lower-earner level. He mentioned taking extra jobs, living with parents to save for the downpayment (the whole thing would be impossible without this, in today's market), and other austerity measures to pull it off. Some of Ultrarunner's suggestions about finding unusual opportunities in the market were also helpful. The overall tone has been that it's very challenging for mid-range earners, but not impossible with sacrifice, compromise and some resourcefulness.

Whether or not someone is willing to make those sacrifices and compromises, and buy a marginal property being auctioned off, or in need of repair, or located in a transitional neighborhood, is a personal decision. Some may bag it and move to where that degree austerity isn't necessary. But whether or not to make the decision to take it or leave it and move elsewhere isn't the topic of the thread.

[Ultrarunner]

Originally Posted by WithDisp

For that to be accurate you'd have to pencil in saving PRE-that point for for the down.

So, same couple. Change their 4300 month PITI to 2500 a month rent. 180,000K (20% down) / 5 years / 12 month a year = $3000 a month.

So Prior to this point, that $4,300 is $5500.
There's still 300 left over to spare- BUT! BUT! BUT! BUT!

That's on a 200K salary! (or two $100K salaries).
Those are still Top Earners nationally.

Most people are NOT earning 100K.
The advice to son leaves out -

DONT WORK in the majority of the Bay Area industries.
Don't be a hotel manager, don't be a teacher, don't be a social worker, don't be an auto service advisor, don't be a house painter, don't be an airline flight attendant, don't be a ballet dancer, don't be a tour guide, don't be a postal employee, don't be a carpet salesman, don't be a cafe manager, don't be a retail manager, don't be a taxi driver, don't be a museum docent, don't be a security guard, don't be a customer service representitive, don't work in print journalism.

You could be a trash collector in San Francisco or a Nurse at SF General...

As to many of the others... it would help if you started your own House Painting Business, Floor Covering Business or even a Security Business.

I think you are lamenting the demise of the Union Worker in Manufacturing...

[Ultrarunner]

OK... I will post this again...

Young high school sweethearts the first in their family to go to college...

He is African American and is a police officer and her family is from the Philippines and she became a Nurse.

This 24 year old couple bought a nice little home in San Leandro that had lots of upgrades... no silver spoon or money tree...

The first full year they made 220k between them for overtime...

Not only is it possible it happens...

[boulder2015]

https://www.city-data.com/city/San-Le...alifornia.html

Yep, you are right. It is entirely possible for a couple like your example that is earning 3.7 times the median household income in san leandro, which was 63k in 2013.

[Ultrarunner]

Originally Posted by Hangul313

What year was this in and how big was the house? A 2 bed room tiny house goes for 400K in San Leandro. Yes you can technically buy something if 900 Square feet and 1 batrhoom for 400-450K is your thing. I think that is ridiculous personally.

2014 and with the added family room it was just under 1400 square feet.

They had no trouble qualifying... both have government jobs... she works for Highland and he works for OPD>

[Ultrarunner]

Originally Posted by boulder2015

https://www.city-data.com/city/San-Le...alifornia.html

Yep, you are right. It is entirely possible for a couple like your example that is earning 3.7 times the median household income in san leandro, which was 63k in 2013.

There are young people with no family money or position that make their own way in this very expensive area... overtime sure did help and is fairly typical for Police Officers and happens in Nursing.

[CA4Now]

Originally Posted by WithDisp

For that to be accurate you'd have to pencil in saving PRE-that point for for the down.

So, same couple. Change their 4300 month PITI to 2500 a month rent. 180,000K (20% down) / 5 years / 12 month a year = $3000 a month.....

And recall that his advice was to put down a much lower amount than 20%, since apparently all he looks at is monthly payment, as opposed to the enormous amount he's financing for all those years into the future.

[boulder2015]

Originally Posted by Ultrarunner

There are young people with no family money or position that make their own way in this very expensive area... overtime sure did help and is fairly typical for Police Officers and happens in Nursing.

Yep, no argument, those are great careers. But most folks are not making anywhere near that amount.