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Old 12-25-2016, 06:40 PM
 
Location: Saint John, IN
11,583 posts, read 6,702,884 times
Reputation: 14786

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I understand the home is more of a want than a need, but I can't comprehend having a home that size for two people. At any rate if you have no debt but what you listed I think you could easily afford it; however, for the amount of income you make your retirement savings is extremely low! Personally if it was me I would buy a smaller least expensive home and sock more away for retirement.


Also as others have said, with a home that big, you will most likely resell it to a family later. If schools are bad, you will have a hard time selling! Typically if schools are bad, the area is bad a well!
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Old 12-25-2016, 07:36 PM
 
Location: SoCal
14,530 posts, read 20,056,677 times
Reputation: 10539
A homeowners policy includes coverage for theft etc. A landlord protector policy covers the basic property and structure, and includes additional features such as loss of rent caused by casualties such as fire etc.

YOU need a landlord protector policy, your RENTER needs rental insurance, your LEASE should require your renter to provide coverage for you as a lease requirement, for example their dog bites somebody they must cover liability or it could pass on to you.

As a landlord you should also be aware of the following:

Unless converting a residence to a rental you will probably pay about 1 percent more mortgage rate as a commercial loan. If converting it's likely your existing mortgage will suffice if you have lived there for a minimum time (2 years?).

You will not be able to claim a homeowner's exemption on your property taxes.

You will likely be required to register your rental property as a rental (in some states rewards are offered for reports of unregistered rentals) and you will likely require a tax license and monthly rental tax returns to pay your local rental "sales" tax.

Oh, and get a good CPA. And beware recapture of depreciation when you sell the rental property.
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Old 12-25-2016, 08:38 PM
 
Location: Saint John, IN
11,583 posts, read 6,702,884 times
Reputation: 14786
Also, $1900 a year for homeowner insurance for a $500k home is WAY too expensive! Shop around for a better rate! If you have good credit as I'm assuming you do, it should be more like $1200!
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Old 12-25-2016, 08:44 PM
 
18 posts, read 24,818 times
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Quote:
Originally Posted by FalconheadWest View Post
Pre-qualified doesn't mean approved. Once they fully look at your situation, numbers could definitely change if your income is a considerable difference.

If it's not that different, buying at $500k with $175k income is not over any limit by any means. In my area, with typical debts and good credit, you could qualify for $500k with less than $125k income if putting 20% down. You haven't said what the averaged income the lender is using.
I'm not worried about getting the financing. It's more a question of whether I SHOULD.
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Old 12-25-2016, 08:55 PM
 
18 posts, read 24,818 times
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Does it make any sense to pay off the 2 cars, leaving $500/mo extra in the budget...or better to hang on to the cash?
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Old 12-25-2016, 09:08 PM
 
18 posts, read 24,818 times
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Quote:
Originally Posted by janster100 View Post
Not enough information. What percentage of your pay do you save for retirement. You describe your debt as "little". How much is "little"? How much is your investment property worth and how much do you still owe on it? Do you have any big expenses coming up, such as repairs to the rental, upgrades or furnishings to the home you want to buy?
No other debt than what's listed.
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Old 12-25-2016, 09:10 PM
 
18 posts, read 24,818 times
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Quote:
Originally Posted by Hemlock140 View Post
It seems a reasonable price for your income, as long as you are not taking a lot of international vacations, eating at expensive restaurants a lot, or other spending not mentioned. A house can be a good part of your retirement portfolio, assuming in an area that will go up in value and you stay there. Ours for example, cost $190k and is now worth $700k, and we plan to downsize when we retire in 4-6 years, and if all goes well, pay cash for the next house.
The house will likely not appreciate much over time. Current owners paid $440k in 2008 and it's worth about $495k now. Values don't move as quickly in my part of the country as yours...unfortunately!
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Old 12-25-2016, 09:11 PM
 
1,369 posts, read 2,131,829 times
Reputation: 1649
With that retirement amount, I wouldn't do it. You are so far behind, it is cringe-worthy.

And what would happen if your business failed?
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Old 12-25-2016, 09:15 PM
 
18 posts, read 24,818 times
Reputation: 15
Quote:
Originally Posted by loves2read View Post
House that large usually means family vs couple for resale
Fact that you know schools aren't that good means resale could be problamatic---w/o knowing the local specifics...

Personally as a couple who moved up to larger home after our kids were out of house--so similar situation--
We paid cash, area has decent but not the best rated schools, and neighborhood is good location, strong neighborhood values---we are considering selling and downsizing...
We basically live on ground floor....wasted space, money to heat/cool, higher taxes...

WHY do you want THIS house??
This house is just an exceptional example of turn of the century construction, amazing details, high ceilings, big mantles...I could go on. The foot print of the house makes for a very large common area rooms which we'd get a lot of use out of. It's 3900 sqft and each room is very spacious. It just has a feel that would be difficult to find elsewhere at this price. Trouble is, there are 2 bedrooms and a bathroom we honestly don't need. I could make a home office out of one of them.

Realistically, we should probably by a 3br for $380k or so. Maybe we just have a bad case of house fever.
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Old 12-25-2016, 09:16 PM
 
18 posts, read 24,818 times
Reputation: 15
Quote:
Originally Posted by CGab View Post
Also, $1900 a year for homeowner insurance for a $500k home is WAY too expensive! Shop around for a better rate! If you have good credit as I'm assuming you do, it should be more like $1200!
It's an all-brick 3900 sqft home built in 1899 w/a replacement cost of $629k. Maybe can insure it for just the purchase price instead of replacement cost?
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