Get by on $180,000 a year in Honolulu? (sales, real estate market)
OahuIncludes Honolulu
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We were okay with less than that but we weren't purchasing real estate either. Relocation expenses paid? If you don't plan to be there forever, why buy? On the other hand, real estate value never goes down out there, right?
Assuming the question is legitimate - (or if not, I'll at least try to make this useful).
Op asked if $180K was realistic to buy a house (so I'm excluding a condo) and have a decent lifestyle.
The first part is easy - a $180K income, little/no debt, great credit score, 20% down, and the ability to show a bank you still have some money left over should get you qualified to buy you a house around the median on Oahu, although it would be a stretch in places like Hawaii Kai or Kailua that a mainland person would generally consider "decent" - but certainly doable at the median on the less desirable West Side.
The second part is not so easy to answer - what is a "decent lifestyle" - do you want to travel, do you want to save a lot of money, want a nice car, or like many who wander to city data, just want the "simpler" lifestyle, surf, not materialistic, blah, blah, blah.....it depends.
Granted OP is single with no dependents, has 20% cash to buy a place + 12 months interest reserves + more assets than liabilities (after the 20% cash), he could comfortably afford a $1.25M home and have plenty of money to burn on a fabulous lifestyle and still save for retirement. Anything above $1.25M would require a more frugal lifestyle... which isn't that rare in Hawaii.
$1.25M will buy a modest-sized beautiful home almost anywhere on the island. Maybe not necessarily where the richest live but definitely in a very desirable neighborhood.
Please explain how a single person with no debt, no dependents on $180K salary cannot afford a $1M mortgage and live a comfortable lifestyle.
Enlighten us.
That's nearly $6,000/month+- mortgage with a jumbo loan, property tax, insurance, maintenance, etc......so qualifying is no picnic with a monthly net of $9,300+-
That's nearly $6,000/month+- mortgage with a jumbo loan, property tax, insurance, maintenance, etc......so qualifying is no picnic with a monthly net of $9,300+-
$9,300 net? You're oversimplifying.
$1M jumbo mortgage = $5,600/mo. Of that, $45,000 is tax deductible in year one ($43K year 2, $42K year 3, and so on).
After interest deductions on $180K income, you'll have approx $27K in fed and $11K in state tax liability. You are now left with $142K or $11.8K/mo.
Of that $11.8K/mo, $5,600 goes to the mortgage, $365 to RPT, $160 to insurance, $250 to utilities (assuming home has PV), $400 to monthly home maintenance and upkeep... leaving you with $5,025/mo AFTER TAXES to live.
I'm pretty sure any SINGLE debt-free guy with NO housing and NO utility cost can live extremely well for $166/day. Heck, I could have dinner at a nice restaurant 7 days/week with that much cash to spend.
However...
For $1.25M you can easily find a decent sized home with a small rental in it. Assume $1,500/mo in rental income for the rental unit. Of that $1,500, $1,200 is net. OP now has $6,225/mo to live.
Again, $180K is a lot of money for a single person living on Oahu. You can live VERY well with that kind of pay. Definitely in the top 5%.
When you give your pay stubs to the bank to qualify and they have issues with the mortgage for $1,000,000 - I wonder how they would respond to how "oversimplifying" they are being. Banks don't take into account potential tax refunds - and at that income, you start losing the property tax and state income deductions (no small #) to that little thing call "AMT".
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