Crowdsourcing one to the great minds of OOT, what do you think my budget for a house should be?

Income ~220k/yr pre-tax (I live in a medium-tax state in the US). Likely getting bumped to the 300ish level within a year or two but it's not a lock

No debt

Single guy, would like to expand my family by 1-2 medium-large dogs (big reason I want a house!) and am open to getting married but don't want kids, so no large foreseeable expenses coming down the pike

I anticipate having some decent looks at active investments over the next 5-10 years, so my opportunity cost for house $ is higher than for most, though not wildly so

Putting down 20% should be fine if necessary but obviously less down is better so long as I'm not getting ****ed too hard on higher rates / fees. 790 FICO

Thanks!

Oh one other really important variable: I'd rate my job security at something like a 7 or 7.5/10. It's not as if I work in the public sector or anything but I think I'm mostly impervious to cutbacks that aren't drastic and the company I work for is thriving in the recession.

There’s a million variables but the rule of thumb is 2.5-3x income. Depending on where you live that could be a 2 room bungalow or a 6 bedroom house.

A single guy spending 600k in Cincinnati seems pretty dumb. If you’re in L.A you’re gonna need to stretch that budget a little.

Yeah. I'm in an expensive part of Northern VA. Probably akin to a cheaper part of LA, though nothing close to Manhattan Beach.

Depending on how nice the place is and the exact location, $500-550/sq ft is probably around what I'm looking at.

i thought it was no more than a third of post tax $? which for a 30yr would be about 6x salary

so a completely standard 3br home is a million dollars? can you commute ten extra minutes and get a bigger house?

pretty vague description is hard to answer

Correct a 2k sq ft house is around $1 mil for the neighborhoods I want to be in. I don't have a commute, that's not a factor.

I guess more than anything what I'm looking for is a sanity check. I know people in similar financial situations to me that have spent $1.5 on a house and people richer than me that rent $1500/mo studios. I know there's no "correct" answer to this question, I'm here to collect data points on what range 2+2ers would be looking in.

I’m a bit of an outlier. I hated my big house and being in the burbs so I sold it and bought a dirt cheap house in a safe but slightly dodgy inner ring suburb that seems like it could be the new hip spot in a few years.

My mortgage is 60k. I make 90k. Best decision I’ve ever made. I couldn’t go back to paying massive bills every month.

Obviously that’s not really an option for you, but were I you I would buy smaller than 2k sq ft in a less desirable neighborhood and spend the rest of my sweet life never worrying about the size of my mortgage payment. Take the rest and invest/travel/hookers and blow.

As a single guy with 2k sqft, I would see no issue living in something between 1,000 - 1,250 sqft. Good luck finding something that size though.

We talkin' Great Falls/McLean, or Ashburn? I've lived all around Northern VA. And yeah, brand new townhouses go for 500-550k in Ashburn, SFHs starting 700-800k.

You being single, I don't know. The chance someone comes into your life and has a different idea of things / where they want to live / career / commute / etc .. the chances of moving in <5 years seem pretty high, in which you're likely to lose $ due to the transaction costs, etc.

Personally in that spot I'd rent something I'm comfortable with and wouldn't scare any potential catch off, then figure it out from there.

unless the surrounding areas are pretty bad id either live somewhere nicer but cheaper or try to spend less per month. as said above, changing future is pretty likely and in a few years you wont have much equity in the house so it could be a loss. or the utility of lower payments means more money in the same timeframe and you get a better deal/pay cash for something you dont need to ask about. especially if you foresee needing a significant chunk to invest, i feel like having that saved up early will help any possible worry that could come from not having it on hand when the time comes.

very few places in northern VA are bad. you're just trading time (commute) for $ really.

I’d look at parts of Fairfax county where the surrounding public schools aren’t as highly rated since you don’t want kids. Shouldn’t cost you seven figures to get a single family home for you and your dogs even if you want new construction.

Are you a cheap bastard trying to save/invest as much money as possible, do you enjoy traveling to other parts of the world multiple times a year, are you a foodie spending 4 figures a month dining out, do you regularly go to Vegas and drop 5 figures on hookers and blow, do you want to retire at 50?

My wife and I have a combined income that is about double yours, we bought our house for $450k. I think we were making around $250k at that point so the price still left us plenty of room to travel, save and not have to worry about random expenses that always come with a house. If we were looking for a new home now our budget would probably be $700-$800k, spending 1+MM in your situation seems like like a terrible idea and 1.5MM is insanity.

My house is 1600sqft and 1.5x my annual income. It's just my daughter, 3 cats and myself. More than enough room for us; 1200 sqft would be plenty for you and dogs.

What do you do for work?

ETA: What the hell do all of y'all do for work to be making so much?

How old are you? (Well really are you old enough to be sure you or potential SOs will never want kids?). Because that variable changes everything from budget/house size/location
/etc.

I’m not a financial wizard but if genuinely sure your not having kids then can probably throw all the conventional personal finances rules out the window and just look at the straight numbers for your situation

Joe,

If you might get married in the next 5 years, then I would definitely rent. Odds are high that wife is going to want a different place.

If you want a place with a yard, rent a place with a yard.

Thank you for all the help!

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Sick sick brag on the mortgage Hoagie. I mostly agree with you on minimizing housing expense -- didn't want to say this at first so as not to bias responses. The devil's advocate argument, and a big reason I made this post, is that the idea of someone lending you a huge pile of money @ 3% seems really awesome.

Fully agree. In my area it's actually possible to find townhouses @ ~1,200 SF! There's this weird dynamic though where 1700 SF places cost barely more than 1200 SF places. I'm trying to understand why that is.

Good question. I'm almost exclusively looking in Arlington. It's a huge priority of mine to live in a walkable area. If I had to handicap where I would buy (if I buy) I'd guess 75% Arlington, 15% Alexandria, 5% National Harbor, 5% field.

Yes to most of the above! After posting this I realized it's more a question of personal preference that I gave it credit for. Thanks, these were obviously the right questions to ask.

I turn 34 in a few months.

I think this is generally good advice but my only counterpoint is that my theory is a ~1600 SF townhouse, if I buy it, would be considered much "nicer" 4 miles from DC than it would in, say Cleveland, if that makes sense. In other words, if I lived in Cleveland I think it'd be a stone lock that someone I marry would be itching to move to a bigger place, whereas here people are used to a lower standard of living relatively speaking.

One thing I feel pretty good about in terms of my theory of homebuying as a single guy: it's a bad idea to pay up for updated finishes. Tell me if you think I'm off base here, but as an example, a place with this kitchen and similar quality bathrooms is going for $608/SF:



While a place with this kitchen and similar bathrooms is going for $409/SF (this isn't the only thing accounting for gap in price, but from data points I've seen around the neighborhood it's for sure a big factor):



The thing is, while I definitely would want to update the 2nd kitchen before selling, it's perfectly functional and acceptable to me, and I might not sell for 10-20 years for all I know, so I can defer that expense to far in the future.

I see higher ceilings in pic 1. I would imagine house 1 is newer in a better neighborhood with better schools.

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Nah house 1 is about an 8 minute walk from house 2.

That doesn't address whether one house is newer. If you upgrade house 2 to similar quality finishes then you're going to spend most of the difference. If you've never done a remodel you're underestimating the cost, time, work, and hassle involved.

QFT.

Everyone told me that remodeling it is going to "cost way more than you think". So, I adjusted my expectations based on that information and it still ended up costing way more than I thought.

It's a little hard to tell because the picture of the updated kitchen is distorted with the wide-angle lens, but I don't think the ceiling is any higher in that house. The cabinets are just shorter. Look at the relative size of the microwave to the cabinets.


If you like a house that hasn't been updated, are ok living in it, and plan to stay there for 10+ years, go ahead and get it. If you update it now it will just be dated when the time comes to sell and you'll need to do it again. But you really need to be ok with its current state.

I buy houses that need updates often, because you can get a really good deal, but I'm also handy and do a lot of the work myself and know how to find the budget contractors for basic stuff that doesn't take huge amounts of skill, but I just don't want to do myself (laying tile and hanging drywall, for example).

If you're just going to get three quotes from the first three hits on Angie's List, yeah remodeling will cost a lot more than you think. It might take less time/disruption, though.