Monday, March 12, 2007

We made a housing decision...the expensive one

Well...we made a decision...the expensive one. Actually, we spent an inordinate amount of time last week looking at many houses.

We ranged the top houses and listed the top five best houses. Their prices ran from $750k to $850k to $950k to $1.2M and another in between. On our last day of looking we decided to look at one more house that had just come on the market.

Boom - it hit us! This was the one. Beautiful house. Very large. Lots of bed rooms - more than enough space for in-laws, children and a nanny! Great neighborhood. Not the most expensive house in the area. Phenomenal school system. Very safe. Costco not too far away. Not too far from my wife's office and from mine. Seems perfect. Unfortunately, it's $1.1M, which is a bit past our comfort zone. We won't have to do anything right away.

We ran the numbers quickly. Decided we could afford it. We put an offer in. Less than what the sellers want, but more than what we would love. We'll see what happens over the next few days. It certainly will be interested.

On the trip home, we ran the numbers again. Our new budget has quite a few assumptions about taxes and paychecks. I'll need to run through the numbers with my accountant to get a more solid idea. The key point is that we should still be able to save some money each month - in addition to a very generouse reserve for household maintenance, accrual for vacations and assumptions for regular spending.

We also anticipate income increases (if I can keep my job - so far everything looks good), which will increase our rate of savings. However, we certainly won't be able to maintain our current savings rate due to the doubling in housing costs.

The real challenge - although a controlable and measurable one - is managing expenses between the period of the move and when my wife starts her new job. We'll have about 3 months without her portion of our monthly earnings. We'll manage, but it will be painful.

I'll have to draw up a detailed cash flow plan before we're comfortable with everything that's happening.

We do adore the house and are very excitied about the possibility. The next step is seeing if they accept our offer - I expect they will counter a bit.

If timing weren't everything ... I have a major presentation to our joint venture partner's CEO coming up (several weeks ahead of schedule). At the same time I'll need to arrange for building inspection, etc.... Sometimes life can suck despite a rosey future!

Regars, makingourway


Anonymous said...

I hope everything works out for you and your family. Congratulations on the house! I can't wait till I buy a house. It'll be my first.

traineeinvestor said...

Good luck with teh negotiations. From what I understand about the current state of the the US housing market you should have some room for negotiation on price (and possibly other terms).

Better to buy a house that you are confident you will be happy with for a long time than have to trade up later.

Denise Mall said...

My niece is a nanny in an area much like I suspect this home is located. If this is the case, you will love the neighborhood.

Good luck to you. The luck is for what is the best for you and yours, not always what you feel is the best at this time.

fin_indie said...

Congrats! Can you share the neighborhood your house is in?

Anonymous said...

Good luck!

Anonymous said...

I'm guessing you must be in CA? Those are some fairly steep housing prices. We live in the NW and even our prices are fairly high, but thank goodness I can get a nice house here for $500K!

Looks like you guys are tracking to your goals nicely!!

Anonymous said...

What will you do if she doesn't like her job or the people she works with? Are there other companies nearby that she could work for? You've had some time to test drive your new job to see if it's a good fit. You don't want to stretch yourselves to buy house that you can't afford on one income.

Anonymous said...

Congrats, on the find.

No immediate construction required and space for all: priceless.


The Sarcasticynic said...

We were saddened when we lost a bid on our dreamhouse. We had a deadline and were running out of time, and finally "settled" on a home nearby. Turned out it was much better than the one we "lost."

Regarding getting the expensive one, in five years it won't seem that it was so expensive after all.

1MansMoney said...

Good luck getting the place. It sounds like you've put a lot of thought into this.

How many sq. ft. is the house? How many beds/baths?

mcgill said...

I agree with anonymous...if you are trading up in house on are asking for trouble(you could lose yours while she waits to start). Your emergency fund would go quickly paying two mortgages without any income. I reccomend paying off the first house and paying cash for the subsequent purchase. It would be silly not too at the salary your wife and you make(I can only guess)...

Shelly said...

Hi. I really like your blog. Was wondering if you want to add it to my directory? Thanks Shelly

Anonymous said...

Could you keep us posted on the home buying process (such as how you arrive at the final price of your home and how you decided apon what home inspector to use - ie little details that may help a first time home buyer)