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post #1 of 33
6/6/10 at 2:54pm
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Edited by yukookoo - 6/26/11 at 5:02am
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post #2 of 33
6/6/10 at 3:50pm
Everything property related is cheap here in KY so my amounts would not line up in, say, California. I want to live in the country and be self sufficient I want a house built exactly as we want (superinsulated, natural materials like strawbale and lime and clay, open public area, high ceilinged living room, fireplace, finished basement, efficient use of space so medium sized feels big). $100k for land and well and septic and whatever. My dream home (for a family of 4-5) will cost $200k to build being frugal about it, so if I had lots of cash available say $300k to make it extra nice. Then I'd put up to $100k into an orchard, outbuildings, veg garden, fences, landscaping, and solar panels. So $500k total for the indulgent version of my dreams.

DH would buy a business with the rest.

So this isn't rhetorical for you, right? Congratulations, what a thing to come to you! I can't imagine how exciting that must be. You'll have to consider just what you want and where. You can get a very rough estimate here http://building-cost.net/ though it doesn't have adjustments for green materials (some cost more, many take less materials and more labor) maybe just pick a higher level on the quality choices for those.
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post #3 of 33
6/6/10 at 4:11pm
Thread Starter 
thanks for the reply!

These are my estimates for owning here in ca as far as monthly costs... i think they are a high estimate though. So this is what i worry about. Say we put a million into a house (which here would buy a really nice house but nothing super gody or outrageous) we would still need to put around 2500 a month into housing! and say we only have one income, or after retirement that A LOT to come up with with no income... I guess its different than having a mortgage I mean we could get rid of most of those expenses and be ok, outside of property taxes, if we cant afford a new roof lets say we get some buckets for leaks?

Homeowners insurance/ earthquack? - estimate 2000 a year
Property taxes 12,500 a year
Utilities: water sewer, electricity - l4800 a year
Repairs set aside 1% of purchase price per year - 10,000
Gardeners - 780

2500 a month.

I dont know what homeowners or other insurance looks like once you own that estimate is for mortgaged property and im not even sure how its different accept that its not forced.

utilities is high thats assuming no solar or anything to cut down on costs.


I still worry about putting money into something that we wont be able to afford long term for some reason. I dont know I guess i am asking what are the risks of overspending on the house?
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post #4 of 33
6/6/10 at 4:23pm
wow! Your utilities really seem high. How big a house does a million get you. Our house is close to 3800 sqft and we only run a couple hundred/month for utilities! So that would be closer to 2400/year.

But, if you realistically can set aside 1%/year for repairs, you will hopefully not be spending that much per year on them. If you had a period of unemployment, you could tap into that for the taxes or whatever.

I guess the risk of overspending on the house is that you wouldn't be able to pay taxes or utilities or whatever, and need to sell the house and downgrade.

Amy
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post #5 of 33
6/6/10 at 4:27pm
Thread Starter 
right now we rent a home thats maybe 1400 square feet and our gas and electric is about 100 a month in the winter when i use the dryer. It's an old home with nothing helpful as far as insulation etc. so i doubled that

water and sewer we pay 100 a month as well and we do what we can to conserve.. so i doubled that as well ?

yeah its a high estimate

we had friends that where renting a million house, they had lots of electronics on all day and teens living int he house, which we dont and they paid around 700 a month just for gas and electric!!! i almost had a heart attack when they told me that...
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post #6 of 33
6/6/10 at 4:47pm
I'd go with as small a house as I could handle living in... and then live frugally and not work unless we felt like it In my area, you can buy a lot of house for 150k. I think I'd probably build a small (less than 1500 sq ft) house that was extremely energy efficient.

How exciting for you, though! Good luck
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post #7 of 33
6/6/10 at 4:51pm
If you have $2 mil, you need a financial planner. Look for an independent (fee for service) financial planner. Don't go for a person who will sell you life insurance or manage stock investments. You want to have your ducks in a row as far as minimizing risk and making sure retirement is taken care of, (and probably college funds) before you decide on a house purchase price range. You want advice to minimize taxes and invest in no-load funds with Vanguard. (Vanguard can also provide advice - call them!)

One piece of info you have not included here is household income - I totally understand why. If you are in the Bay area with low income, you probably should not buy a house - $2 mil will not last long!

CA is a high cost of utilities area. I suggest getting an Energy Star house with PV roof, solar hot water, etc... to minimized cost of living and maximize tax breaks. Call around to find a *really good* green builder in your area, not a regular builder. Or, find a nice existing house and spend about $100,000 (or less) to do the full energy upgrade with PV. You may be able to enlist the the help of your energy contractor in choosing the right house.

Based on how the real estate market has done in the past few years, I would suggest you focus on the "right schools" and "right neighborhood" not on granite kitchen or brand new construction or whatever. The people who bought the biggest, newest houses (most expensive) took the biggest hit in the recent real estate bubble. Just FYI, we are living in a pretty darn large house right now, and miss our smaller house. Make sure you have a really good home inspector, as there are some real surprises behind the drywall in some newer homes, even really expensive ones.

My guess, assuming no debts and a household income around $100,000, would be $700,000 to $1mil for the house + upgrades. That is a huge price tag and I would suggest going lower if you can.
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post #8 of 33
6/6/10 at 4:59pm
Quote:
Originally Posted by Juvysen View Post
I'd go with as small a house as I could handle living in... and then live frugally and not work unless we felt like it In my area, you can buy a lot of house for 150k. I think I'd probably build a small (less than 1500 sq ft) house that was extremely energy efficient.

How exciting for you, though! Good luck
This, but I don't know how realistic that is for living in CA. Maybe find an investment advisor who can help you find someplace to put, say, half the money where it will earn a pretty good interest rate. If you can live off the interest on that investment, pay cash for a smallish house with the other million, and work or not work as you see fit, I think that'd be ideal. Then you still have a million saved for your retirement when all is said and done. (Although depending on how old you are, that might not be enough total, but it's a nice place to start!)
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post #9 of 33
6/6/10 at 5:10pm
350k
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post #10 of 33
6/6/10 at 8:26pm
$650k because that's what a typical house in our area cost. I wouldn't want anything bigger than average. Though if I have 2 mil I might just move to somewhere cheaper, rent a house and live off the interest. I agree with the financial planner suggestion.
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post #11 of 33
6/6/10 at 10:04pm
Depending on where in the Bay Area you want to live, really.

I'd spend no more than 400k-500k on the house in a good school district. Tough to find, BUT you have time on your hands too. I'd look for one that needs some work too and make it energy efficient, etc like a pp said.

That said, unless you are in San Fransisco I can't see why you would want a 1mill house? Sure, they are 'nicer' than the ones for half the price, but honestly, I'd rather not have to make 2500 each month to cover the basic housing expenses. I'm a big fan of keeping housing expenses as low as possible because, honestly, in retirement you are living on a fixed income. You don't want to start out at too high of a bottom line, kwim?

Ami
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post #12 of 33
6/6/10 at 10:15pm
Solar panel that baby. The state of CA has some fairly good rebates going. If you get new/zoned A/C unit together with solar paneling you'll save what it cost you in 10 years, maybe 15.
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post #13 of 33
6/6/10 at 10:34pm
Quote:
Originally Posted by JamieCatheryn View Post
Everything property related is cheap here in KY so my amounts would not line up in, say, California. I want to live in the country and be self sufficient I want a house built exactly as we want (superinsulated, natural materials like strawbale and lime and clay, open public area, high ceilinged living room, fireplace, finished basement, efficient use of space so medium sized feels big). $100k for land and well and septic and whatever. My dream home (for a family of 4-5) will cost $200k to build being frugal about it, so if I had lots of cash available say $300k to make it extra nice. Then I'd put up to $100k into an orchard, outbuildings, veg garden, fences, landscaping, and solar panels. So $500k total for the indulgent version of my dreams.
You pretty much took the words out of my mouth. I would LOVE to have a completely self-sufficient home, gardens, and some land to put one of those wooden kids pirate ships on. And I want it to be on the outskirts of Louisville's South End or Bullitt County.
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post #14 of 33
6/6/10 at 10:43pm
With $2 mil, unless I were completely in love with my job or really wanted to stay close to family I would invest in a decent but not excessive home in a lower cost of living area with good schools and the right vibe (I'd take my time finding this place) for no more than $300k, invest the rest, and retire and live simply (except for travel).
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post #15 of 33
6/7/10 at 2:37pm
Another poster asked about household income. That would be a big factor.
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post #16 of 33
6/17/10 at 11:33pm
Quote:
Originally Posted by AAK View Post
How big a house does a million get you.
The building 3 doors down from us just sold for a million - it's a falling apart condemned mess that the new owner will have to tear down and build anew! Funny, the COL discrepencies, huh?

(we rent, not own in this neighborhood, btw)
sorry to veer OT
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post #17 of 33
6/18/10 at 12:50am
2 million is what I calculate I need to invest to maintain my standard of living in retirement, so I would be thrilled to pieces to get that as a lump sum. I wouldn't buy a house with it!

I'd get a financial planner and invest the money into a relatively safe, income-producing portfolio. In fact, what I would specifically do is transfer all the money to Vanguard and utilize services, which are quite extensive if you have that much money invested with them.

If I was going to buy a house, I wouldn't spent more than 500K in my area (LCOL). In a HCOL area, like DC or Boston (places I'm familiar with) I'd try to keep it under 750K. But understand that makes a huge difference in the amount of income you can get from investing that money.
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post #18 of 33
6/18/10 at 12:56am
Quote:
Originally Posted by yukookoo View Post
thanks for the reply!

These are my estimates for owning here in ca as far as monthly costs... i think they are a high estimate though. So this is what i worry about. Say we put a million into a house (which here would buy a really nice house but nothing super gody or outrageous) we would still need to put around 2500 a month into housing! and say we only have one income, or after retirement that A LOT to come up with with no income... I guess its different than having a mortgage I mean we could get rid of most of those expenses and be ok, outside of property taxes, if we cant afford a new roof lets say we get some buckets for leaks?

Homeowners insurance/ earthquack? - estimate 2000 a year
Property taxes 12,500 a year
Utilities: water sewer, electricity - l4800 a year
Repairs set aside 1% of purchase price per year - 10,000
Gardeners - 780

2500 a month.

I dont know what homeowners or other insurance looks like once you own that estimate is for mortgaged property and im not even sure how its different accept that its not forced.

utilities is high thats assuming no solar or anything to cut down on costs.


I still worry about putting money into something that we wont be able to afford long term for some reason. I dont know I guess i am asking what are the risks of overspending on the house?
You're very smart to consider this. Oftentimes lottery winners end up broke or bankrupt because they "overbuy" and aren't able to support their lifestyles. Why don't you just buy the house you could afford with your current income and then just pay cash outright for it? Then you wouldn't be stretching.
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post #19 of 33
6/18/10 at 1:10am
Quote:
Originally Posted by noobmom View Post
You're very smart to consider this. Oftentimes lottery winners end up broke or bankrupt because they "overbuy" and aren't able to support their lifestyles. Why don't you just buy the house you could afford with your current income and then just pay cash outright for it? Then you wouldn't be stretching.
Very good advice.
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post #20 of 33
6/18/10 at 1:28am
Quote:
Originally Posted by noobmom View Post
You're very smart to consider this. Oftentimes lottery winners end up broke or bankrupt because they "overbuy" and aren't able to support their lifestyles. Why don't you just buy the house you could afford with your current income and then just pay cash outright for it? Then you wouldn't be stretching.
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