[BudgetFilter] We're about to purchase a 3-unit multi family home in a desirable downtown area near a large park designed by Frederick Law Olmsted. The rental market in our city is very strong and continues to get stronger. Does this potential budget make sense and put us in a good financial position for the future? Details and actual budget numbers within.
We will be owner occupants. We have previously owned a condo (closing the sale on 8/31). We have strong family and friend support in the area. We have lived in this small, amazing, seaside city for the past 7 years and know the neighborhoods well.
Here are the specifics - would love any feedback! Or recommendations for some type of professional budgeter who can help - we aren't looking to put our money in investments so I am thinking a financial adviser is the wrong way to go.
Yearly Expenses - some of these are inflated numbers based on the lifestyle we would like to live:
$1,800.00 - personal loan @ 0% interest
$2,400.00 - Student Loan payments
$1,085.16 - car insurance
$1060.00 - gifts & donations
$5,100 - Dining Out/Groceries
$1,322.88 - Internet/Cable
$1640.00 - Medical/Dental
2,000 - Housewares (includes moving costs and some new furniture - will be less after year 1)
$1,200.00 - Additional Roth IRA contributions
$100.00 - cat supplies
$1,200.00 - car registration/repair
$15,360 - "personal" money (includes gas, clothes, snacks, CDs, DVDS, etc for two people)
$2,000.00 - travel/vacation fund
$400.00 - concerts/entertainment
$1,482.36 - cell phones
$38,150.40 = Total “Life” Expenses
Potential House Expenses:
$35753.52 = Mortgage payments - We will be using a FHA backed loan with a fixed rate of 3.25%. The total monthly payment including taxes, home insurance, and PMI is $2979.46.
$3,000.00 - Heat
$1,000.00 - Electricity/hot water
$2,100.00 - water/sewer
$2,500.00 – repairs
$44,353.52 = Total House Expenses
$31,800.00 = Total Rental Income per year
= Combined take home income.
. This is after taxes, 401k (with 3% and 4% match), and premiums for health, dental, life insurance, and accident insurance
$6053.52 = Yearly Bottom Line
My question is – In the first few years of owning a home, is this a reasonable number to have left at the end of the year? After we have 20% equity in the house, we eliminate the PMI at $450/mo – must have had the loan 5 years at that point. We also eliminate the student loan payments in 4 years. There are several places we can cut back in our “life” expenses if things become tight, or a major repair is planned.
Other life notes:
-after the purchase we will have approx $20,000 in savings
-we will not be having children and there is zero chance of an oops baby. No need to plan for that expense.
-my partner's father owns a lot of rental property in the area and is a supportive resource
-We are late 20s/mid 30s
- we have used the PearBudget
spreadsheet for several years and feel confident that our numbers are on point for our “life” expenses.
-we have no credit card debt