Tag: t_homePre$$ure44

[21]U.S.home: too many inflexibilities #w1r2

Posted on by tiger40490

See also

— livelihood vs FOMO
[L=a livelihood concern] This blogpost was written a few weeks after I defined the 6+ elements of livelihood . Grandpa and Jack.He would agree that Home ownership is not a necessity. The less affluent can stay rented long-term, so heavy rental burden is a livelihood concern.

[f/F=FOMO-related or FOMO-driven] Most of the items below are FOMO-related. The pTax, HOA and mtg burden are part of the “deal” when you join the exclub, and maintain your status … high maintenance !

== Given the multitude of constraints, we want to show (and posses) flexibility. It’s crucial to identify your points of inflexibility, i.e. your unique priorities (half-ranked) compared to peers.
— constraint: CC1 [commute] .. am not flexible. Arguably my #1 inflexibility
Sugg: favor connectivity
As explained elsewhere, long commute is not a livelihood issue
— [L] constraint: high rent in the U.S. .. am flexible
am flexible to keep renting long term, whereas my peers may prefer buying a home ASAP.
am flexible due to my Asia rental income
am flexible with half unit in small home
am flexible with lease spread including sublease
— [f] constraint: oversized price tag .. am flexible with small or old homes
Sugg: avoid big homes or top SDXQ
Sugg: buy small unit and lease spread
— [f] constraint: pTax .. am less flexible, due to my limited income + location requirements
Sugg: 43R lease spread to offset pTax
— [F] constraint: SDXQ .. am flexible with average schools.
Sugg: live rented in a reasonable SDXQ, and move if needed
— [L] constraint: CC2 [Chinese community] .. wife and I are less flexible
Possibly a livelihood issue for wife
— constraint: car-dependency .. I can reduce my inflexibility. This inflexibility severely limits my choice of location.
Sugg: favor walkable neighborhood

— constraint: resale liquidity … in a low-cost, low-growth location such as Bayonne or South Edison
Am less flexible because I hate losing money on rEstate.
“Appreciation” is related word.
— [f] constraint: mtg burden .. am less flexible, due to income
Sugg: lease spread .. pay mtg on rental property while renting
Sugg: pay down the outstanding
— [f] constraint: HOA .. am not flexible when condo location is perfect for family
am also less flexible, due to my limited income
====
— the ffree Q: The constraints listed in this blogpost highlight the limits to … my exclub status or my barebones ffree?

Jolt: If you retire early, then you would probably move to (a cheaper, more Chinese country or ) less expensive locations. Commute would be a non-issue.

You may want to cash out your residential properties and stay rented, with subleasing. Sales proceeds, invested in a “shrinking nest egg”, would pay your net rental for 30 years.

However, some affluent people would want to retire AND still keep their homes. They could use lease spread to retire somewhere “nicer”.

In any case, I don’t think CC1, CC2 are real limits to ffree.

— compared to my Chinese cohort

  • am flexible with 1) SDXQ, 2) renting forever 3) home-sharing/sublease,
  • we are inflexible with 1) CC1, 2) CC2,

— compared to a 10Y younger guy in a comparable profession

  • my #1 advantage: overseas rental income(s), substantial enough to defray the heavy burden of rental.
  • my advantage: bigger portfolio, producing a growing current income
  • my advantage: less sensitive to peer pressure, more mellow at my age
  • my advantage: semi-retired (if I so choose) .. less earn-more/move-up pressure
  • my advantage: I figured out a dev-till-70 plan, in my niche position
  • my weakness: slower adapting to daily driving

Who has more dependents? a 10Y younger guy may have 2 or 3 kids too.

##[19] G11 progress]PFF plann

Posted on by tiger40490
  • MOETF with firewall, 3Y BnF, 3min due diligence
  • exp recon process improvement

No oth please.. I feel proud of my independent thinking and progress. I feel these items are remarkable and visible signs of progress. New and better ideas for the next 1~30Y.

I guess many of my U.S. and Singapore peers don’t have such a /progressive/, continuously refined financial plan.

Even though some of them (YW.Chen, Shuo, Ash.S,…) have multiple properties; some (Venkat?) more successful with U.S. equities, I feel most of them follow the bandwagon with fewer bold departures.

  1. [aU] bold decision to stay rented on lease spread, without U.S. home ownership — lower cash flow burden than buying 700k. 700k is like Ivy League plan among the Chinese immigrants.
  2. [AU] bold decision on college fund — discussed with grandpa, Kyle etc , and more convinced than ever to avoid the rat race to branded colleges … insider.
  3. [AU] bold decision to accept average school districts and focus on conducive learning environment instead of test scores
  4. [u] surprise discovery of current income /vis-a-vis/ windfall far out
    1. analyzed three ffree scenarios, based on my detailed burn rate record
  5. deeper conviction and belief in U.S. equities, /vis-a-vis/ other regions
  6. surprise discovery of SG elderly healthcare as more efficient and accessible than feared. No driving required as in U.S.
  7. [a] incisive researched on U.S. burn rate and figured out it’s much higher than SG due to Melvin3
  8. [u] more firm than ever before on my bold decision to work till my last day
  9. bold decision to include 43R model in my default plan, rather than the conventional 2FH model
  10. [AU] singled out Bayonne and South Edison as my bold yet viable choices

Above are progresses made since mid 2018. Below are Earlier progresses, roughly ranked by importance :

  1. bold investment in a 3rd shop unit, despite the concentration risk and lower NRY guarantee than before.
  2. bold decision to choose lower CPF-LIFE payout, since I don’t need the higher monthly payout or bequest.  This decision has implication on my savings rate now.
  3. [u] tried out dividend stock investing on Robinhood
  4. [au] bold idea of sending kids to Singapore universities, avoiding the mad rat race
  5. bold idea on MYS retirement — need more evidence and research
  6. [u] bold decision to stay as contractor
  7. [u] tracked family burn rate for years
  8. [a] passive income added up
  9. [u] bold and unconventional decision to favor walkable locations, to reduce car dependency
  10. new plan on HDB jumbo unit
  11. [a/A=high leverage i.e. high impact at low effort, low distraction, low laser dispersion]
  12. [u/U=unconventional among my Chinese peers. Back bone required]

[19]2phase strategy2cope+multiple inflexibilities: rental income

Posted on by tiger40490

Previous title: two-phase strategy to cope with multiple inflexibilities

See also U.S.home: too many inflexibilities

Buying a family home has a huge impact on comfort, street safety, confidence/financial_security, school, commute, Chinese community, car dependency, resale liquidity, burn rate (heavier than renting) … Too many concerns. It would be great if I can put off half the concerns to a later phase.

Sugg: stay rented indefinitely so I can focus on the first concerns and not worry about commitment and cash flow pressure due to a big buying decision.

The first small purchase is really a rental property to defray my rental outlay. A 250k 1st rental property promises to provide positive NRY of 0~2k/M. 2-3K/M would enable my family to enjoy the flexibility of renting indefinitely.

With enough [1] NRY, I could solve commute, school, and car dependency problem by renting as a family in Jersey City for 2~3k/M. Commute would be by bike if working in JC, or by train to NYC. There are many good public and private schools in JC. I could lease a 4k/M house and sublet rooms in other floors to recover 2k/M.

[1] 3k is realistic as of 2019.

Compared to me as a student, my son is more influenced by classmates, so he needs a suitable school. Better stay rented and flexible to accommodate his schooling needs.

Similarly, overseas NRY of 1-2k/M also enables the family to enjoy the flexibility of renting indefinitely. A 4th property in Cambodia would increase the NRY by about $1k/M… a huge boost. However, don’t assume Cambodia investment is as safe as a Singapore investment!

Actually, I will have at least 3k/M overseas rental income. Still, I WANT (not “need”) to own a rental property in U.S. while paying U.S. rental.

cashflow pressure: rent iHt buy#graph{Rahul

Posted on by tiger40490

https://www.zillow.com/rent-vs-buy-calculator/ is a nice graph Rahul showed me. It shows inflation !

2.5k can rent a nice small home in a reasonable location outside the luxury /belt/ like JC waterfront. With sublet I could take up a 3k house and collect 1k rental.

In contrast, if buying a 700k home, total burn rate could be 5k. Basically, high mtg and tax rate is applied on a big home value.

  • 3k mtg, depending on rate and amt
  • 1.5k tax. Bayonne tax is higher, but I won’t buy anything 700k in Bayonne.
  • maintenance costs like heating, cleaning,,,

[17]2phase: relieve rental burden #steps

Posted on by tiger40490

All my life, I have felt very uncomfortable with big rental burden (debt too .. another topic), so I always find ways to reduce it.

  • in Newport, I was paying $2000, then increased to $2200 ! (I just hated the hike) So I quickly subleased the big room for $800 and felt much better.
  • In Fort Hamilton and Bushwick, I had to sublet one room to /reach/ an affordable rental cost level.

When my family finally comes over, I will need to find quick relief. A questionable relief is buying a home as it will further aggravate the cash-flow burden, and sink me to cash flow lower ground ! My default plan:

  1. Try to save up USD 100k (discussed below) in advance. Convert SGD if needed.
  2. give family a feel for the different parts of Bayonne. Bayonne is low-rental town. Hopefully we narrow down to 2 or 3 locations.
  3. locate the best rental home. There should be many reasonable choices so won’t take too long.
  4. Get family prepared for downsizing, potentially challenging.
  5. Pick a place up to $1500-2000/M. If too many rooms and too expensive, I will consider sublease part of it.
  6. construct a div stock (Reit) portfolio.. low volatility, to be liquidated in the next step
  7. Within 2 years (hopefully 12 months) buy a first rental property 200k-350k like 43R, with NRY to help defray my rental expense
    • It could be a pure rental property but I can still use the basement for storage.
    • If acceptable, my family could use it, reducing various risks

In the long horizon (no timeframe), I could buy a 2FH for family use, and sublet one unit. However, 2FH creates heavier cash flow burden including pTax

Q: USD 300k war chest for rental relief? How would it change my life?

  • I could stay in SG forever
  • I could target JC jobs, and spend $1.5k/M net rental in Bayonne/JSq forever. Or $2k in JC/Hob.

Q: USD 100k war chest for rental relief?

  • This amount means a lot to rental home comfort [size..]. $1k/M additional rental will exhaust this amount in 8 years !
  • This amount is insignificant for branded colleges .. not worthwhile
  • This amount is insignificant for a SDXQ home .. not worthwhile
  • This amount is easy to squirrel away, esp. in SG
  • This amount as a target bonus, is brutal and unforgiving. I won’t accept such a target. I will reject such a target.
  • To relieve work stress, I can realistic consider giving up $30k/Y salary over 10Y. USD 300k lost_pretax_income is no big deal to me. (After-tax, it would become a 200 lost income.)

[17] affordability @700k family home #NRY

Posted on by tiger40490

Update — if I were to buy a 700k family home, it should have multiple storeys and I need to lease multiple rooms on other floors to collect $2k-4k rental. The luxury condo model (389 Washington St) is completely unsuitable for me.

I tend to think I could afford a 700k home with the pTax + HOA, but I might be over-confident.

  • pTax up to $20k/year … way too high
  • mtg $3000/month (depending on down payment percentage) too heavy and much higher than rental!
  • closing cost and necessary renovations
  • down payment (excluding renovation) at least 20% 140k
  • (I guess the only way I can afford 700k house is massive $400k down-payment)

Issue #1: Could I afford to pay 5k/month? 4k/month is about my max. My overseas rental income (see blog on 4 ffree scenarios) will build up a reserve.  I still want to squirrel away $1k/month as a savings habit.

Issue #2: A severe problem is rent-out. It’s hard to rent out for a large $4k rental to cover the monthly cost, so I will feel “tied down” just like Jack He.

Staying rented is safer and more flexible as we can move to a cheaper home if we later find out our burn rate and saving rate are not as good as planned.

Sugg: private high school]Bayonne-like cheaper areas

Posted on by tiger40490

A specific example like Bayonne

  • home cost saving? conservatively 250k (350k vs 600k), or about 30k/Y over 8Y.
  • tax + maintenance saving? Probably $7k/Y
  • interest saving? Probably 8k/y
  • — in total I can spend up to a 45k/Y budget over 8Y to match up with the cost of living in a 600k school district home. The 15k/Y is fair, but the 30k/Y is slightly inaccurate, because it is “refundable” outlay
  • private high school cost? $20k/Y.
  • ==== additional benefits and flexibilities
  • collocate with tenants? big bonus, not available in a typical top school district
  • flexibility to change school. In contrast, if the top school in a expensive school district isn’t suitable for us, we still pay the additional tax + interest
  • perhaps a religious school
  • perhaps a regular high school but get extra tuition, saving even more. See https://tanbinvest.dreamhosters.com/2017/07/18/extra-tuitionu-s/
  • perhaps attend a private high school only for 1 or 2 years,
  • Overall, the same “academic” standard can be achieved without some 10% compromise

##many options: avg学区 ≠ avg school #index

Posted on by tiger40490
  • opportunity — compete to enter a magnet school in an average SD
  • opportunity — compete for gifted class in an average SD
  • opportunity — earn a scholarship for a private high school
  • opportunity — stream into a good class in a average school. Look at the Staten Island boy.
  • charter school and religious school
  • study in a private high school for last 2-3 years if we have saved on housing.
  • extra tuition to help grades
  • parent push. (Jack’s pointer) At middle school level, #1 factor affecting grades is parents’ push.
  • focus on engagement and conducive learning environment, not benchmark. Refuse the herd instinct, brain wash, peer pressure
  • rent near an top academic school if indeed my kids suffer in an average school
  • If my kids have mediocre grades despite parents’ push, then a better-rated school may not help much. Just wait for their self-motivation to emerge and catch up later.

consider cheaper states,more family-oriented

Posted on by tiger40490

Consider parts of NJ close to JC. I could focus on jobs in JC and exclude NYC, to cut down my commute. I could then buy in a nice NJ suburb.

Consider Boston.

Other states may offer shorter commute, more space, less congestion, possibly better schools.

Shiva recommends Charlotte, NC

Consider Jack’s suggestion on work-from-home tech jobs

This is another advantage of U.S. job market.