Hi all,
Im (F 27) and live in a growing city in Texas. Real estate. prices blew up here from 2021-2024 but seem to be coming down. Ive been thinking about real estate since 2020 when I was in college and knew I wanted to get into it as a way to start a future wealth building tool. However, I am not blind to the fact that one can possibly grow money more on stock market investing than real estate sometimes. If I were to buy something in this city it would have to be a small 2bed/2bath, 800-1000sqft and I would plan on house hacking it. Doing so would cause me to lose my ability to contribute to my roth and brokrage for a couple of years ($840 total).
Ive ran the numbers
I take home $4200 and currently save/invest 25-30%.
my rent is $1300 after all utilities
and the rest I spend on my lifestyle.
Would I be dumb to get into a house now if it would mean i pay close to 50% of my take home in housing?
I am not opposed to waiting to buy and I know its better to buy when you are financially ready. I definitely could work on building my EF more ($1800 atm) and maybe saving for a bigger down payment?
I appreciate the thoughts!
Posted by latortilladeharina
4 Comments
Your emergency fund is way too small for homeownership tbh. You need at least 3-6 months of expenses saved up before even thinking about buying, and that’s on top of your down payment and closing costs
Going from 30% housing costs to 50% is a massive jump and you’d be house poor. I’d keep renting and build up that EF first – houses always have surprise expenses that’ll hit you when you least expect it
Realtor here in your area. My recommendation would be to wait. Your emergency fund is low and I’d recommend being ready to start saving for the following, based on the Dallas area –
. HVAC – new system is $14,000,
. Hot water heater – $3,000
. Foundation – $220/pier
. Roof – 2% deductible.
Those are the biggest ticket items and the ones you’ll likely come out of pocket for.
You’re right to want to buy now – the market is in a lull before a likely increase, but you’ll feel a lot better having more money in the bank before you buy.
Good luck and PM me if you have any questions
You will be committing to staying in that location for quite a long time, or losing money if you need to sell because you are relocating. Being an absent landlord carries a number of pitfalls. If this is ok, buy if you can afford it. If you want to keep your options open then invest in ETF and continue to rent
No, half your take home is too much. Unless you have a roommate to cover a good chunk of your mortgage, you’re going to be in a tight spot for a while.