[USER]

I need some friendly guidance. Husband and I are 43 and 41, combined $350k annually with un-stable jobs (hello, Government).

So far, invested in the market in combined retirement/brokerage accounts in basically all index funds is approx $1.7mm.

I’m holding $400k in MMMF with a dream of buying a second property in an exorbitantly HCOL area overseas where we want to retire.

Properties range $1.2-$1.8 mm where we want to buy.

I would put the $450k down as required downpayment as foreigners and mortgage the rest leaving us with at least a $4k monthly mortgage (plus taxes and fees), and we’d rent it for 5 years to start to have the renters cover most of the mortgage.

After the down payment we would have minimal cash left and to anticipate this I would immediately start re-building a cash emergency fund.

More stats:
-No debt;
-Current primary home has $80k owed at 2.5% valued at $600k;
-2 cars paid off (approximately 5 and 6 years old);
-Annual spend with 3 young kids is $130,000 though we can cut that back if need be.

A sizeable portion of that is charitable giving. I wouldn’t race to cut the charitable giving back as I value helping others, but I can cut a vacation or take out if need be.

My main question/concern is are we going in over our heads by buying this property? One of my favorite feelings right now is “knowing” its OK if I’m let go from my Government Job.

Once the $450k is spent and a huge 15 year mortgage is owed, not sure I’ll feel so free. But I’m certain we want to retire to the area and I’m certain (as certain can be) prices will only increase.

As a side note I’ve spent 15 years saving for this property. I know I am going to lose sleep about “when” not “if” the tenants call with a water leak, or significant issue that could set us back financially.

I fear this. I also fear one or both of us losing our jobs given the reality of the times we’re living in…then what? Sell the place?

I hear myself from afar and recognize I’m not pulling the trigger out of fear. Am I over-analyzing this and we can afford it?

Or should I just deal with waiting longer to buy even though we’ve been saving for 15 years and even though the market prices in the area are only increasing.

For context I almost pulled the trigger 2 years ago to buy when the same $1.2-$1.8mm places ranged from $600k-$1mm, so it just keeps getting more expensive to buy.

I already regret not buying 2 years ago when prices and the exchange rate were more favorable.

I just hate to give up the road to FIRE we’re nearing- but- if we know we want this property then why not use some of our net worth to buy it and let renters pay the mortgage down?

Thank you for your guidance.

[Nicole]

So, looking at it another way you could buy the house outright, and if you sold your current home you’d have $1M in assets.

Property doesn’t need to be rented then but you could for extra cash flow, and you could build savings up for however many more years you wanted to work.

$1M brings in about $40k before tax so doesn’t seem anywhere near what you think you need at 130k but if you were debt free maybe it’d be enough?

How many more years saving on top of the $1M would it take for you to be where you need to be for a comfortable lifestyle?

It just really doesn’t sound like you have enough money….

[Claude]

$2M in liquid taxable assets. One of you could retire on dividends immediately.

Forget another property. Start getting the cash without taxes and repairs.

And if you feel the need to give to charity, fund your retirement, then your childrens educations, first.

Then, decide to retire the second person, before you give any more away.

[Jule]

I honestly don’t think you can afford this. You cannot comfortably afford to buy a second home that costs almost as much as your entire retirement savings and in the process wipe out all of your liquid cash, including your emergency fund, on a $350,000 income that’s unstable right now, without taking some serious risk.

[Caroline]

Suggest…No. You have 3 young kids and have unstable jobs right now. When will you be looking to retire? 10+ years out?

You may need that cash cushion in the meantime.

Wait until you get closer to actual retirement and then decide what you want to do with facts-on-the-ground at that time.

You may still decide to retire there but rent instead (because you do not want to take on the responsibilities of home ownership), or something else.

[Rose]

You seem generous…Are you planning to pay or help pay for college for your kids?

I’d be using this era of my life to be dumping money into 529.

[Author]

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