{"id":286292,"date":"2025-06-10T18:32:16","date_gmt":"2025-06-10T18:32:16","guid":{"rendered":"https:\/\/peraltafinancing.com\/business\/finance\/615-qa-we-saved-1-2-million-but-were-still-renting-should-we-buy\/"},"modified":"2025-06-10T18:32:16","modified_gmt":"2025-06-10T18:32:16","slug":"615-qa-we-saved-1-2-million-but-were-still-renting-should-we-buy","status":"publish","type":"post","link":"https:\/\/fivemor.com\/?p=286292","title":{"rendered":"#615: Q&A: We Saved $1.2 Million But We\u2019re Still Renting. Should We Buy?"},"content":{"rendered":"


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\"ImageEmily is nervous that buying their first home will derail her family\u2019s journey to financial independence. What\u2019s the smartest way to deploy their savings and stay on track?<\/p>\n

Based on cap rate calculations, Paul\u2019s real estate investments have appreciated beyond their sensible holding point. Should he sell his assets, or is there more to consider here?<\/p>\n

Mike is recently retired while his wife still works. With a paid-off home and healthcare already taken care of, what are best practices for drawing down an investment portfolio?<\/p>\n

Former financial planner Joe Saul-Sehy and I tackle these three questions in today\u2019s episode.<\/p>\n

Enjoy!<\/p>\n

P.S. Got a question? Leave it here<\/a>.<\/p>\n

_______<\/p>\n

Emily asks (at 1:14 minutes<\/strong>): As young parents, how do we plan for a major move and our first house purchase without throwing a wrench into our financial independence goals?<\/p>\n

I was so happy to hear your defense of renting on Episode 559. My wife and I have taken that perspective to heart as renters for the past 15 years. But now, we\u2019re ready to buy a home.<\/p>\n

We\u2019re in our early 40s, married, with two kids\u2014a 3-year-old and an almost-1-year-old. We\u2019re approaching Coast FI, and want to be work optional within the next 10 years. We plan to move home to the Midwest and settle into a great school district before our oldest starts kindergarten.<\/p>\n

We have $1.2 million in investments, plus $120,000 cash earmarked for a down payment. We also have $85,000 in cash as our emergency fund. We may be able to save a bit more depending on when we move, and we\u2019re also open to renting in the Midwest before we buy.<\/p>\n

We currently spend $11,000 monthly due to high rent and childcare. But we expect that to drop to $6,000 once both kids are in school and once we move, depending on our mortgage.<\/p>\n

We\u2019re estimating a housing budget of $500,000, which should be enough to get us into a good school district with access to strong job markets. That number could be higher or lower depending on what we find.<\/p>\n

Given our ages, net worth, and timeline for reaching work-optional status, how should we approach financing this home? Should we make a large down payment? Should we consider a 15-year mortgage? Or is it okay to carry a mortgage into our seventies?<\/p>\n

Paul asks (at 26:20 minutes<\/strong>): Does it make more sense to keep a high-value rental that brings in solid income, but comes with landlord headaches, or to sell, invest the proceeds, and live more passively off a 4 percent withdrawal rate?<\/p>\n

In 2011, I bought a 3,300-square-foot primary residence as a short sale in a highly desirable neighborhood for $645,000. After a year-long battle for permits, I built a second home on the same one-third-acre lot: A 1,800-square-foot house that\u2019s perfect for me.<\/p>\n

I moved into that smaller home in 2017 and have been leasing out the larger one ever since. The lot can\u2019t be subdivided, so if I ever sell, I\u2019d have to sell both homes together as a single property.<\/p>\n

Here are the numbers:<\/p>\n