• This newsletter follows a 3 Pillars framework each month: grow income, reduce expenses, and save more.  

• Week 4 is up for grabs topic-wise so I either explore a topic of interest or answer questions submitted.

• Send your questions to me at [email protected] and I’m happy to do research for you.

To learn more about my comprehensive planning engagements available, checkout my website and schedule a call.

You Can, But Should You?

• With a $200,000 down payment and $800,000 mortgage, the $1,000,000 property can be purchased and in theory kept with a $225,000 household income according to Zillow’s calculator. Assumed monthly mortgage is $6,401. This assumes they have no other debt.

  

• Most lenders will give you that no problem.

  • 28% of gross monthly income is an often used house affordability rule of thumb. That would be a $4,687 on a $225,000 gross monthly household income.

  • 25% of net monthly income is a better rule of thumb in my opinion. It’s one from Dave Ramsey I do agree with.

    

    • Building wealth requires a margin. Consciously spending less on a home is one lever you can pull to do this.

    • The above 25% net example vs. the Zillow calculator is $2,956 per month that could create an amazing future beyond a sweet house.

    • It allows flexibility to use money for other endeavors like starting businesses, affording income gaps if a spouse wants to change careers or return to school, invest more in higher potential assets, and more.

    • While real estate is a great wealth builder, it’s not always optimal, especially in the case of a primary home.

Primary Home Buying & Wealth Building

• Real estate is a great wealth building asset.

• A primary residence is much more than an investment however. It is where you live and raise a family.

• A primary residence is similar to a high credit quality municipal bond:

  • Steady return potential

  • Usually low probability of loss

  • Potential tax benefits

  • Most importantly, located where you want to live. This really trumps most financial considerations.

    

If you’re not a subscriber already, hit that button below to receive new tactics each week to help you grow income, reduce expenses, and save more now!

If you know others who would benefit from this content, please share the newsletter URL link on your social channels!!