Should You Buy A Bigger House?

Should You Buy A Bigger House?

Even though many people are buying less expensive housing these days, you might be very tempted to buy a bigger house. I can understand that. Interest rates are ridiculously low and real estate prices seem to be just bottoming out. I recently wrote a post explaining that most people are far better off buying real estate rather than renting. I believe that with every cell of my body. If that is true, wouldn’t it also be true that owning more real estate (in the form of a larger house) is better than owning less? The argument has merit.

But before you whip out your check book and call Moshe’s Movers, chill out. Even ifyou can af ford the new house, I suggest you pause. While there are a few good reasons to move into larger digs, there are plenty of reasons why you should maintain as small a footprint as possible.

Reasons to Move to a Larger Home

There are only three good reasons to move into a larger home:

1. Current Home Way too Small

One of the worst decisions I ever made was to buy a house that was really affordable but way too small for our family. My wife tried to tell me this before we bought the house. But of course the financial advisor expert in me took over and prevailed. Within a year we all agreed that we better move before one of us ends up on the 5 o’clock news.

That was very expensive because real estate prices had increased over that year and of course we had to pay the commissions and the movers and all that fun stuff. Drag. If you are in a house that doesn’t fit your family and you can afford a bigger house, I suggest you do it. Now is a great time for you to upgrade.

2. Current Home Way too Far

Just like living in a cramped space, living in a bad location can be a downer. If you are moving anyway, why not trade up a little? Again, assuming you can afford the upgrade, go for it. No reason why you shouldn’t.

3. Extra Costs of New Home Are Irrelevant

If you want a bigger home because you want a bigger home and you can easily pay the higher freight, it might be OK to go for it. This can be really tricky however.

One of my friends bought a huge house overlooking the valley when he was at the peak of his career. He spent a ton of money on a huge mansion and was very happy there – for a while.

Eventually he decided that he wanted to change his lifestyle. He realized that if he downsized, he could actually retire early and live very comfortably. Unfortunately, he hasn’t been able to realize his dream. The house is worth much less now than when he bought it. As a result, he’s stuck with the larger house, the very high upkeep and a lifestyle he’s dying to change.

To summarize, there are only 3 reasons you should buy a bigger home. Notice that I didn’t include buying a larger estate as a way to increase your real estate investments. While I do think it’s generally a good time to invest in property, the best way to do this is by owning rentals in the right market. Rentals provide income. Your residence doesn’t. Buying a bigger house as an investment might work out for you but it’s far riskier than buying good rentals.

Why You Should Not Buy a Bigger Home

1. You Can’t Afford It

Never buy a house you can’t easily afford. With the uncertain financial times we live in, it’s not unheard of to suffer big financial reversals. If heaven forbid you encounter such a situation (such as losing your job), the last thing you want to do is to lose your house too. People underestimate what it really costs to own a home. When you upgrade to a larger house all of the following bills go up substantially:

a. Mortgage Payments (duh)
b. Insurance
c. Taxes
d. Utilities
e. Upkeep
f. Décor and Furnishings (You’ll probably have to buy all new furniture when you move. At the very least, you’ll have to buy more furniture to fill up that castle you just bought).
g. Landscaping and grounds

Even if you think you can afford the new house please confirm it. Take a few minutes and crunch the numbers to be sure.

2. Risk

As I mentioned above, once you commit to real estate – especially if it’s your residence – it’s difficult and expensive to make a change. Consider how your circumstances might change over the years ahead.

Think of my friend who wanted to reinvent his life but couldn’t because he was trapped by the large home he owned and couldn’t sell.

My wife and I bought a pretty nice house in LA when our kids were younger. Before we knew it, 2 of them were in college and out of the house. We really don’t need that big house any more. I’m not saying it was a mistake to buy the house originally (12 years ago) but it would be a mistake for us to buy a bigger house now.

This is true even though it would be easier for us to afford a larger home now that two of the kids are almost done with college. There is no reason for us to buy a larger home so we aren’t doing so. Having a very affordable home gives us lots of freedom and peace of mind.

3. Opportunity Cost

If you tie up lots of money in your residence you incur an opportunity cost. The money you put in as a down payment is money you can’t invest elsewhere. Maybe there are better alternatives that you can’t take advantage of because you haven’t got the scratch. And remember that more of your monthly income goes towards the house payment. That’s money you can’t invest for your retirement. It’s also money you can’t use to travel or have fun doing other things with.

Real estate presents a wonderful opportunity right now. I’m a big fan. If you are thinking of taking advantage of the present circumstances to buy a larger home, it could be a really smart move. Just make sure you do this with your eyes wide open and do it for the right reasons.

Are you thinking of buying a larger home now? Why or why not?

First Fridays Ventura

First Fridays Ventura

First Friday's goal is to promote the appreciation and sales of art in a relaxed, supportive and fun environment. Each month, visual fine art spaces in downtown and midtown Ventura offer a variety of special entertainment to compliment the collectible artworks on display. Demonstrations, lectures, music, and performance provide an opportunity for everyone to share in this unique Ventura cultural experience.

 

Flying Tomato Festival

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THIS IS HAPPENING! Flying Tomato Festival is officially on Tour and is so stoked to be in Pacific View Mall on Feb 27th, 2016. DON'T MISS THIS!!! This will be the event everyone is talking about this year. Grab everyone you know and LET'S DO THIS!
Flying Tomato Festival™ is the World's Sauciest Party™. Inspired by huge tomato fights from Europe - Tomato Festival combines an amazing concert with a huge Food Fight - and then sprays you down in the Rinse Cycle before you head home. It is pure adrenaline, and crazy fun! Tomato Festival started just trying to create an amazing event but was soon swept into a conversation about food waste and feeding the hungry. Tomato Festival donates meals and funds to Action Against Hunger at every event, and is fighting hunger by conducting local food drives as well as supporting several local non-profits. Visit our website for more details!
http://www.tomatofestival.com/
Participants receive the best swag in the business: a Terry Headband, Aviator Sunglasses, a classy Moustache, cool event T-shirt, terry sweatbands, fun fake tattoos and all the tomatoes you can throw.
Flying Tomato Festival is for people of all ages and children ages 11 and younger may attend for FREE when supervised by a paying adult. Tickets are on sale now. Prices increase soon so don't wait! Don't forget to like us on Facebook or Follow us on Instagram!
https://www.facebook.com/thetomatofestival/
https://www.instagram.com/tomatofestival/

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Farmers Market

-Oxnard

Every Thursday,

Open year round, the market offers an enormous variety of freshest local fruits and produce available as well as freshly prepared items such as bread, dried fruits, nuts, and more.

Location: Plaza park, 500 S. C St.,

Information: 805.247.0197

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Central Coast Comic Con

Ventura County Events

Central Coast Comic Con, Ventura's very own Multiple genre Comic Convention Comics, Anime, Sci-Fi, Horror, Steampunk, Cosplay, Gaming, Work Shops, Concerts, After Parties, Pub Crawls, Charities, Kids Activities, Film Screenings, all things geek Sheik at the home of the Ventura County Fair, the Ventura County Fairgrounds, Seaside Park.

Obon Festival

Ventura County Events

 

FREE admission and fun for the entire family! Exhibits and displays include Bonsai, Karate, Judo, Crafts and Craft Workshop in addition to authentic entertainment such as classical Japanese and Okinawa dance, Taiko Drumming, and children's games. Also, oriental foods such as teriyaki chicken and beef, Japanese rice (sushi), udon (hot noodles), Japanese pastries, and farmers market. For more information visit www.oxnardbuddhisttemple.org or call (805) 483-5948.

4th of July Fireworks & Family Festival

Ventura County

Ventura’s 4th of July Fireworks & Picnic! Have a blast once again as the Rotary Club of Ventura presents “A Salute to America” 2014 4th of July Fireworks and Family Picnic at Ventura College! Enjoy a booming fireworks show, live music, a huge Kids’ Fun Zone, and the friendliest hometown picnic in America! The Rotrary Club of Ventura is proud to bring back Ventura's annual 4th of July Fireworks Show & Family Picnic. Thanks to our generous sponsors and the hard work of our volunteers, the 2014 Fireworks Show promises to be be bigger and better than ever before! Tickets go on sale in June at all area McDonald's and Vons stores. Friday, July 4th at the Ventura College Athletic Fields. Click here to see a map:Location Gates open at 5 pm. Fireworks show begins at approximately 9 pm. Presented by the Rotary Club of Ventura