House purchase advice needed

Currently my wife and I and our 2 toddlers live in Manhattan in a 1 bedroom apartment.

She found a 3 family house she likes near her parents and she wants us to get it.

My concerns are:
1. Price - if we empty our bank accounts and assuming we rent out the other 2 units, our monthly debits (mortgage, insurance, taxes, electricity, food, etc...) will be about 90% of our take home money. That does not leave a lot to save for the kid's college or if one of us loses a job.
2. Renters - I always hear stories about horrible renters who stop paying and so on. NYC is a liberal city so of course they will side with the folks who want to squat :)
3. Location - Its in Brooklyn, and to me its too congested - I grew up on Long Island and we had a bit more space.

Her ideas are:
1. Its future income (once the mortgage is paid off). Her brother/sister in law bought a multi family unit about 15 years ago and now its fully paid off and they are getting 4k in rent money every month. Her parents also are living in a multi family unit that they just bought last year.

2. Proximity to parents - I am currently working in NJ, but after my project is over I could travel for work again (I travel for 13 of the last 15 years) and she likes the idea of her parents (and her brother/sister in law) all being close to her. In case she needs anything and so on. The house will be about a 5 minute walk from her parents and a 10 minute walk from her brother.

Thoughts?
TIA!

Fuck no, you will only have 10% of your paycheck for emergencies??

Na son

I'll pass bruh

You feel me homie

That bish is crazy

Thats what I'm thinking!

But we're chinese so if theres any problems we can count the family to help out.

In my experience I have found that I would get a primary residence based on your personal needs and income, not with future renting in mind. Chances are you will sell it to purchase the next home. Put your happiness first.

My wife and I are currently selling our first place and upgrading our home. We initially wanted to keep it as a rental property. But the numbers just didn't add up for us.

90% is spreading yourself REALLY thin

Wait, you only get 10% of your take home money IF you rent out the other two units?

So, if you go 1-2 months with no renter/payment, you're fucked, right?

This seems like a no-brainer.

jkd_guy - Currently my wife and I and our 2 toddlers live in Manhattan in a 1 bedroom apartment.

She found a 3 family house she likes near her parents and she wants us to get it.

My concerns are:
1. Price - if we empty our bank accounts and assuming we rent out the other 2 units, our monthly debits (mortgage, insurance, taxes, electricity, food, etc...) will be about 90% of our take home money. That does not leave a lot to save for the kid's college or if one of us loses a job.
2. Renters - I always hear stories about horrible renters who stop paying and so on. NYC is a liberal city so of course they will side with the folks who want to squat :)
3. Location - Its in Brooklyn, and to me its too congested - I grew up on Long Island and we had a bit more space.

Her ideas are:
1. Its future income (once the mortgage is paid off). Her brother/sister in law bought a multi family unit about 15 years ago and now its fully paid off and they are getting 4k in rent money every month. Her parents also are living in a multi family unit that they just bought last year.

2. Proximity to parents - I am currently working in NJ, but after my project is over I could travel for work again (I travel for 13 of the last 15 years) and she likes the idea of her parents (and her brother/sister in law) all being close to her. In case she needs anything and so on. The house will be about a 5 minute walk from her parents and a 10 minute walk from her brother.

Thoughts?
TIA!

90% is way out of proportion. You'll be "house poor" and your quality of living will take a hit once you realize you literally have no money to go out with the guys or your wife can't go shopping with her sister because you guys have no spare cash. 

Plus I'd be surprised if you could get a loan with that type of DTI ratio. Unless you're buying it outright?

At most, and I mean at most your mortgage payment shouldn't exceed 45% of your gross income but really it should be in the 30% range for you to be comfortable. 

PM me if you have specific questions or need advice. I'm in real estate and happy to let you bounce questions off of me. 

Thanks for the replies everyone...

Ok, I will add a little bit more info here that might sway it to her point.

Yes it will be 90% of our take home, but that includes all our bills, including nanny ($2500 a month!), cell phones, internet, etc...

If I cut my company stock purchases (our stock price has sucked anyway) - that would put an extra 500 in my pocket per month.

And my wife also has a studio that she is renting out (that is fully paid off) - so if we are in dire straits we can always sell that...

And when I say empty our bank account...well...I'll still have a drugs/hooker/BBC account hidden that will have about 6 months of living expenses.

oh...and her point about money is this:

If we rent out the 2 units and apply that money toward the monthly mortgage, the amount left over is about how much we would have to pay if we were to buy a single family house anyway.

That is true - but if we bought a single family house we wouldn't have to raid our savings accounts for the big down payment (or sell our current apartment)

You lose a tenant, you lose a job, etc. and you are bankrupt quickly.

No chance do I take that deal.

It will add a ton of stress to your marriage.

jkd_guy - Thats what I'm thinking!

But we're chinese so if theres any problems we can count the family to help out.
How dare you parade your Chinese privilege and casual racism around this upstanding forum!


While it seems like a bad idea to me, if your wife gets her way your vetting process for potential renters has to be exceedingly thorough.

Cutty McButts - 
jkd_guy - Thats what I'm thinking!

But we're chinese so if theres any problems we can count the family to help out.
How dare you parade your Chinese privilege and casual racism around this upstanding forum!


While it seems like a bad idea to me, if your wife gets her way your vetting process for potential renters has to be exceedingly thorough.

#asianprivilege

although her brother/sister in-law don't like renting to asians.

They feel that they overcrowd the house with too many family members and are dirty...they're not that wrong actually...

Have you gotten pre-approved?  If so, you should know what your principal and interest split is on any given payment. 

Look at it this way: how much principal are you paying down each month and how much is the contribution from renters.  That amount is equivlent to your savings. 

On the flip side, you should always have enough liquidity to weather 1 month of vacancy.  

 

If I have enough cushion to weather the vacany, I would do it.  

Lol at rationalizing that debt to income ratio