We live in California where $1 million gets you a fixer-upper. Should we stop investing $5,000 a month and buy a home instead?

We live in California where $1 million gets you a fixer-upper. Should we stop investing $5,000 a month and buy a home instead?

‘Would we be better served to continue putting $5,000 or more into stocks each month, buy a rental property in another state where the market is great?’

My wife and I are in our mid-30s and live in Southern California and have a combined income of about $350,000. We currently invest $5,000 a month into index funds and ETFs. We have recently begun to look at homes as our rental costs about $4,500 per month. However, for even $1 million in our area, you will get a fixer-upper that is over 60 years old, which is undesirable to us.

Moving out of SoCal isn’t an option because of work. With an annual income of around $350,000 which is projected to increase again soon, should we try to save the requisite $300,000 or more for a jumbo mortgage in SoCal with a mortgage that will likely cost our current rent — plus the $5,000 we put into the market monthly?

Or would we be better served to continue putting $5,000 or more into stocks each month, buy a rental property in another state where the market is great (say for $250,000 or less) and continue to rent?Sincerely,

Cash-strapped in SoCal

‘The Big Move (link)’ is a MarketWatch column looking at the ins and outs of real estate, from navigating the search for a new home to applying for a mortgage.

Do you have a question about buying or selling a home? Do you want to know where your next move should be?

Your situation demonstrates how difficult it can be to make these sorts of housing decisions when you live in an expensive part of the country like Los Angeles, Seattle or New York. In many other parts of the country, a couple who made a combined income of $350,000 wouldn’t have much trouble finding a home they could afford, but it’s not so straightforward in places like Southern California, as you’ve seen. Continue reading “We live in California where $1 million gets you a fixer-upper. Should we stop investing $5,000 a month and buy a home instead?”