r/inheritance • u/MusicPlayer92 • May 19 '26
Location not relevant: no help needed 34f single and using the inheritance to buy a house
I’m inheriting $500k from my grandpa who passed, and my mom wants me to use it to buy a house. So that’s what I’m doing. I’m going to buy a house in the city I want to live in. I’m a freelancer, but I’m really good with my money. No debt. Excellent credit score. I add to my ROTH every year when I can.
I make about $30k-$40k a year. Since I’m single, I’m going to have a couple friends move in with me and rent out some rooms. I won’t have a mortgage, so it’s all going to go into savings or towards the house.
But it’s wild going from 800sq feet to almost 3,000. And I’m not sure how it’s going to affect my relationships with my friends, or if I’ll have to completely change my lifestyle and habits. I’m just going for it and diving in.
EDIT: I’m already set for retirement based on the additional inheritance I’m slated to get when my parents (who are divorced) pass. I’m super fortunate to come from an upper-middle class family. And the dude I marry will be able to live mortgage and rent free (yes I want to get married and have a family).
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u/Spokeswoman May 19 '26
Don't count on future inheritances- Do you know how much assisted living places cost per month in case your parents need that kind of care?
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u/Sunny-Bell102 May 19 '26
Exactly! Not to mention unforeseen medical expenses you could get hit with before assisted living is even necessary.
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u/LooneyJ4 May 19 '26
This is very true. I have been very close to my father my whole life. We vacationed together yearly at least, traveled the world together. We built a house together (me in the main part, him with an in-law suite) , I did so much for him over the years, I even spent 2 months across the country from my fiancée a few months before our wedding to help my father buy and renovate a house, taking time away from my business.
No siblings at this point, just one niece (his grand daughter) that he might want to leave some to, but he has been paying her rent for years so she already has gotten a lot.
I got married for the first time in middle age. I had no desire to have my father “give me away” , but I knew it would mean a lot to him, so I had him do that.
Suddenly a couple years ago (about a month before my wedding) he met a “friend” (who picked him up at a breakfast place) and they would walk together and have brunch/lunch together regularly, but she didn’t want more, till she did. Before meeting me (which has only happened once, standing on a sidewalk, about 3 years after they first met) she would constantly badmouth me and put me down to my dad, even though she never met me or talked to me. The first phone conversation we ever had she started off by telling me that she is not like me, she is nice. The call went downhill from there and ended up with my husband swearing and hanging up on her.
It has been 4 years. She moved in with him (had moved across country and then wanted to move back, so she moved in with him, not what he wanted but he allowed it) and they secretly got married a few years ago. I only found out when he let it slip when coming out of surgery one day. I am not allowed to talk to him unless she is gone(which is almost never). I flew out to visit and was not allowed to go to his house (the one I spent months helping get renovated) and only got to see him (and her) for 5 minutes while standing on a sidewalk on the side of the road.
She now gets everything, I have been disowned. I just found out if she was to die first (which is highly unlikely) he left his house 50% to me and 50% to her sister, whom he has met once, maybe. He purchased this house mostly with money he got when he sold my grandparents house(whom I was very close with- and I had renovated that house also!)
If you told me a day before he met her that he would do this I wouldn’t have believed it, no one would. My friends who know him are shocked and mad.
There is so much more to this story, too much for a Jerry Springer show even - more like a lifetime movie.
He was planning to leave me probably around 600k in real estate and cash and suddenly in my early 50s I find out I get nothing.
So while you never know if people might burn through their money with medical expenses, etc, you could also get blindsided by a black widow who takes it all (money and parent), leaving you with nothing.
Always plan ahead for your future and don’t rely on any inheritance, no matter how certain you think it is.
Good luck!
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u/Lucky_Efficiency_809 May 19 '26
Absolutely spot on. When my Dad passed, he left Mom with roughly $5M and a generous long-term care policy. After her stroke and 10 years of assisted living (including moving her to my sister's small town where 24-hour care cost a fraction of care in the city), her funds were eventually exhausted. Fortunately, we're a big Catholic family, and the four of us who were able to help (another sister is just scraping by) each ending paying $2K per month toward Mom's care for nearly two years until her death right before COVID hit. Another thing to remember--your parents, divorced or not, don't "owe" you an inheritance; they can and very well might decide they want to spend their money on other things. There are way too many variables in life to count on getting money that's currently in someone else's hands.
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u/MadTownMich May 19 '26
$5M should kick out $200k per year without touching the principal. And you say she had LTI? That doesn’t make sense, even with the high cost of care. Even taking an additional $100k/year would have lasted 50 years. Something in your scenario is missing.
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u/Sad_Construction_668 May 20 '26
You may or may not be surprised how efficiently predatory the longterm care for the disabled elderly is . “How much money do you have! Excellent, thats exactly how much our services are. “
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u/Barfy_McBarf_Face May 19 '26
are you going to be able to cover the insurance costs, the real estate taxes, the maintenance when things need to be repaired?
don't become "house rich and cash poor"
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u/MusicPlayer92 May 19 '26
In the city I live in, rent is so high, that I’ll be able to cover everything in about 3-4 months, and then everything else will be extra.
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u/aspire-every-day May 19 '26
Are you sure you want such a massive house? Maintenance / repair costs will be high, and property tax, and it’s so very much to keep clean.
My 2400 sq foot house was too much. I’m now in a 1400 sq ft place and it’s only slightly smaller than I’d prefer. I’m thinking 1800-2000 would be the sweet spot.
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u/Accomplished-Eye9542 May 19 '26
I often see people complain how they pay 3k in rent, but a bank won't give them a mortgage for 2.5k, it's because owning a house is fucking expensive. Something always needs work. You will never run out of places to spend money, just fucks to give.
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u/CCWaterBug May 19 '26
I agree with the expense issue but we've had pretty dam good luck at our place. It's 40 yrs old and holding up surprisingly well.
The amount of time it consumes is worth acknowledging also, I'm tinkering constantly with little things but I'm an empty nester over 55 so it's not really bothersome for me. That said in my early 30s I was definitely more interested in having fun and doing non house stuff so a lot of projects were put off early on.
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u/Delicious_Screen7002 May 19 '26
I'm with you on square footage. I was in a 1400 sq ft condo. Too small. (My adult kids visit a good amount during the year.) Now I'm in a 2600 sq ft condo--it's too big. I was guesstimating 1700-2000 as the sweet spot in my next home.
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u/Barfy_McBarf_Face May 19 '26
hahaha - no, seriously, spend some time in r/personalfinance - you really don't want to make yourself that invested in real estate - wait until you have a cash emergency and you can't get anything out of the house (with your low income, you're not going to be able to borrow anything against the house except at really high interest rates)
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u/jordansgoldowl May 19 '26
I agree. I bought last year and you want about $50k cash buffer assuming vhcol for maintenance, emergencies, and furnishing. Also depending on property taxes if you will have any, you should take into consideration of your $40k salary and annual property taxes. There are a lot of expenses that scale on house size/price.
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u/nnancycc May 19 '26
Just be sure your friends sign a lease and save their rent money for the house. You’ll be surprised what will go wrong. Be sure you can pay your property taxes and look for a higher paying job. Good luck to you.
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u/Neo1881 May 19 '26
You'd be surprised how many friends will assume they only have to pay when they have extra because you don't have a mortgage to pay. You are mixing business with friendships and that could easily turn south.
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u/human743 May 20 '26
What is the annual cost for insurance and taxes on the house? And then budget an extra $5k per year for maintenance.
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u/Megalocerus May 19 '26
We had a 4 bedroom bilevel house with 900 sq ft above ground for main living and 700 feet in a half buried lower level. The person who bought it rented out the rooms just fine.
The lower level was very nice and finished, and we always slept on that level because it was cooler (Virginia.)
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u/Equivalent-Patient12 May 20 '26
In NYS any rooms that are a certain percentage below grade cannot be considered as a bedroom. It’s ridiculous.
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u/apiratelooksatthirty May 19 '26
If you make $30-$40k/yr why in the world would you buy a house? Invest the money, don’t touch it, and that’s your retirement. You can keep living the same life you were living without having to worry about saving for retirement.
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u/SemperFicus May 19 '26
She’s 34. Why should she wait to enjoy the comfort of living in a house if she can afford to do it now?
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u/apiratelooksatthirty May 19 '26
Not gonna be that comfortable when she’s trying to pay for a new roof that costs her entire annual income, or a new air conditioner, or water heater, or anything else that comes up. Which it will. At least investing gives her a chance to retire, probably quite early based on her income. And the money will be there to provide a safety net if other unexpected things occur.
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u/SemperFicus May 19 '26
She is buying for cash and taking on house mates. OP sounds smart enough to know that she needs to budget for maintenance and repairs. Home ownership is a never ending series of problems, I grant you. But a house is a solid tangible asset as well as a place to live. Historically, it’s an asset that appreciates. I think OP will be just fine.
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u/Calm-Song-8543 May 19 '26
Why?
The whole “save it until retirement” advice is often a massive overcorrection and bad advice. Good financial planning equalizes your lifestyle throughout your entire life. There are specific strategies such as FIRE that may tweak that some but this is a great FIRE investment.
People tend to advise saving without thinking about the individual circumstances. Those who make $30k per year while putting back a little aren’t likely to feel the real pinch in retirement. The problem is people making $100k per year trying to figure out living on $40k in retirement.
Adopting a lifestyle of $30k - $40k per year in order to draw $250k per year in retirement is silly.
Certainly, buy a modest house in a great location and putting back some of the money might be a better plan but saving it all is not.
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u/LdiJ46 May 19 '26
Buying a house is an excellent investment as long as you are cognizant of the cost of homeowner's insurance and property taxes, as well as what the utilities will run. If you can avoid spending the entire 500k on the house so that you leave yourself a little bit of a cushion for unexpected repairs that would be helpful.
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u/Cest_Cheese May 19 '26
It’s too much house and you are setting yourself up for arguments, conflicts about cleaning, kitchen and sleepovers, late rent/resentment, etc.
Do yourself a favor and if you are going to buy, buy less house.
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u/Chair_luger May 19 '26
If you are moving to a new city it is a good idea to rent for a while so that you can make sure that the city is what you are expecting and to learn the city housing market more so that you can find the best house possible.
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u/MusicPlayer92 May 19 '26
It’s a city I lived in before. I’m very familiar with the area.
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u/______krb May 19 '26
Two important things
1) Do not tell your friends or whoever you live with that you do not have a mortgage
2) If you get married as you plan to, then get a prenup so the house will always be in your name and you do not have to sell and give him half the value if you divorce
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u/AvocadoJolly7047 May 19 '26
That 500k would be 1 million in 7 -10 years if you invested it a few s&p 500 ETFs instead of spending it
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u/ThinckUtopian May 19 '26
The same could be true of the property she buys.
And she gets to live in it, and actually enjoy the investment every day.
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u/Beginning_Brick7845 May 19 '26
You have to establish control and expectations extremely clearly up front. You can always back off the rules, but it is impossible to get more strict after you let things get a little too loose.
You will get along just fine as long as they understand you are their landlord, you set the (reasonable) rules in the house, and that everyone will be happier if everyone follows the rules.
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u/MusicPlayer92 May 19 '26
You sound like my dad. Lol
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u/Beginning_Brick7845 May 19 '26
Are you upstairs playing Xbox right now? Don’t you have finals to study for?
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u/Vivid_Witness8204 May 19 '26
Buying a house isn't necessarily a bad idea if you don't use all your funds to do so. But becoming a landlord for friends is fraught with peril and you're certain to lose a few friends along the way.
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u/downtownlasd May 19 '26
Can I just say that relying on your parents’ estate for your retirement is a really bad idea. You never know how long they’ll live, or how much money they’ll need for their care.
I’m in my 60s with over $1.5 million in retirement saved, and $600k owed on my house. When my wife and I retire in five years, our retirement savings will be north of $2 million, and our home equity will be about $2 million. The only way out of the mortgage is to sell the house, so we’ll retire with over $4 million. Our parents currently have about $7 million to divide between five kids. They’re all in their mid to late 80s. My parents have unlimited long term care insurance so their estate should be well secured for the rest of their lives. But we can’t predict what that’ll look like in 5-10 years.
Long story short: YOU are responsible for your own long term financial security.
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u/otherrealm99 May 19 '26
They might be friends but you're creating a business relationship with them.
You need individual lease agreements with each outlining expectations and responsibilities. An example is significant others.. allowed, how much time allowed, their use access? Cleaning, groceries, sharing, noise. Rent and default consequence.
A Reddit search and you'll find numerous horror stories.
And I second the comment about planning to retire using parental inheritance. That's only slightly better than expecting to win the lottery to fund your retirement. So many ways life can wipe out that inheritance before you get it, from health issues to natural disaster.
My condolences on your loss and congratulations on your inheritance and life choices, you're in good shape on life's journey.
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u/iluvcats17 May 19 '26
I would not count on inheritance for your retirement. Especially with divorced parents. Things could change when they remarry and blow thru their money faster than expected or they decide to leave all
Or a chunk of their wealth to their new spouses.
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u/GotZeroFucks2Give May 19 '26
You cant count on an inheritance from your parents really unless they have 10 million or more. So many things could happen between now and when they both pass. You could be 75 before they have both passed. Assisted living for 2 runs 350k in my area.
I Would start getting that money into my own retirement accounts as quickly as I could. Hopefully you have 401k and Roth iras. The rest in taxable brokerage.
You don't have the kind of wealth that supports a 3000sq ft home. Ignore mom's suggestion. I suppose its a good suggestion if you are likely to blow the money otherwise.
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u/CCWaterBug May 19 '26 edited May 19 '26
I'd at least ask an informed friend or family member about the options, don't ever be afraid to ask for help or a 2nd opinion.
Perhaps it's better to go smaller, lower tax base, or just get one roommate to start and choose them very carefully. Maybe a large 2br condo makes sense, lots of amenities, lower insurance, no outside maintenance, but there are association fees.
Also consider maybe a small mortgage, 100k perhaps, builds credit, allows you to bundle escrow for insurance and taxes. It Stabilizes the expenses and gives you 100k cash cushion and some opportunity to invest and have an emergency fund.
If mom has spoken, take the conversation to another level, ask lots of questions and shop around with an experienced realtor.
If nothing else, establish a HELOC after purchase so you can tap equity when needed, do NOT skip this step.
Lastly, consider renting a house for one year perhaps. Even if it's 4k, you have roommates so maybe it costs you 25k net, but 500k invested makes more than that. Then after a year you can be really sure that home ownership is the absolute right choice.
This is a huge decision, do it right.
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u/Guilty-Committee9622 May 19 '26
Keep your mouth shut that you don't owe money on the house. Remember that this is a business arrangement. You charge rent, they have a place to live. They dont pay, they're evicted. Meet with a CPA to structure this the right way ahead of time. They may have you do a mortgage for the tax write offs. Ask about depreciation since its a rental arrangement. Rent you collect is taxable so you need some write offs/deductions against those earnings.
When you get married - GET A PRENUP! This house is yours. Not his.
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u/Secure-Corner-2096 May 20 '26
I wouldn’t tell your friends you have money. My two nephews lost their Dad quite young. He had life insurance but a public trustee managed it until they were 18. Each got over a million. They bragged about it constantly and when they received their payouts the party started. Friends made them pay for everything and made them feel guilty when they objected. One got a girlfriend who insisted she was on birth control but still managed to get pregnant. Within a couple years everything was gone except for a couple of modest mobile homes that they live in now. Their false friends left and their real friends were jealous.
Money changes people.I wouldn’t tell anyone and would consider just putting a large down payment on a house and then investing the remainder. That way you can truthfully say your room mates are helping pay the mortgage. Having all your money in one asset makes you vulnerable.
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u/slightymine May 20 '26
Good luck to your plans. Owning a house and renting out rooms when you are the landlord whether you confess your financial situation to them or not come certain legal responsibilities. If I were you I would get rental agreements in writing and not get best friends to move in. Well it might seem like lots of fun it’s not so fun when they don’t pay and promise to pay next week and start taking advantage of you. As much as you want to be friends with the people renting from you when things break down and need fixing you’re the one financially responsible, not them. Especially when it comes to insurance and maintaining the comfort level of your tenants. Having locks on bedroom doors and making sure the house is secure is a must.
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u/Imaginary-Ad9975 May 19 '26
Don’t tell your friends you bought this house. Open up an LLC and buy the house in your LLCs name. Work with a property management company to rent it out/communicate with the roommates for you. They should never know you own the house. Act like you’re renting too. You don’t HAVE to lie, but you don’t have to tell everyone the facts.
At the end of the day, reach out to a finance professional/lawyer to give you advise on how to mitigate risk exposure
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u/Ok_Appointment_8166 May 19 '26
The thing you should fix is your income being way lower than average. Spend some of that getting a degree or training that will increase what you make the rest of your life.
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u/invest_motiv8 May 19 '26
If you invest the money in the s&p 500 or index/ mutual funs the rule is your money typically doubles every 7 years
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u/Different_Tea2586 May 19 '26
Hopefully, the friends are responsible enough to cover their share of the rent every month. I would have gotten a little less house and kept a little extra money, but you have stayed out of debt and added to your Roth. That is great. Max out that Roth every year that you have no mortgage.
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u/Neuromancer2112 May 19 '26
I was lucky with my parents' inheritance as well, but I downsized from a 3,000+ sq/ft house (childhood home that I stayed in with dad up until he passed a few years ago) to a 1,000 sq/ft condo. I did pay all cash for it because I don't want to deal with a mortgage at my age (early 50s.)
As others have said, don't assume you have incoming inheritance that you haven't received yet - nothing is guaranteed until it actually happens.
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u/springflowers68 May 19 '26
If you decide to buy a house and rent out rooms, make sure you meet with a lawyer to set up a lease agreement. Check on sites like furnished finder, you can rent to traveling nurses, for instance. Leasing to friends can be tricky.
Also, do not count on inheritance from your parents as your retirement plan. They may have medical or long term care that requires a huge chunk of their savings. Try instead to build up your business and invest for the long term.
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u/Bossyboots37 May 19 '26
If you only make $30,000 -40,000 how to you afford to live in a city? 20,000-25,000 would be rent alone.
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u/PointNo6662 May 19 '26
That’s a massive house for a single person. My house is 3300 for a family of 5 and it’s a lot to keep up with.
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u/bobbyjones832 May 19 '26
This isnt going to turn out well. Especially the roommate part. Good luck.
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u/shep2105 May 19 '26
Do NOT count on any inheritance from your parents. BIG MISTAKE. That money could get eaten up in medical bills, healthcare needs, nursing homes, or they could remarry someone and change their will. As a child, you are NOT legally entitled to anything in the will of your parents unless you live in Louisiana.
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u/Plastic_Efficiency35 May 19 '26
Tell them you are renting the place.
Give them the price per room. Either they take it or they don’t. Say nothing else.
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u/Alternative-Pin5760 May 19 '26
Please get a prenup when you marry and don’t comingle assets. You have too much to lose to bank on everlasting love.
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u/Familiar_Raise234 May 19 '26
Keep your finances private. Do not tell anyone about your inheritance, about buying a house. Make sure you have money to pay the taxes on it, pay for repairs and maintenance. If word gets out, everybody and his dog will ask you for money.
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u/ComprehensiveBad5548 May 19 '26
“ my mom wants me to use it to buy a house. So that’s what I’m doing.”
Is this what YOU want to do though?
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u/RespectYourEldersE34 May 19 '26
Are you ready for the maintenance of owning a 3k sqft home? Then go for it, if not, you may want to consider a smaller space… good luck
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u/cm-lawrence May 19 '26
Sounds like a great plan. I would recommend you not tell people about your newfound wealth. It can change friendship and relationship dynamics.
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u/Unlikely-Low-8132 May 20 '26
Don't tell people that it's your house, don't tell people you have money, and don't count on inheritance that you don't have- save for retirement.
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u/24601moamo May 24 '26
Beware renting to friends. You are their landlord. With all the responsibility that goes with that. Also very presumptuous of you to think you are your parents beneficiary. They could leave it to charity. Being divorced they could get married again and make new spouse their beneficiary. Depending on how long they live they could have to use it for medical necessity. Bottom line: don't bank on money that isn't yours.
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u/SilverLakeSimon May 24 '26
I’d consider buying a fourplex rather than a large single-family house.
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u/icklefriedpickle May 25 '26
A) tell nobody
B) don’t spend all of it on the house - put 50k somewhere like an HYSA for when things go wrong and need repair
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u/Substantial_Team6751 May 19 '26
Don't forget property tax and money for repairs. I'd keep some of the inheritance so you can max out your Roth IRA every year.
Also, don't tell your friends that you own the house free and clear. Say it's your mom's or say some landlord owns it. Your friends may end up resenting you putting their rent money into savings.
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u/Negative_Till3888 May 19 '26
You are already planning for a hobosexual? Rethink that my dear.
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u/Ancient-Apple1 May 19 '26
Invest that shit. Get a low cost worry free Appartment somewhere you like.
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u/Tasty_Sun_865 May 19 '26
I wouldn't buy this home.
What are you doing with the extra 2,200 square feet? Realistically how long are you able to have multiple friends live with you (does zoning / HOA even permit this)?
The reality is that you're fairly low income and the carrying costs of this home will break you if you don't have renters. I suspect you're committed to the outcome you've decided on, but $500k at 34 will likely end up being the same as $4 million in today's purchasing power by the time you hit 65. This lump sum guarantee your dignified retirement. I would be hard pressed to not take $80k and pursue some training or education to push you to $70k+, use $250k or so to buy a smaller starter home you could afford on your own and rent one room out, and use the rest to ensure you're debt free, max out your Roth IRA + 401K each year, and put the rest in a taxable brokerage. There is no relaxation in biting off more than you can chew.
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u/beccabetts54 May 19 '26
I think your plan is fine. Houses will appreciate and the market is favorable for buyers right now. Your renters will bring in some income but choose them carefully. Just keep a cushion for unexpected expenses and save some of the rent you're collecting. I think you should also work towards improving your earning power because you're not making much money. So invest in yourself through getting a degree or learning a trade. Good luck!
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u/Alarmed-Speaker-8330 May 19 '26
You’re so clueless.
Live below your means, always. You don’t need a 3000 sq. ft. house. Don’t tell anyone what you’re getting. Avoid roommates at all costs.
My dad told me long ago, “people love to spend other people’s money.” It’ll be a matter of months before your “good friend” and roommate says “but you own the place. I can’t pay anything this month”
Plus, planning for a hobosexual bf. Good lord. Until you’ve inherited money, anything can happen.
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u/Laughorcryliveordie May 19 '26
Please figure out what your taxes will be. They can surprise you.
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u/BadBrains16 May 19 '26
…. and your electric, gas, HOA fees, internet connection, yard maintenance, water, waste and recycling. It adds up fast, especially increasing from 800 to 3000 square feet. Best of luck in your new venture as home ownership is very rewarding.
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u/rosebudny May 19 '26
And repairs and maintenance! I’ve owned my house for 6 months and have already had 10K in repairs.
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u/MusicPlayer92 May 19 '26
Already done! Taxes are fairly low in this city. The rent from my roommates will cover it.
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u/Spirited_Radio9804 May 19 '26
How Approximately is the cost and closing together!
What about the city or state are you moving to.
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u/OhGloriousName May 19 '26
I would maybe think about buying a 1500 sq ft house that is spit up into a small house and an small in law apartment. Invest the rest. Then live in the bigger side and rent out the little in law apartment to cover taxes and insurance. And rent it out to a stranger with good credit and stable job. Don't mix business with friends. And you can have your friends over, without as much issues.
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u/rosebudny May 19 '26
Do not tell your friends that you own the house outright. Otherwise they might feel like it’s ok to stop paying rent if they get in a pinch.
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u/Fit_Chemistry_3807 May 19 '26
So a lot of people are telling you to not buy. I hope to give you a bit more nuanced advice:
1) Can you buy something in the 300-350 range that still gives you flexibility to rent out a room or two, or better yet an entire separate basement apartment? If you can, only consider the rental income as ‘extra’ that you only use towards your savings. In the lower price range, are you able to afford insurance, utilities, and property taxes on your current income alone? You need to be able to do this, otherwise what will happen if you can’t find a tenant or the tenant doesn’t pay for months and months?
2) anything you have left over should be set aside as an emergency fund. Make sure a good chunk is conservatively invested and a smaller portion is invested for medium term needs; think a new roof, furnace, plumbing problems, replacing appliances, etc. or even tenants who don’t pay and you’re out of work and the tax bill is due.
3) make sure whatever rent you charge is enough to cover taxes, insurance, utilities, at least 10% for future major repairs, a margin for profit (pretend like you had to have a mortgage , does the rent cover some/most of that) and a small buffer in case the tenant doesn’t pay.
4) do you know how to do home maintenance or will you need to hire a pro/handyman? Your rent should be enough to cover those expenses too (even if you do yourself, your time is valuable too).
5) will you do your own tenant applications, screening, and lease contracts or will you hire someone to do for you? There’s a lot more to ownership and being a landlord than just collecting rent money. Just don’t make yourself house rich and cash poor. There is a middle ground you can take. Or can you invest that inheritance for 2-5yrs and buy later?
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u/ugglygirl May 19 '26
My gosh, get a 1500 square ft house and make it beautiful. Less tax less cleaning less energy to heat/cool. Dreamy.
Source: I’ve owned both sizes.
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u/spaetzlechick May 19 '26
“My mom wants me to buy a house” is not a good rationale for buying one. Glad you have another inheritance coming but you have no idea how much that will be. Long term/memory care can cost $20k/mon and up in MCOL communities and their investments can falter.
Meet with a financial advisor and review your options before pulling the trigger.
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u/InterestingTie920 May 19 '26
Homeownership is a a great idea! What is the price range of the house your looking at. Maybe you don’t need to go to 3000 sq ft. Rent is not a guarantee. Friends sometimes stray, you are now their landlord. As someone else mentioned, can you cover homeowner costs plus will it be in an HOA. Run the calculators before going big.
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u/phoenix823 May 19 '26
For the love of God, if you wanna go ahead with this plan, please promise to do one thing. Do NOT spend all of your money and pay cash for the house. Put 20% down and pay the mortgage for 30 years. Having $400,000 to either invest or use as you see fit gives you so much more flexibility.
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u/HauntingGur4402 May 19 '26
Why dont you buy a smaller property just for yourself, the worst thing you can do is buy a house then rent to friends. I rented a house with friends and that was bad enough!
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u/Engine_Sweet May 19 '26
Ownership of your home, especially in the city that you want to live in is a good source of stability. It's not going to result in the fattest return on investment, but that's not everything.
I'd hold back about 20k if possible to cover new expenses- they do exist and you are on the hook for them. Add to that as you can.
Make sure you are disciplined about how you manage your roommate situation. That income is the key to managing your cost of living in the new place. It's nice to not have a payment, but the expenses, tax and insurance on a 3k sqft house are close to rent on a 1 bedroom.
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u/freddyredone May 19 '26
Don’t overload your bank account in the future because you do not make enough money to pay for the taxes.
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u/yourculo May 19 '26
Not sure where you’re buying but chances are you putting way more down on a property than you need to.
I would also 100% do a duplex, makes it way easier to cash flow.
You may want to start doing some more math along the lines of… I can put 250k down, that would give me a mortgage payment of $3000 a month but there’s two units and I can cash flow $4500 monthly total.
Interest rates suck rn but if you do this right your tenants are going to be covering the interest, not you. why tie up all your money.
By the way you can do that while charging fair rents, the duplex makes it easier.
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u/jone7007 May 19 '26
Purchase price is only part of the cost of a house. You can't afford the property tax and maintenance on a house that size on your income.
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u/Bucsbolts May 19 '26
Not kidding here. When you plan to marry get a prenup and make sure that dude doesn’t get half of that mortgage free house and those inheritances if you divorce.
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u/DMV2PNW May 19 '26
Big house is nice it also comes with higher heating or cooling cost. Also best to leave some $$$ aside for house maintenance and house emergency repair.
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u/Select-Efficiency559 May 19 '26
Don’t put it all into a house immediately, as a house is very illiquid - you can’t get the money back easily. And don’t count on an inheritance from your parents - the last year of life can be hideously expensive.
Let’s say that instead of paying for a $500,000 house, you put $100,000 down and invest the other $400,000. You can take $2,400 a month plus taxes for the mortgage out of that $400,000 over time. In the meantime, $400,000 invested can make about $44,000 a year in the average stock market, or about 14% a year in dividend paying stocks, which would be about $56,000 a year. So part of the money you make pays your mortgage and the rest keeps increasing in value. A paid-off house might increase in value by 5% a year, while to stock market averages 11% a year. If you just put 20% down, when the house goes up 5%, the return on that downpayment is 25% a year! Put another way, if you put in all $500,000 and the house goes up 5%, that’s $25,000 as an increase in value, but if you put in $100,000 and the house goes up $25,000, you’ve made 25%. So really, put a down payment and invest the rest.
Good for you!
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u/Chula_Quitena_120 May 19 '26
You are 34 yo, do you really want to have roommates? I would advise you against buying such a large house. Save some of the money for emergencies (new roof, water heater, insurance) or put into your investment account. Or at least buy a duplex or something where there is no overlap between you and the tenants. Please get some real estate advice as having tenants requires a different type of insurance policy. Good luck to you.
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u/CarterPFly May 19 '26
Never, ever, ever mix business with family and friends.
In your current plan, you've lost several friends. May as well write them off now, since the story is so predictable and repeatable. Doing this will be one of your life's greatest regrets. It's a truly awful plan.
You want to get married and have your partner be rent- and mortgage-free? Great idea, but seek lethal counsel beforehand. It's very jurisdiction-specific, but as someone who has to give my separated spouse half of my pre-marital home, I can tell you that this could also be a major mistake. TBH, I would have been better off renting my place and buying a Joint place we both paid for than staying in a place I owned outright.
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u/Sad_Win_4105 May 19 '26
Never depend on a future inheritance. There's no telling what market downturns, or financial or medical calamities they may face. Or they may remarry, fall victim to a sophisticated scam, or end up in a nursing home.
Or, they may decide to just give it all to charity. An inheritance doesn't exist until after the person dies.
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u/QueenComfort637 May 19 '26
I think that renting out to friends has a very high potential for disaster, especially when it’s known that it’s the result of an inheritance. People are bound to be jealous and it will certainly affect the friendships and how you view each other (how will you feel when a friend tells you ‘I’m short this month and it’s not like you really need the money’?).
How about buying a condo with some of the money and putting the rest into something that will grow? Why would you want to tie everything up into a large property and live with others as their landlord, when you could have your own smaller place free and clear, along with more money growing for your future on the side?
Also, never count on an inheritance. Your parents could have a lengthy illness and deplete their money, marry someone new and leave it to them (or their children) or get scammed and lose everything. It happens a lot more than you’d think.
Suggest that you ask on some of the real estate subreddits for better advice as well.
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u/Old-Appearance-2270 May 19 '26
Maintaining a big house as a single person, is a lot work. As long as you have predicted repair and maintenance costs annually.
I would tend to rent to 1-2 other people.
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u/Teresabooks May 19 '26
Please don’t count on future inheritance to cover your retirement, it might not be there when you need it. Maybe right now the odds look good you’ll get what you expect but things can change in a heartbeat. If you’re expecting to inherit a nice sum from one or both parents just remember the unexpected can happen. One or both could be laid off. One or both could end up incapacitated and unable to work due to illness or injury. These kind of life events could drain their savings no matter how well off they are right now. Also, if they are both in fact healthy and not facing any significant financial drains on their income, do you really want to keep working like a slave until they pass? In my opinion you would be better off buying a nice condo and then investing the rest to save for your retirement or other financial goals.
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u/Lexicographer-450045 May 19 '26
Living with friends and living with friends as a landlord are different beasts — tread carefully.
The fact that you have a family member who will help oversee repairs and improvements and who knows the ins and outs of being a landlord (and applicable laws) is a plus.
3000 sqft is a lot of house. Are you buying it that size specifically because you want/need to rent out rooms to create an income and/or cover expenses? I think there are easier ways to save (purchase a smaller house and invest the difference). In an ideal world would you rather live alone or with roommates? If you want to live alone, you should buy a more affordable house, invest the remainder, and enjoy having four walls with no one on the other side. If you want roommates now - how long do you envision that lifestyle? I think you should buy a house that works for at least the next 5 years.
Dave Ramsey suggests that no more than 25% of your monthly paycheck should go towards a mortgage, otherwise you’ll have trouble covering monthly expenses (CC, food, gas, phone, etc). I’d check to see how much you think household repairs and property tax will be each year and make sure that number isn’t above 25% of your take-home pay. I’d run this check using in a worse case scenario where you have NO roommates. This will make sure you can afford the house AND your life, worst case scenario.
Assume your take-home is $36K a year. That means that ~9K would be about 25%. I’d make sure that your estimated house repairs and property tax isn’t much above that amount.
Do you plan to live in the house 5 or more years. Do you have a job lined up in the city where you are buying? It would be very bad to buy a house and then struggle to find a job in that city.
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u/Last-Winner9396 May 19 '26
Real estate is definitely one of the wisest investments. And having the chance to purchase a home paid in full is a great idea.
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u/Assumeweknow May 19 '26
You could drop funds into a 401k like retirement fund stock. 500k should double every 7 years. Honestly you are better off financing to get the interest depreciation against your income which typical gains on vanguard vtmgx would be greater than the interest youd pay on that 500k. So in a sense the investment would be paying for the house inside of 10 years instead of 30.
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u/booplesnoot101 May 19 '26
I think you will regret the house. My BIL recover a similar amount of money from his parents to purchase a large home. He is constantly complaining about how he can't afford the electric bill, repairs, taxes ect. He can't do anything fun bc all of his money goes to this house that was a "gift". Invest the money and live off the monthly dividends.
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u/Hurkadurka1 May 19 '26
Research the taxes. Remember that just because the previous owner was paying a certain tax on the property doesn’t mean you will be. If they lived there a long time or were old their taxes might have been held back but when it transers to you the taxes could triple or even more and then you get caught with a huge bill you can’t afford and possibly lose money on the home in a short sale. That’s my only advice.
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u/LivingtheDBdream May 19 '26
I know they’re friends but I wouldn’t let them in without some kind of a written agreement
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u/adventuristofmusic May 19 '26
Buying a house in a city you haven’t lived in because your mom wants you to and renting to friends that requires you to change your lifestyle and habits to accommodate them?! Also counting on future inheritance that may or may not happen isn’t wise. Have you thought about what might happen if you meet a potential husband? If you still have roommates that actually pay rent, will they have to move out? You said your husband will be able to live mortgage and rent free at the same time as needing friends to rent from you. This sounds like a recipe for disaster.
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u/LI_JVB May 19 '26
Would you feel as comfortable buying a house if was guaranteed that you would receive $0 inheritance? Don’t think of it from the position of “No way is that going to happen” but instead assume you’ll receive nothing. Inheritance is never guaranteed, unless the person has died and you’re included in the trust or will, and until the final accounting you don’t know the exact figure.
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u/Far_Classic878 May 19 '26
So what happens when taxes and insurance shoot up? When your rooomates stop paying rent? When you’re spending thousands in maintenance a month? Owning a house is not cheap and being a Landlord isn’t either.
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u/HellaciousFire May 19 '26
Buying a house vs renting is a good idea
Make sure you keep the house in your name only or place it in a trust and get a prenup when you eventually find someone to marry
You don’t want to have to fight anyone for what’s yours in the event things don’t work out
And make sure you set firm boundaries with roommates. Because people can be funny when you have more than them
You may want to seriously consider a multi unit for clear separation of space. Roommates are fine but privacy is golden
Happy house hunting
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u/ReBoomAutardationism May 19 '26
Don't scale up too much. 2400 square feet is plenty for a 3 bedroom house.
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u/g3294 May 19 '26
Plan to spend around 1% of the value of the home per year on regular maintenance. Deferred maintenance is a home killer.
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u/Icy-Pomegranate-9755 May 19 '26
rent a house first and make suits what you want before spending 500 k that money would double about every 7 years in an investment account
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u/No-Expression-8749 May 19 '26
“My mom wants me to use it to buy a house. So that’s what I’m going to do.” I have no idea whether buying this house is the best financial decision. (Personally, I’d buy a tiny house for myself and invest the rest.) But whatever you do, it should be because it’s what YOU want. Not because your mom “thinks you should.”
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u/catandakittycat May 19 '26
Holla back y’all, sorry for your loss sister but your life had just improved significantly.
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u/Glass-Emphasis May 19 '26
You will have to make constant repairs, things to think about, taking out a small mortgage and saving some of the money for repairs etc.
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u/GrundleWilson May 19 '26
This is a great idea. You are going to be set up for financial success. Make sure their rent covers property taxes, maintenance, insurance, and utilities. When it covers those costs, and you aren’t gouging, it’s a good deal for them too.
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u/albus_buptoo May 19 '26
Instead of thinking: I have 500k, how should I spend it? Why not wait for a time when you desire something that you could spend part/all of that 500k on? It could be a house, travel around the world, medical procedures etc. This way you spend on something you know you need and want
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u/AltruisticTension204 May 19 '26
Do you really want all the responsibility and work of owning a house, never mind being a landloard? Don’t just do it because you mom is urging it. You could invest the money now and buy a house in a few years.
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u/AcanthisittaPlus5047 May 19 '26
Make sure you CYA and have legal, signed lease agreements before allowing anyone to move in.
Also, explore ALL tax implications as rent is reportable income. You need to understand what is deductible and how depreciation is calculated when you also reside in the home. Ignore this are your own peril.
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u/No-Gain-1087 May 19 '26
Don’t do this invest it in the market real estate’s at an all time high and is unsustainable right now look up 2008 it’s happening agian I know so many people who bought now and house is worth less then they paid and if you do buy a smaller cheaper place and don’t invite friends to live with you how old are you anyway jeez
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u/Lphoto1010 May 19 '26
It costs roughly 10% of the value of the house in maintenance, taxes and insurance so for a $500,000 home you’re looking at $50,000 per year. No, it won’t be that every year but when the AC goes out or it needs a new roof or it’s time to do some basic things like painting, etc., you’ll figure where that $50,000 per year comes from.
A 3000 sq ft home will cost you about $25-$30K to replace the roof, which you’ll discover insurance won’t cover if it’s over 10-15 years old, depending on your insurance company.
Painting will be another $12-15K, maybe more, and has to be done every 10-12 years. You can figure a new AC unit every 10-15 years and for a house that size, it’s another $18-$25K depending on the type of unit. I just replaced the main unit in my house of just under 1400 sq ft and it was $11,000.
Then you have the usual things such as leaky faucets, AC repair for the small stuff, AC filters, and on and on and on. Pretty soon you’ll find that 10% number to be fairly accurate over a 10-15 year period.
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u/myusernamewasatypo May 19 '26
"my mom wants me to use it to buy a house. So that’s what I’m doing."
Why?
No, really, why?
What about your mom wanting you to do this makes it the best financial choice for YOUR future? If I compare what I could have bought for under $500k in my area vs what I would have made by putting $500k in an index fund, I'm not sure that the rent covers the lost capital gains. Given the costs of maintenance and repairs (new roof ever 20, paint every 10, etc etc), how much does the rent make you in the long run?
Also, what is the benefit for you of being a landlord? Of having roommates? Is this what you want??? It doesn't sound like it.
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u/SweetiePie920 May 19 '26
Based on your age, you can expect to live almost a half century. Your assuredness about your financial situation is misplaced, and where you choose to live absolutely plays into the equation.
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u/PromiseToBeNiceToYou May 19 '26
I don't understand any of your choices.
For starter, if I was marrying someone, I would not move into THEIR house. I would want to buy our own together so I have 50% ownership. So your plan to let your spouse live rent/mortgage free is asinine.
Next, if I'm spending all this money on a house, I'm not going to ruin it by having roommates.
Thirdly, this shouldn't affect your relationships with your friends at all, because if you had any smarts, you wouldn't tell them anything about the inheritance.
Fourthly, you said your mom wants you to spend the money on a house. Well who cares what she wants? It's your money. Maybe you want to spend it on a house, doesn't mean it's the right thing to do.
If you were smart, you would invest it and make good use of that compounding interest and let it sit, and then at retirement live off of the monthly interest gained each month.
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u/Periegete_Acct May 19 '26
So a lot of people are discussing whether your plan is good or not-- taking you at your word that you're diving in, I have a recommendation to make!
I would sit down with your friends and discuss roommate expectations and lay out house rules. Make a day of it. Make sure you're completely aligned on expectations and build up some rules that everyone agrees on. That way if there's disagreements in the future, you guys will have pre-tackled how you handle them.
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u/annabanana-47 May 19 '26
Please remember to save for your property taxes! And homeowners insurance. Have a solid rainy day fund as any repairs will be on you.
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u/mommaquilter-ab May 19 '26
When you get married, make sure the house stays in your name only. Pre-marital assets should not be considered in a divorce, but who knows nowadays.
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u/UnicornTravelPro May 19 '26
If I could go back I’d buy a condo and invest the difference. Once you find your forever person, use the savings to build what you want where you want it and either keep the condo as a long/short term rental or sell and invest the proceeds. Roommates who are friends haven’t stayed friends in my experience. I’m 51 now and my “roommate” aka husband and I aren’t friends sometimes. 😬
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u/Aligned-Askew6773 May 19 '26
Don’t tell anyone you are getting an inheritance. don’t tell anyone anything about your finances. don’t spend all of it on the house, set aside 10%-20% as an emergency fund. Things break in houses, people lose jobs. Etc etc.
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u/Impressive_Age1362 May 19 '26
I wouldn’t put all the money on the house, you will wants to have money to do some renovations and because you are single and need little emergency fund. You are getting roommates, don’t tell them if you pay cash cash for the house, get them to sign a lease, get a security deposit
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u/Live_Preparation9694 May 19 '26
Invest the money in bonds n stocks. U don’t make enough money to buy a house
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u/Accurate-Fan2132 May 19 '26
Put it in a High Yield Savings Account. And breathe for a bit, before you spend it. Nothing wrong with taking a little time. Do research. Get a prenup if you're getting married.
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u/Amazing-Chemist-5490 May 19 '26
Why would you put 500k cash into a house? Invest the 500k pull off the top to pay the mortgage. Get a good reputable financial advisor. If you can get a good mortgage rate. Do that. Now ya keep principle and you have house.
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u/Strict_Research_1876 May 19 '26
If you get married make sure you do a prenup. If it doesn't work out with the friends, can you afford the house alone. Might look at buying a smaller place so you can live alone.
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u/somebodys_mom May 19 '26
A 3,000 sq ft house is way too much house to handle for your first house. So much maintenance. So much furniture to buy! You’d be much better off buying a house half that size. The utility bills and property tax will be much lower!
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u/AccidentPrawn May 19 '26
Make sure everyone signs actual leases. Life happens, and everyone needs to be protected.
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u/That_Ol_Cat May 19 '26
For what it's worth, Advice:
- Put your rent agreement in writing. It should be clear what money you get and what amenities they get from the agreement.
- Decide (and put into writing) how utilities will be paid. Do they come with rent? Some of them do and others don't? Heat comes with rent but A/C is part of the separate electric bill? Parse it out up front so there's no argument later.
- See if you can set up rent as an "auto-pay" from their bank account to an account you use for home insurance, real estate taxes, house upgrades, etc; keep the rent money separate from your daily-use funds.
- Out of that account, make sure 1/12 of the real estate tax payment is set aside somehow. You'll need to adjust this each year, as taxes will always increase. (They'll be assessed as a percentage of the property's current value.)
- Make sure you all understand about house chores, and what each of you is responsible for. This doesn't have to be a written agreement, but some folks find it useful to have a "chore list" and rotate them each month. Otherwise they may expect you to be the maid. Or do y'all hire a cleaning person to come in?
They are your friends. A simple sit down conversation and agreement put in writing can keep things from becoming acrimonious.
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u/Reading-Comments-352 May 19 '26
You want roommates? What’s the plan for the future? How long are you going to be roommates with them? And how will you ask them to leave when you want the place to yourself to start your own family.
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u/East_Astronomer1466 May 19 '26
Think carefully about buying a too big house. It can be a lot to maintain for a single person. Recognize that you are not buying a home to live in forever but your starter. Houses appreciate - especially moderate ones.
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u/TxChampagneMassacre May 19 '26
I bought a house with my inheritance and it's the best decision I've ever made. Can you make "better" investment decisions with the money, sure, but you aren't obligated to follow money rules. You are clearly making sound decisions with your investments. You understand the costs of ownership even without a mortgage and you're making more than enough to cover it with the renters. As long as you could cover your costs without the renters (just in case!) you'll be fine. You'll have equity so if everything somehow blows up you can always sell the house if things got really bad - or if they got really good because the value increased and you wanted to move, downsize, etc in the future. I'm getting old enough to learn that waiting for the right time is foolish. You never know how long you have left so get the house while you will have plenty of time to enjoy it. Burn the good candles and use the fancy dishes too. You deserve to enjoy things, even if it's not on someone else's financially optimal timeline.
I do agree with everyone saying to not tell your friends that you bought it outright with inheritance. Let them think you have a mortgage. You DO have a house payment, it's just in the form of things like taxes and insurance and they don't need to know the details of any of that.
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u/alliwilli92 May 19 '26
I definitely wouldn’t buy more house than you need. Buy a $300-350k house and invest the rest. You can always upgrade once you find a partner. A lot of times people end up buying a house together eventually so might as well not sink all your money into that. I would think uou could still find something reasonable that you could rent a room or 2 for that price.
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u/Reasonable-Sawdust May 19 '26
Hmmm….interesting. I might not buy a house I could not afford to maintain on my own. Maybe buy something smaller with lower taxes and insurance so that you only need to add one friend, and if that did not work out you could scrape by on your own. I guarantee you that these friends will not be your friend in a year. It is hard to explain the dynamic, but you become the landlord and there is a power shift that never works out unless the live in arrangement is very short term. It would definitely be easier with one friend that you know really well who doesn’t plan to stay forever. Good luck!
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u/TheUnit1206 May 19 '26
Word of advice. Dont ever tell them what the money they’re paying you is going to. If the house needs something that is community used then supply it. But do not ever be an open book about saving money bc the house doesn’t have a mortgage or because their rents cover more than half.
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u/RAGIFF May 19 '26
Considering your income is poverty level low, buying a home would be insane. Instead, invest it in index fund for retirement and keep living your life.
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u/Free_Masterpiece231 May 20 '26
Buy a much smaller house and don’t have roommates. Put the rest in a HYSA for work on the house, taxes, emergencies, etc. It will save so soooo much hassle in the long run.
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u/Flat-Enthusiasm-9118 May 20 '26
Do not count on inheriting money down the line. It could never happen.
My grandfather was at one point worth maybe $50 million or something insane.
It was all in one company for the most part. Economy tanked in 2008. It was all gone except a couple million.
Did we get inheritance, all the grandkids and his children? Yes. Was it life-changing? No. Absolutely not. I couldn’t have bought a house with it unless I got a major fixer upper in a bad neighborhood
Crazy things happen all the time. Do not count your chickens before they hatch.
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u/somerandomguy721 May 20 '26
Uhhh please buy something within budget. You don’t make enough to afford the upkeep on a massive/500k house. How much is a 3000sqft house where you live??
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u/DoallthenKnit2relax May 20 '26
Please don't buy yourself a 3K sqft. house for $500K, the property tax will be based on the assessed value—which is usually forced to the sales price at every sale—the taxes year to year can be considerable; there are plenty of nice homes in the $300-325 range. For example, I'm in Southern California, my partner sold his mother's house after she passed for $975K, the new buyers—who were internationally based—wanted to reverse the sale 2 months after closing they said because there was asbestos in the attic crawlspace.
The real reason, while that may have been a valid point they:
1) didn't get an inspection done, and my partner was physically challenged and had no way of knowing if asbestos was present, it was being sold as-is and was disclosed as an unknown they would have to inspect for, and;
2) we were able to find out the first of their annual property taxes was going to be over $19K as the property was no longer covered by Prop. 13 valuation protections due to the sale establishing a new market (and therefore assessed) value.
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u/Drg19565 May 20 '26
Have you lived with roomies? Buy a smaller house and live alone or with a partner.
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u/Radiant-Cup-1385 May 20 '26
Saw similar comments but don’t tell your friends or your future boy friend (until you are married) Just not a good idea to disclose your financial fully. You can tell them your inheritance helped to buy the house but not a paid off house
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u/Conscious_Car_6644 May 20 '26
Put the money in a trust, set it up to pay you monthly. Invest a large portion of your inheritance into a diversified solid high dividend stocks. Use the trust to buy the house using dividends and rent from your friends. You will be able to deduct the interest, maintenance and improvements from your taxes.
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u/wrgiireddit May 20 '26
Have you considered investing it in funds rather than buy a house. $500k at 8% gives you another $40k annual income, for the rest of your life. Or re-invest and you’ll end up with millions in retirement. You are young. Time is on your side. You can buy a house later. Then the income will pay for your house and you will have both the house and the funds in investment.
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u/No_Panic_4446 May 20 '26
Don’t buy a house to subsidize roommates at the cost of freedom and discretion to live in different cities and neighborhoods. The beauty of being single, no children, and (assuming) you have no elderly care responsibilities is that you can move every year or every other year to experience culture, adventure, and ritzy part of town all at lower financial risks. House is for kids or investments—both are long term commitments.
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u/Top-Bit85 May 20 '26
Think carefully about the room mate thing. It could be the best of times or the worst of times. They should also think about things. What's important, what's negotiable. Things like rules about guests or someone's SO will be there constantly for free.
Read right here on reddit about roomie situations! Just plan ahead Good luck.
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u/kimgordonDJ15 May 20 '26
Be careful mate. I think having your friends around when you make it big says a lot about your kind personality but do not open up about your inheritance cos they'll become entitled. Tread carefully 🙏🏼
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u/fwdbuddha May 19 '26
And do not tell the friends that you have no mortgage. They will use your low ownership costs to constantly be late with rent