Earlier, I wrote about some of my friends and co-workers whose house purchases have caused me to suffer house envy.
Next on the list, Jessica and Tony. Jessica and I used to work together and she and I are in the same industry. Tony works in the engineering field. They do not have any children together, Tony has children from his prior marriage and just recently concluded his support obligatins. They live in the same county we live in.
Last year, they built a home that cost more than a million dollars. The home is more than 5000 square feet and has four bedrooms along with a pool. Taxes on the home are $20,000 a year. They have a $1.1 million dollar mortgage mortgage. Carrying costs, assuming 30 year mortgage and not including insurance costs (which in Florida are expensive), are $7000 a month.
As a comparison, taxes on our home are approximately $3500 a year.
Also, when Jessica and Tony sold their prior home they lost $125,000 on the sale. They had bought pre-recession and the value of their prior home had not yet fully recovered.
What do you think about this type of real estate purchase? On the one hand, Jessica and Tony have a gorgeous home in a great location. On the other hand they have a $1.1 million dollar mortgage and that type of debt would keep me up at night.