conversation: User (monsterdoodle): "My wife and I are interested in buying some land and building a custom house, but we really would love to know if it’s something that’s doable for our finances. With the land, permits, and house construction, the project we’re looking at could go up to $750k, which is much more than we were originally thinking. But if we plan on putting roots down and living there 20+years, maybe it isn’t unreasonable? \n\nWe are 31 years old. My salary plus bonus is $115k/yr, her salary is $43k/yr. We are debt-free dinks for now, but would like to grow a family soon. Right now we spend $1600/mo on rent and save $4k/mo. \n\nWe currently have $140k in savings + checking accounts, $268k in a professionally managed investment account, and $70k in 401ks. We’ve made a lot of sacrifices to get where we are today and want to move forward with the project, but also don’t want to be house poor or drastically impact our financial trajectory.\n\nAny advice would be greatly appreciated!\n\nEDIT: Thank you all for the sound advice! You shared some very compelling reasons why the project likely isn't a good idea. We read through your comments in detail and agreed to not move forward, at least not for now. You also gave us some great tips if/when we take another look at it. So thank you again!"
  Self: "You’ve got more than 400k in non-retirement Savings.  If I were in your shoes, I would just buy a $300-$350k starter house in cash (using the rest to pay for closing costs, and leave a good sized emergency fund).  This would be attractive for several reasons:\n- No mortgage, which will allow you to ramp up your savings rate even more.\n- You won’t be wasting money on space you don’t need yet while you’re still dinks/ a young family.\n- If/when you do have kids, you’ll know better then what neighborhood, school district, size, and type of house you will really need and want for your family.\n\nIf you buy well, then you really won’t lose any ground towards getting the custom house later - you’ll have a lot more money available to save, you won’t be sending all your money to the bank in mortgage interest, and the starter house will appreciate in value, too.  You may very well end up ahead, financially.  "
  User (monsterdoodle): "That is essentially our alternative plan. Most of the homes in the middle range $400k-$600k don't seem very attractive to us, so if we're going to go with a non-build, I think we'd do just as you're saying. Super affordable and ramp up savings. \nGood point. For some reason we get into this now-or-never thought process, which really isn't true. We could always upgrade later."
  shhimatwork (shhimatwork): "It is insane to pay cash for a house when interest rates are this low. You would be leaving a large chunk of money on the table by doing this. Putting down 20% and investing the rest would on average yield you an extra 3% return per year. If anything bad happens/emergencies occur you can easily pay the house off at any time using your existing savings.\n\nHow does ramping up your savings rate even more with no mortgage help when you have wiped out $200k+ of your savings right off the bat? Having that money liquid in the market/savings is much safer and will actively make you more money."
  User (monsterdoodle): "Yeah I was just about to say this... we wouldn't actually pay in cash, we'd finance it and keep most of our investments in our managed portfolio that generates higher interest. But the point of going cheap is the option we'd go with if we abandoned the build project."
  shhimatwork (shhimatwork): "Great, I keep seeing this advice on this sub and its just flat out wrong in 99% of the cases."
  