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Would you take on a $2M home opportunity or stick with freedom and passive income?

Looking for thoughts on a big decision that balances homeownership with financial flexibility and lifestyle priorities. Here are a couple hypothetical scenarios I'd like to get this subreddit's input on.

Here's the background:

  • You already receive $65,000/year in passive income (post-tax).
  • You also work a job that pays $65,000/year post-tax, but you’re free to quit if you can make it work financially.

Scenario A: Take the House

You're given a $1 million gift to help purchase a $2 million home in Los Angeles. You take out a mortgage for the remaining $1 million. Between mortgage payments, property taxes, insurance, and upkeep, the home will cost around $110,000/year to own and maintain.

You have two options within this scenario:

  • A1: Live in the home You use your passive income and job income to cover the $110K in housing expenses. After all housing costs are paid, you'd have about $20,000/year left for everything else. The home is located near family and could be a great long-term place to raise your own family someday. But because of the high expenses, you’d basically need to keep working to make it all work financially.
  • A2: Rent out the home You rent the house out and collect about $60,000/year post-tax in rental income. Combined with your passive income, your total income without working would be about $130,000/year, but after subtracting the $110K in ownership costs, you’re left with just $5,000/year in net income. Since you’d still need to pay for your own place to live and cover normal living expenses, you’d likely still need to work, unless you live very lean.

Scenario B: Decline the House

You skip the opportunity and keep your $65,000/year in passive income. You’re free to continue working or not. If you keep your job, you have $130,000/year post-tax income. If you quit, you still have a comfortable $65,000/year to live on, with no housing debt or obligations and full lifestyle flexibility.

Which would you choose and why? Is the long-term value of owning real estate near family worth being cash-strapped for a while? Or does keeping full freedom and liquidity give you more peace of mind?

submitted by /u/salmonslapper2233
[link] [comments]

source https://www.reddit.com/r/RealEstate/comments/1lrb1bj/would_you_take_on_a_2m_home_opportunity_or_stick/
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