It’s actually more of a theory than a rule, but the $50,000 Rule applies to anyone looking to buy a home in Virginia Beach. It gets its namesake from the difference between the amount a homebuyer really wants to spend and the price of the home they really want to buy.
After a day or two of house hunting, it usually comes down to this. “We want the kitchen from house A with the backyard from house B in the school district from house C.” The good news is that you can have all of these things! The catch is that the $50,000 Rule applies.
I had a friend recently move to Texas. “You wouldn’t believe this house we bought”, he said. “After using the remote control to open the gate, I park next to the fountain in the middle of my gigantic circular driveway. It only cost $300,000!” I’m not sure if he meant the house or the fountain. I think it is safe to say that the $50,000 Rule doesn’t apply in Texas.
But we live in Virginia Beach, and there isn’t a foreclosure on every corner like the news says there is. While you won’t find homes with fountains in the driveway for $300,000 you will find great value and it will cost you much less than the sticker price implies.
Let’s say you are looking for a home in the $400,000ish price range. How much extra would it cost you per month to buy the $450,000 house that you really want? This is an important question because the price tag is independent of the value. There are great values at $400,000 and great values at $450,000. Just like there are overvalued homes at both of these price points.
But let’s say we find two homes that are great deals at $400,000 and $450,000. What does your $450,000 decision actually cost you per month?