Amazon Is Coming To Crystal City, VA. How Does That Affect Our Financial Plans?

If you haven’t heard already, Amazon is opening half of its second headquarters (HQ2) in Crystal City, VA.

In a previous post on July 16, I discussed how Mr. FAF and I went house-hunting in Northern Virginia because Mr. FAF heard a rumor that Amazon was coming to the area.

At that time, we didn’t know which part of Northern Virginia Amazon had its sight on.

We knew that Amazon Web Services is located in Herndon, so we thought Loudoun County was a prime candidate.

We went to various open houses in that area to gauge the market and see what kind of house we’d like to buy.

We indeed found a house we liked and wanted to purchase.

The only problem was that we didn’t have the money to do so.

We felt pretty deflated, realizing that it’d take us a long time to save up enough cash for a down payment and the closing costs for a $600,000 home in or near Herndon.

That was the last house we went to check. And we are glad we didn’t have the money to buy that home.

In the morning of November 13, Amazon made the official announcement that it had picked Long Island (New York) and Crystal City (Virginia) for its HQ2.

Amazon is indeed coming to to Northern Virginia, just not the location we had expected.

Both Mr. FAF and I were shocked.

Amazon’s selection of Crystal City has huge implications for our future financial plans.

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1. Our house

We live closer to Crystal City than to Loudoun County. In fact, it is quiet convenient for us to commute from our house to Crystal City both by public transit and by car.

That means three things.

First, our house will experience major appreciation in the future once new Amazon employees are deployed at HQ2. The property tax on our house will increase drastically.

Second, if we were to rent out our current home, we would have a huge pool of highly qualified prospective tenants to choose from (both Amazon employees and professionals in the area).

Third, if we were to sell our house, we are likely to pocket a larger chunk of cash (due to appreciation and high demand) than we would otherwise.

Both Mr. FAF and I agree that our house is in a prime location, and that we need to hold on to this house instead of selling it. Our long-term plan for the house is to rent it out to either a family or different individuals (we can get higher rent this way).

RelatedWe Just Put $15,000 Towards Our Mortgage Principal. And This Is What Happened.

2. The next house

Instead of looking at houses near in Herndon, we have pivoted our focus to the housing market right in our backyard. We have narrowed down the search to single family homes within a mile from our house and the metro station.

The houses in our areas are in the $500,000s, which is cheaper than the $600,000 homes we have looked at in Herndon.

We might move to the new home or rent it out, depending on our needs. However, our priority right now is to save up enough cash for a down payment and the closing costs once the right home comes on the market.

We will have paid off the mortgage from the bank by the end of 2018. We still have $36,000 we had borrowed from Mr. FAF’s extended family to pay off starting in January 2019.

However, given the US-China trade war and the depreciating Chinese currency (the yuan), Mr. FAF’s extended family wants us to keep their money in US dollars until the currency appreciates (which is unlikely to happen any time soon given the political tension between the two countries).

That means that we could hold on to the $36,000 for a down payment for our next house in 2019.

In 2019, we will be able to save between $5,000 to $6,000 every month (after maxing out our 401(k) and 403(b) and paying for all monthly expenses). That amounts to $60,000-$72,000 a year, which equates 10% for a down payment of a $500,000s home.

We might also get a raise and bonuses in March, which will increase our overall savings. But we don’t want to count on that. We might have an emergency that drains most of our cash.

However, if everything stays the same, Mr. FAF and I hope that we will be able to buy our next home in late 2019 and early 2020.

There are early signs of a recession as the stock market plummeted in October, so we want to be cautious. We don’t want to jump into another house purchase if we can’t find a good house or if we think we’re getting laid off.

Not being able to buy another house in 2019 or 2020 won’t be the end of the world either. We set a goal and won’t be devastated if we can’t reach it, given that we will soon have a paid off house by the end of this year (2018).

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3. Careers

Mr. FAF

I have discussed Mr. FAF’s career a couple of times on this blog but never mentioned who he works for since I didn’t think it was important.

However, I will reveal the secret this time since it is pertinent to the discussion. Mr. FAF works for Amazon Web Services (AWS) in Herndon, VA.

Just a month ago, he was asked to transfer to another team since his boss thought he wasn’t a good fit. That caused Mr. FAF major anxiety and depression. In fact, he had long felt like a misfit on the team but didn’t have the guts to move to another team.

Ever since he joined a new team at AWS, he has become a totally different person. He no longer comes home looking depressed and frustrated. Mr. FAF told me that he feels more comfortable in the new group and likes his teammates more.

Coupled with Amazon’s move to DC, Mr. FAF told me that now he can see himself working at Amazon for the long haul.

Amazon is bidding for a cloud contract worth $10 billion from the Department of Defense. If Amazon wins the contract and expands their office in Crystal City, there will be more career opportunity and upward mobility for Mr. FAF.

Me

I have been working at the same job for three years. Recently, I’ve been thinking about a career change. And Amazon coming to DC is just a perfect opportunity for me to explore a potential career with the company.

In Crystal City, Amazon will hire 400 in 2019 and $1,180 in 2020. Most of those, I assume, will be software engineer positions.

I am no engineer, but I will try to explore non-technical jobs at the company. I currently work as a Research Analyst at a nonprofit in DC, but many of the skills I have will be transferable to the private sector as well.

4. Stocks

As part of his package, Mr. FAF gets stocks from Amazon. The stocks will be invested 5% after his first year, 15% after the second year, %40 after the third year, and 100% after four years.

Mr. FAF has been working at Amazon for a little more than a year. If he doesn’t change employers and stays with Amazon, we will be able to get a sizable number of Amazon stocks after his 4th-year mark, which I hope will happen.

5. Saving in transportation

We have felt somewhat restricted with one car but are hesitant to buy another one.

When Amazon comes to Crystal City, Mr. FAF will try to transfer to another team in the city so that he can take public transit instead of driving two hours both ways to work every day.

Amazon reimburses their employees if they take public transit, so we hope to be able to save hundreds if not thousands of dollars on transportation each year. If both of us take public transit, I can drive our kids to daycare or just use the car if need be.

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Conclusion

The plans above sound promising. But they depend on whether Mr. FAF and I can hold on to our jobs. And of course, as part of life, many things can go wrong and cost us thousands of dollars in the process.

However, I still want to lay out what plans we have in order to work towards them. If we just sit at home thinking about a dark future in misery, that would only dampen our spirits and motivation.

We never thought Amazon would open a new HQ near where we live. But since it is happening, we want to make advantage of this opportunity to build a stronger financial future for us and our family.

Related:

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Why We Feel Under Pressure To Buy Another House

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10 thoughts on “Amazon Is Coming To Crystal City, VA. How Does That Affect Our Financial Plans?”

  • Oh wow, BIG stuff! I had a sneaking suspicion that Mr. FAF worked for them – it sounds like this announcement will afford your family opportunities in more ways than one!

    Woof, that’s a killer commute … I can’t imagine. Lots of podcast/music listening, I assume? (Any recs?)

    • I wonder what gave away the secret hehe 😉 Both of us have a long commute. I usually listen to FI/RE podcasts such as the Rental Income Podcast, Choose FI, and Afford Anything. Mr. FAF listens to the Economist podcasts and C-SPAN (I think).

  • That’s great news for you guys. Amazon should lift up the whole area. If you find a house you like, I’d go for it. You can take out a second mortgage against your current home to get some cash for the downpayment. You need to think like an investor and take advantage of this opportunity. Amazon will change the area a lot. Nice.

    • Mr. FAF also mentioned taking out a mortgage against our house, but I’m still nervous about it, especially we have 2 young children. We’ll see if we can find anything we like and go from there. I also think Amazon will change the area too. Prices going up is a start 😉

  • Ooooh I wanna see how this goes! Are you glad you guys didn’t buy the house in the other county then? I wonder if people bought it with the same thought as you thinking it would land there. I’m surprised NY was chosen and that they split the headquarters into 2.

    • I’m SUPER happy we didn’t have the money to buy that house in Loudoun County. If we had money at the time, we would have put in an offer for sure. Funny how not having money helps sometimes =))

      I was surprised they chose NY too. It’s so expensive there already. But when you think about it, it kinda makes sense. Seattle = tech; DC = politics; NY = finance. Amazon has their bases covered.

  • Yea I was surprised at the locations that Amazon chose though I hadn’t really followed the process. I thought they wanted an area with affordable housing!! Amazon HQ coming to Queens (where I live though not my neighborhood) and near you…can be seen as a good thing and a negative one. We live in a 800 sq foot co-op which might see even more appreciation but we were hoping to get a bigger place with 2 growing boys. We might be priced out of Queens in the near future. It’s great that you have a house as you can keep it as a rental or AirBnB =)!!! With my co-op, we aren’t allowed to rent it out so we’d have to sell when we move.
    Oh and that’s a rough commute! Mine is about 1 hour without traffic (which is almost never) and usually about an hour and a half. It was 3 hours when it snowed like a week or two ago!

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