Buying real estate when in med school

If you look at the topics way down the page below and/or do a search, you will find many, many threads on this very topic with lots of good advice.

In my opinion, you know you'll be there for 4 years but there's no guarantee you'll be there any longer depending on what residency you match into. Traditional thinking is that you shouldn't buy a house if you don't think you'll live in it for 5 or more years. Of course, this is no longer a market that makes much sense - depending on where in the United States you are looking to move. Some places have even reported increasing home sale prices (Charlotte NC), while many others continue to report dropping sales prices and lots of foreclosures.

Regardless, if you do have to move for your residency, you'll need to either sell your condo or rent it out. While the market should go up in the next few years (I mean, how much further down can it go, right?), there's the chance that your condo could still take a while to sell. This would mean you'd be paying that mortgage in addition to rent in your new place. Or you could look to rent it out, but you'd need to get a property management company if you will be living in another state and you never know how good or bad the tenants might be.

Also consider that if you own the property, you'll be responsible for any repairs. You sound like you'll be living on loan money in the first place. Where will you find the money if the fridge breaks or you need a plumber? Do you have enough loan money to cover that?

My opinion will probably be more cautious than others on here because I've been burned before with a house where I thought I'd be there for a certain number of years, and in the end we moved much sooner. I can tell you that there is a lot of stress that comes with having a house and feeling tied down if you are still in a mobile part of your life. To many people, they think renting is like throwing money away. This is not always the case after you take into account costs of possible repairs, realtor fees associated with selling just a few years later, property management if you have to rent it out if you can't sell it, etc.

Where there's risk of course there is also potentially reward. You're hoping the market will improve from where it is now. And you might not have any needed repairs and your condo might sell easily 4 years from now. It's all a possibility. It's just not a chance I'd personally be willing to take if I were a single person living off med school loans and a large chance of moving again in 4 years. If you're married or have a partner with a source of income, then of course I'd be more willing to take the chance. Other than that, I'd be happier and less stressed renting with no financial ties. Just my opinion!

Real estate varies highly in different areas. Given that you won't be sure of your location for residency, there is no way to know what the market will be like in 4 years. If you get a place where you can rent out a room or two to help with costs, you might make out okay. It's also possible that you could be stuck with the place, have it be worth less in 4 years, and need to move to a different area.

My personal thinking is that med school is stressful enough, and I'd rather not have this hanging over my head.

Again, you really need to know the area to make an informed decision.

gman33 said:

Real estate varies highly in different areas. Given that you won't be sure of your location for residency, there is no way to know what the market will be like in 4 years. If you get a place where you can rent out a room or two to help with costs, you might make out okay. It's also possible that you could be stuck with the place, have it be worth less in 4 years, and need to move to a different area.

My personal thinking is that med school is stressful enough, and I'd rather not have this hanging over my head.

Again, you really need to know the area to make an informed decision.

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I've posted about this many times before, but this post sums it up Any other advice you receive is pretty much worthless unless it is location specific.

here's a handy calculator:

http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html

If you're planning on staying in one city for 7 years, it probably makes sense to buy a house. I know a lot of people wonder if they'll break even after 4 years and all, but really...so long as you can sell the property for more than you owe on it at the end of 4 years, then you'll be making out better than if you had rented...assuming you'd rent at about the same price range and all. Depending on the market, you may want to look at the price range and what type of property students and residents are buying in the area (houses vs condos vs townhouses) because they might have a higher turnover rate due to the constant flux of people looking to buy and sell.

Just as buying a house can be frustrating, so can renting...so figure out what works better for you. Some people are more comfortable being in control of their home, other people feel better knowing that someone else has to take care of upkeep. Also consider if you've got pets and how easy it is to find a place that allows animals if you rent.

BluePhoenix said:

so long as you can sell the property for more than you owe on it at the end of 4 years, then you'll be making out better than if you had rented

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Not at all true. This is why you need to do the exact calculations for your personal financial situation.

You have forgotten that even if your mortgage payment was the same as your rent, as an owner you have to pay closing costs, taxes, insurance, HOA fees, and 6% to the realtor when you sell.

Try looking for a house on that is on foreclosure. These are usually sold for cheap.

MeowMix said:

Not at all true. This is why you need to do the exact calculations for your personal financial situation.

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Absolutely agree with this. In addition to be ing location specific, rent vs. buy is very financial situation specific, as well.

You have forgotten that even if your mortgage payment was the same as your rent, as an owner you have to pay closing costs, taxes, insurance, HOA fees, and 6% to the realtor when you sell.

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It all depends upon the circumstances of the mortgage. Rent = Mortgage Interest (adjusted for any tax benefits you receive for deducting it) NOT "mortgage payment" (principal + interest.) You get the principal back when you sell, assuming the house doesn't lose value (probably a pretty good assumption these days since many housing markets are currently in the toilet.) But the other expenses that you mention are all valid and must be accounted for. The one that your forgot is upkeep. My rule of thumb is 15% of mortgage payment for average monthly upkeep. It's just a rough rule of thumb, but it's been more or less what I've ended up spending on upkeep for my houses. Also, when all is said and done, my rule of thumb for sales is that it costs about 10% of the sales price to sell a house (4-6% of which is commission to the realtor, plus closing costs to sell, repairs to get the house in salable condition, etc, etc.) HOA fees are easy to avoid: Don't buy a house that is part of an HOA.

OP: If you think that you have a better than 50% chance of staying in Boston for residency, I'd seriously consider buying. Look at the rates of matching at the various hospitals in the area and try to see what your chances are. Unfortunately, I am in Dallas-Fort Worth, so I really don't know much about the Boston real estate market conditions. I am in a similar situation as you, however -- I bought a house here, and would like to stay here for residency (both to maximize my real estate investment, as well as because my family and I actually really like it here.) But, I planned for the worst (i.e. I would have to move after 4 years of medical school,) did the math, and made decisions to maximize my chances of not losing my shirt (i.e. bought in a good location, shopped around for good financing, negotiated for a good price.)

BTC said:

here's a handy calculator:

http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html

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This calculator is the heat. I like how you can adjust all of the inputs to make it fit your exact situation.

How do you guys pay mortgage without having any source of income??

medalofhon0r said:

How do you guys pay mortgage without having any sourse of income??

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The same way you pay rent.....usually by writing a check.....

I struggled with renting/buying before I started, and still do even heading into the second year. However, I can say this, nothing makes you feel better than to know your not tied down with a home, and if the water heater goes out ect... I don't have to worry about it.
Rent. Its simple, the peace of mind that goes along with it far outweighs the uncertainty in the housing market right now.

Futuredoctr said:

I struggled with renting/buying before I started, and still do even heading into the second year. However, I can say this, nothing makes you feel better than to know your not tied down with a home, and if the water heater goes out ect... I don't have to worry about it.
Rent. Its simple, the peace of mind that goes along with it far outweighs the uncertainty in the housing market right now.

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I've rented since I was a freshman in college...so for about ten years or in $$$ terms about $750/month for 120 months or $90,000...wow, wish I didn't just do that calculation, ignorance was bliss).

I agree it is nice to not worry about a lot of things that comes with owning a home, but, there is some peace of mind that comes with owning your own house as well.

For me it is a no-brainer at this point. I am starting medical school with a family, I have enough for a 20% down payment which will also shelter this money from the financial aid office so to speak), interest rates are low, the market is down, I will save at least $400 dollars a month in rent vs mortgage payment, I am done renting and moving renting and moving...and in the end, if I lose a couple thousand verses what I would have paid renting....it is ok, I have learned a lot about home buying and will do much better for myself when it is time to be a real nice one as a doctor.

As for making the payments...you have to live somewhere, whether you are renting or paying on a mortgage, it is the same.

elderjack21 said:

I've rented since I was a freshman in college...so for about ten years or in $$$ terms about $750/month for 120 months or $90,000...wow, wish I didn't just do that calculation, ignorance was bliss).

I agree it is nice to not worry about a lot of things that comes with owning a home, but, there is some peace of mind that comes with owning your own house as well.

For me it is a no-brainer at this point. I am starting medical school with a family, I have enough for a 20% down payment which will also shelter this money from the financial aid office so to speak), interest rates are low, the market is down, I will save at least $400 dollars a month in rent vs mortgage payment, I am done renting and moving renting and moving...and in the end, if I lose a couple thousand verses what I would have paid renting....it is ok, I have learned a lot about home buying and will do much better for myself when it is time to be a real nice one as a doctor.

As for making the payments...you have to live somewhere, whether you are renting or paying on a mortgage, it is the same.

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I think its a no brainer to buy a home if you are in a market where around 100K buys a decent/safe home. Some of these places like CA/FL where places are 250K+ is probably not a good idea. I have no clue about the nature of housing in Boston.

I agree with what you said about "and in the end, if I lose a couple thousand verses what I would have paid renting....it is ok". That is something that people on here seem to not always calculate into the equation. Its worth spending extra money per month for my own home, IMHO...

I think if you watch for the right home, try to buy something by owner, steer clear of realtors... you can set yourself up to do well on the home purchase. I bought a home in Lubbock, TX for 57K and sold it 4 years later for 80K. It needed some minor work/updating which I piddled with during my time in medical school. It was FAR from a burden and was sometimes nice to work on the home in lieu of studying. I bought the home as a by owner sale, and sold the home as a by owner sale. I put a 4x8 piece of plywood in the yard that said the house was for sale... the city knocked on my door, said it was too big... so I made a smaller one. Had the home sold in just a few days to a passer-by.

I am now a resident in Jackson, MS. I bought a home here that was by owner... needing minor updates which I have been in the process of doing. I know the housing market sucks and all so I dunno what will happen 3+ years from now...but even if I 'break even'...... I am in my own home with my own 3acres... I cant imagine living in an apartment.


Good luck...

i just got an incredible deal on a place in east Cleveland. the city is working very hard to "reclaim" this neighborhood despite the fact that it is already pretty nice (and extremely close to the university).

anyway, my general advice to people looking to buy is:

1) check to see if the municipalities offer any incentives to buy (for example, city of Cleveland is giving me $10,000 interest-free towards my down payment as long as I keep the place for 5 years)

2) check different tax rates for different municipalities and compare across properties (this can make a huge difference in monthly payments). city of Cleveland is also giving me 100% tax abatement for 15 years. no property taxes for 15 years!

3) focus on buying newer construction (lower monthly and overall maintenance fees)

4) check to see if developers and/or local banks offer incentives to students/faculty/staff of local hospitals/universities, etc. i was able to lock in a 30-year fixed mortgage @ 4.50%

5) consider whether you'll be able to rent or resell if you match elsewhere

by doing all of the above, I was able to get a $260k property for less than $30k down. my total monthly payments (mortgage and maintenance) will be around $1200/month. if i try to re-sell in 5 years, there will still be 10 years left on the tax abatement; an attractive feature for potential buyers. if the market is bad for sellers, the place is walking distance to the university and the CCF and i should be able to easily lease to incoming physicians.

now the only problem is that my place back here in Chicago is unlikely to sell thanks to the deadbeats in my building who defaulted on their loans... if i had bought in this building with the intention of selling after med school (it has been about the same amount of time, 5 years), i would be in seriously deep doo-doo. i'm in pretty bad shape as it is seeing as i will have to carry 2 mortgages until the market corrects in Chicago.

summary: buying involves risks. you can mitigate those risks by doing research and choosing carefully. even so, you will always be at the mercy of the market.

medalofhon0r said:

How do you guys pay mortgage without having any source of income??

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I think the better question is how do you get a lender to approve you for a mortgage without a source of income?

I want to buy a home, but all the real estate agents that I am dealing with tell me that my wife needs to secure a job first.

ra233 said:

I think the better question is how do you get a lender to approve you for a mortgage without a source of income?

I want to buy a home, but all the real estate agents that I am dealing with tell me that my wife needs to secure a job first.

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well, you certainly have to demonstrate SOME source of income, although there are various creative ways to do this.

examples: income from investments (your investment advisor could prepare a document outlining your projected income for the year), income from your parents or grandparents (such as untaxed gift money - i think the federal government allows $11k/year untaxed gift money from each relative), income from any property you own (for example, if you currently have a place and are able to rent it, a signed lease could be presented as proof of income). loan officers have other ways of showing this as well.

if you have some net worth (i.e. some piece of property, liquid assets or securities, etc) but not significant income, some banks will offer "pledge loans" that are essentially loans that use your assets as collateral.

real estate agents can be helpful in this respect, but they aren't the definitive source of information. speak with a lender about your situation and they may be willing to work with you. if your wife is not a student and is not employed, i agree that it will be difficult.