apartment vs. house

[leia05]

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I have a question about where to live. I've heard that some people actually buy houses while in school. Which would actually be better for someone who will only be in that particular area (around the school) for the four years-an apartment or a house? I know that there are pros/cons to each, but I'd appreciate any advice anyone can offer! I'm thinking apartment for now since I don't know the area well enough to know which area will be a real estate gold mine down the road to where I wouldn't get stuck with a mortage for a place I no longer need. Also, what about renting a house vs. renting an apartment? I've lived in the same house since birth so all this is greek to me. Thanks! 😀

 

[12YearOldKid]

It's really going to be situation specific. It will depend on the cost of real estate, what kind of interest rate you can get, what typical rents are for the area, etc...

Real estate has become so inflated in many areas recently that renting is often a better deal. And with the housing market starting to cool down, it is unlikely that you will see a great return on your investment if you only hold it 4 or 5 years.

I bought a house and it has turned out to be a great investment; the equity when I sell it will be just about equal to my dental school debt. If I had had roommates over the last couple years they would have more than covered the cost of the mortgage.
But I'm not sure I would buy this same house today; home prices have pretty much levelled out around here and I don't think I would do any better than break even with renting now. It's really variable.

A good start would be to look up a "rent vs. buy" financial calculator on the internet. It can't tell you exactly what you should do, but will help you focus on the things you should be looking at in this decision.

 

[mdub]

I have a question about where to live. I've heard that some people actually buy houses while in school. Which would actually be better for someone who will only be in that particular area (around the school) for the four years-an apartment or a house? I know that there are pros/cons to each, but I'd appreciate any advice anyone can offer! I'm thinking apartment for now since I don't know the area well enough to know which area will be a real estate gold mine down the road to where I wouldn't get stuck with a mortage for a place I no longer need. Also, what about renting a house vs. renting an apartment? I've lived in the same house since birth so all this is greek to me. Thanks! 😀

The answer depends mostly on appreciation, projected appreciation, and your ability to buy. In a booming market you're more likely to not lose money (including transaction costs) when you sell, but you'll also probably pay more. In a booming market there's also usually a bigger gap between rental prices and purchase prices for similar dwellings because investors are willing to take a cashflow hit when their equity is growing quickly. So, if you've got the money buying is probably the better way to go as long as appreciation is healthy. If you don't have the money, rent. If appreciation is slow and projected to be slow, buying becomes pretty dicey because 4 years isn't a lot of time to overcome the transaction costs of buying and selling. In slow markets, the costs of renting and buying are very close.

The general advice would be buy if you have the money and the market looks reasonably good for 4 years. If you don't have the money, rent. If the market looks slow for the next 4 years, rent regardless of whether you can afford to buy.

Obviously there are other factors like your tax situation, family size, location, preferences, and things like that. But we don't know those.

 

[DentalNerd]

I'm in the same boat in deciding whether to rent or buy. I've done some major research and decided to buy. If your house appreciates at least 5%, you should be able to break even...meaning you live for free for four years. I figured it would cost about $30k to rent over 4 years. If your house appreciates very little or not at all, you'll end up spending a little more to buy vs. rent. Of course there are several variables like home price, property taxes, interest rates, appreciation, single or married, etc. If you are single and not working, you really can't take advantage of the tax break. On the other hand, if your spouse works, then you can deduct all that interest and tax from your income. Also watch out for property taxes. If you live in an area with high taxes $3000 and up, it may make more sense to rent.

For example, on a $100,000 loan at 6%, your monthy P&I payment will be $600. AFter 4 years: total payments: $28778. Interest paid: $23,400. Principal: $5,400. Add $3000 per year for property taxes and $300 for insurance. You now have spent $42,000 over 4 years to buy with $5400 in equity. The only way you actually make money is if your home appreciates.


Here's a good site with appreciation rates for major cities.
http://www.ofheo.gov/media/pdf/4q05hpi.pdf

 

[S Files]

I'm in the same boat in deciding whether to rent or buy. I've done some major research and decided to buy. If your house appreciates at least 5%, you should be able to break even...meaning you live for free for four years. I figured it would cost about $30k to rent over 4 years. If your house appreciates very little or not at all, you'll end up spending a little more to buy vs. rent. Of course there are several variables like home price, property taxes, interest rates, appreciation, single or married, etc. If you are single and not working, you really can't take advantage of the tax break. On the other hand, if your spouse works, then you can deduct all that interest and tax from your income. Also watch out for property taxes. If you live in an area with high taxes $3000 and up, it may make more sense to rent.

For example, on a $100,000 loan at 6%, your monthy P&I payment will be $600. AFter 4 years: total payments: $28778. Interest paid: $23,400. Principal: $5,400. Add $3000 per year for property taxes and $300 for insurance. You now have spent $42,000 over 4 years to buy with $5400 in equity. The only way you actually make money is if your home appreciates.


Here's a good site with appreciation rates for major cities.
http://www.ofheo.gov/media/pdf/4q05hpi.pdf

a few pearls i've picked up along the way:
-when shopping for mortgages, don't just pay attn to the % rate (although that's the most important). pay attn to fees per transaction. some charge an arm an a leg just to close the darn mortgage, just to pay off some principal, etc.
-when searching for condo's. pay attn to the common charges.
-don't forget, interest paid on a mortgage is tax deductible. but this of course won't mean squat unless you have an income
-get a co-signer

i'd love to hear if anyone here took out a mortgage with wachovia's loan program for residents (type in doctor dentist loan in google)

 

[STARCITY]

I have a question about where to live. I've heard that some people actually buy houses while in school. Which would actually be better for someone who will only be in that particular area (around the school) for the four years-an apartment or a house? I know that there are pros/cons to each, but I'd appreciate any advice anyone can offer! I'm thinking apartment for now since I don't know the area well enough to know which area will be a real estate gold mine down the road to where I wouldn't get stuck with a mortage for a place I no longer need. Also, what about renting a house vs. renting an apartment? I've lived in the same house since birth so all this is greek to me. Thanks! 😀

You can never go wrong with buying, plus it will provide a better studying atmosphere.

Also, it may appreciate. I know a guy whos a dentist now that bought a townhome and it appreciated so much he sold it and paid off all of his student loans 2 months after graduation.

 

[STARCITY]

a few pearls i've picked up along the way:
-when shopping for mortgages, don't just pay attn to the % rate (although that's the most important). pay attn to fees per transaction. some charge an arm an a leg just to close the darn mortgage, just to pay off some principal, etc.
-when searching for condo's. pay attn to the common charges.
-don't forget, interest paid on a mortgage is tax deductible. but this of course won't mean squat unless you have an income
-get a co-signer

i'd love to hear if anyone here took out a mortgage with wachovia's loan program for residents (type in doctor dentist loan in google)

gotta be a doctor first?

 

[STARCITY]

a few pearls i've picked up along the way:
-when shopping for mortgages, don't just pay attn to the % rate (although that's the most important). pay attn to fees per transaction. some charge an arm an a leg just to close the darn mortgage, just to pay off some principal, etc.
-when searching for condo's. pay attn to the common charges.
-don't forget, interest paid on a mortgage is tax deductible. but this of course won't mean squat unless you have an income
-get a co-signer

i'd love to hear if anyone here took out a mortgage with wachovia's loan program for residents (type in doctor dentist loan in google)

i typed it in and didnt get anything of interest. this is thru wachovia???

 

[gryffindor]

IMO, it's all about what you are comfortable with.

I am moving for 3 years for residency. Many of the other residents buy homes in this program. They also have families. I am single and am planning to rent.

The way I see it, if I owned a house, I'd have to deal with the headaches that came with it. I would not be very excited to own it since I don't plan on staying in that location after residency. I would have to furnish the whole thing when it is just me living there. (I currently live in a studio and have no problems living in one for residency as well.) If the air conditioner breaks, I have to get on the phone to track down an AC repair guy. Same thing if there is a water leak, the doorbell stops working, the grass has to be cut, etc. I just don't have the interest to take on all that responsibility.

While we're at it, I don't want to deal with the headache of a realtor to find a desirable place I want to own/inhabit for the 3 years, and then finding a buyer when I want to sell it. And hoping to turn a profit to make it all "worth it." And timing those transactions to coincide with starting and finishing my residency.

I will be able to sleep much better at night knowing I am renting. I have aspirations to buy my own house/apartment after I get out of residency, but now is not the time for me.

 

[STARCITY]

IMO, it's all about what you are comfortable with.

I am moving for 3 years for residency. Many of the other residents buy homes in this program. They also have families. I am single and am planning to rent.

The way I see it, if I owned a house, I'd have to deal with the headaches that came with it. I would not be very excited to own it since I don't plan on staying in that location after residency. I would have to furnish the whole thing when it is just me living there. (I currently live in a studio and have no problems living in one for residency as well.) If the air conditioner breaks, I have to get on the phone to track down an AC repair guy. Same thing if there is a water leak, the doorbell stops working, the grass has to be cut, etc. I just don't have the interest to take on all that responsibility.

While we're at it, I don't want to deal with the headache of a realtor to find a desirable place I want to own/inhabit for the 3 years, and then finding a buyer when I want to sell it. And hoping to turn a profit to make it all "worth it." And timing those transactions to coincide with starting and finishing my residency.

I will be able to sleep much better at night knowing I am renting. I have aspirations to buy my own house/apartment after I get out of residency, but now is not the time for me.

Sounds like mommy and daddy will foot your bills, who cares right since its their money that you are throwing away.

 

[leia05]

IMO, it's all about what you are comfortable with.

I am moving for 3 years for residency. Many of the other residents buy homes in this program. They also have families. I am single and am planning to rent.

The way I see it, if I owned a house, I'd have to deal with the headaches that came with it. I would not be very excited to own it since I don't plan on staying in that location after residency. I would have to furnish the whole thing when it is just me living there. (I currently live in a studio and have no problems living in one for residency as well.) If the air conditioner breaks, I have to get on the phone to track down an AC repair guy. Same thing if there is a water leak, the doorbell stops working, the grass has to be cut, etc. I just don't have the interest to take on all that responsibility.

While we're at it, I don't want to deal with the headache of a realtor to find a desirable place I want to own/inhabit for the 3 years, and then finding a buyer when I want to sell it. And hoping to turn a profit to make it all "worth it." And timing those transactions to coincide with starting and finishing my residency.

I will be able to sleep much better at night knowing I am renting. I have aspirations to buy my own house/apartment after I get out of residency, but now is not the time for me.

yeah...i've been thinking along those lines... and for the record, starcity, not everyone has mom and dad paying for everything... in my case, the money spent would be my own hard-earned cash...my parents already help my brother through podiatry school, and i've always tried to be little miss independent. but the area i'm moving to...well, jackson has a really high crime rate, and i don't know enough about the past and future of its real estate market to feel comfortable essentially gambling with my money since i'll only be there for school. also, i feel like i don't know enough about repairs to be able to handle it on my own yet. i see that there are financial benefits to buying, but i'm scared of getting "stuck" with a house. if anyone has anything to say that might otherwise influence this train of thought, i'd love to hear it...

 

[gryffindor]

Sounds like mommy and daddy will foot your bills, who cares right since its their money that you are throwing away.

🙄

FYI, I am already a practicing dentist and have the means to buy a home/condo when I am a resident. I don't have the desire to do it. Not all of us get turned on by real estate.

The OP asked for opinions, pro & con.

BTW, my family would of course help me out if I asked them. They do not want to see me struggle for the sake of "be a man/woman, learn from your own mistakes." It's what "family" implies - or at least in our definition. I would do the sme for them and my own family someday. If my family thought for one second I was "throwing their money away," they would not give it to me. We're not stupid.

 

[STARCITY]

🙄

FYI, I am already a practicing dentist and have the means to buy a home/condo when I am a resident. I don't have the desire to do it. Not all of us get turned on by real estate.

The OP asked for opinions, pro & con.

BTW, my family would of course help me out if I asked them. They do not want to see me struggle for the sake of "be a man/woman, learn from your own mistakes." It's what "family" implies - or at least in our definition. I would do the sme for them and my own family someday. If my family thought for one second I was "throwing their money away," they would not give it to me. We're not stupid.

It was a joke. But now I want to laugh because your a practicing dentist and still makin comments here and gettin ticked.

 

[mdub]

You can never go wrong with buying,

Wrong. Wrong. Wrong. Two words: Transaction costs. It IS POSSIBLE to go wrong by buying.

 

[superchris147]

Wrong. Wrong. Wrong. Two words: Transaction costs. It IS POSSIBLE to go wrong by buying.

not to mention its hard to build equity in such a short period of time (especially when you don't have an income)

and like you said before (i think) the booming areas appreciate faster so a house might not appreciate that much or at all in four years