Buying a house before/during medical school?

[GettinAfterIt]

Hey all,

I'm getting ready to start med school this summer, moving in May. There are a variety of decent duplexes and triplexes for sale near the university I'm moving to. Buying one of these seems like a good investment, as in I could rent out the other units and it would cover my rent + extra.

I have the VA loan available from serving in the Army, which would allow me to purchase a house with no downpayment, low-interest rate etc.

I'm a 29 y/o non-trad and would like to get some investments going if I can.

Do you think this would be worth the potential extra work/headache in medical school? Is it feasible?

Thanks!

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[omogedoctor]

I think so. I’m a non-trad that is planning to do this as well. I’d be interested to see what others have to say. The only issue I foresee is the stress of managing the property as a med student. I’m considering using a property management company so that I can focus on my studies.

 

[LunaOri]

Be careful that what you buy is well built, in good condition, and in a desirable location. You want it to be easy to rent to good tenants now, and easy to sell when you graduate. Check how long properties in that area are usually on the market before they sell.

 

[voxveritatisetlucis]

Real estate is a terrible investment right now since according to Robert Schiller (Yale winning Nobel laureate) the housing market lags the equity market. If you look what has happened to the stock market, it seems likely that it will also happen to the real estate market in the near future. Wait until rates and prices come down

 

[Obnoxious Dad]

Hey all,

I'm getting ready to start med school this summer, moving in May. There are a variety of decent duplexes and triplexes for sale near the university I'm moving to. Buying one of these seems like a good investment, as in I could rent out the other units and it would cover my rent + extra.

I have the VA loan available from serving in the Army, which would allow me to purchase a house with no downpayment, low-interest rate etc.

I'm a 29 y/o non-trad and would like to get some investments going if I can.

Do you think this would be worth the potential extra work/headache in medical school? Is it feasible?

Thanks!

Have you ever owned a home? It's an unbelievable pain in the neck. You won't know what problems there are in a home until you and your tenants live there. Home inspectors often stink. Then there's the problem of dealing with tenants. You might end up with people who don't pay rent, trash the place and/or constantly complain about trivia. In many states landlord tenant law has become a nightmare for property owners. Furthermore, many people think we have a real estate bubble. You could end up with negative equity. There's also the problem with time. Do you want a pipe to break the day before an exam?

If you perform well in medical school and live like a duke and not a king, you'll get rich enough. Worry about med school.

 

[AnonymousDoctorGuyPerson]

Very feasible. I helped several folks who had the capital to buy for med school with their homes during 1st year (I worked construction before medicine so was able to help with renovations). The only folks that had headaches were those who went in over their heads and bought some real fixer-uppers with 0 experience on the "fixing up" end heh

 

[RangerBob]

I personally would not want to manage a property in med school, much less in residency. M3 is not a time you'll want to deal with headaches of maintaining a property, nor dealing with tenant issues. Same goes for almost all internships/residencies, though if you do a TY and then psych/PM&R/etc, you've actually got some time.

If you're hiring a company to manage the property, and you can still make a good profit, it could be then worth it. I have no idea what the market is going to do, so I can't comment on whether it's a good long-term investment.

I will say this--be careful buying a property in med school unless you can continue to make payments on it while you're a resident. Trying to sell a property while you're an outgoing M4 and trying to also rent/buy (I recommend rent) another one as an intern is tough. You'd likely have a period of double rent/mortgage, and you're either moving out early as an M4 (doable) or selling as an intern--which would be a major headache, especially if you're in another state. If you have a property manager then it's not really a big deal as long as your cash flow is positive.

I purchased a home in residency (PM&R, so I had time, and working on the home was a hobby for me). It was a lot of fun, but it did take time. It was just my wife and I though--we didn't rent any of it out (it was only 2bd). I thought I'd go straight into practice and selling wouldn't be an issue. Instead I did a fellowship--on the opposite coast. And my wife was pregnant when we had to move. The home wasn't worth enough to rent out ($120k) so we opted to sell it. We didn't want to sell from afar, nor could we afford double rent/mortgage for very long as she was no longer working. We got lucky and sold it a few months before graduating and found a 3-month apartment lease. We sold the home for about $20k more than we paid, but we had to replace the heater (so I opted to replace the aging/inefficient AC at the same time), and it had some basement issues as well at selling.

All-in-all, we essentially broke even compared to renting a home for all of residency. But we had some great memories there.

 

[Dral]

I agree that if you do this, try to find a good company to manage the property. You don't want to deal with the headaches that happen.

If you are a fastidious person, you especially will likely underestimate what others are capable of messing up in a rental property or what things will just go wrong regardless. As someone else pointed out, you don't want your tenant calling you about a burst pipe the night before your surgery shelf exam.

When I bought my second house, I chose to keep my first and rent it. It's a 2014 construction, and the rent currently pretty much covers my mortgage payment (less the $150 or so I pay to have it managed). However, I will likely be here long term, so I should come out on top after rent collected when it is paid off combined with general appreciation.

 

[wysdoc]

Hey all,

I'm getting ready to start med school this summer, moving in May. There are a variety of decent duplexes and triplexes for sale near the university I'm moving to. Buying one of these seems like a good investment, as in I could rent out the other units and it would cover my rent + extra.

I have the VA loan available from serving in the Army, which would allow me to purchase a house with no downpayment, low-interest rate etc.

I'm a 29 y/o non-trad and would like to get some investments going if I can.

Do you think this would be worth the potential extra work/headache in medical school? Is it feasible?

Thanks!

I think this is workable, live in 1/2 of the duplex and rent out the other half, as long as real estate prices are not crazy high in this area.
You could sell it after graduation & recoup all that you would have paid in rent.

 

[wholeheartedly]

I loved and miss owning a home but mine was built solid and inspected well and it was still frequently a pain in the rear. I don’t think I’d want to deal with that plus tenant drama while trying to do med school. It was hard enough as a single grad student.

 

[xffan624]

Hey all,

I'm getting ready to start med school this summer, moving in May. There are a variety of decent duplexes and triplexes for sale near the university I'm moving to. Buying one of these seems like a good investment, as in I could rent out the other units and it would cover my rent + extra.

I have the VA loan available from serving in the Army, which would allow me to purchase a house with no downpayment, low-interest rate etc.

I'm a 29 y/o non-trad and would like to get some investments going if I can.

Do you think this would be worth the potential extra work/headache in medical school? Is it feasible?

Thanks!

I think it's feasible, but it's a risk (like any investment). I would try to focus on finding tenants that are other medical students or graduate students so at least you have some known quantity. If you have some savings from your service that could help handle the unexpectedness of repairs. Ideally, you would be considering staying in the area as trying to rent out the place fully and do residency some place else would make this a less viable plan. Also consider that the VA home loan is for your primary residence so I'm not sure about whether renting out a portion would be allowed. (I know technically renting out the full home would definitely not be allowed but I don't know how they enforce that. You definitely can only have one VA home loan at a time so a new place wouldn't be eligible unless you changed the loan type on the old place.)

 

[omogedoctor]

I think it's feasible, but it's a risk (like any investment). I would try to focus on finding tenants that are other medical students or graduate students so at least you have some known quantity. If you have some savings from your service that could help handle the unexpectedness of repairs. Ideally, you would be considering staying in the area as trying to rent out the place fully and do residency some place else would make this a less viable plan. Also consider that the VA home loan is for your primary residence so I'm not sure about whether renting out a portion would be allowed. (I know technically renting out the full home would definitely not be allowed but I don't know how they enforce that. You definitely can only have one VA home loan at a time so a new place wouldn't be eligible unless you changed the loan type on the old place.)

Agree 100%. I feel like student tenants lowers a risk because its recession proof. You could have perfectly great tenants who are no longer able to pay rent because they lose their jobs. For the most part, med student funds are derived from loans so even in a bad economy, your tenants will be able to pay on time.

I'm also not familiar w/ VA home loans, but another option is purchasing a home with a basement, and finishing the basement in time to rent it. That way you can get the loan for a single family home you are living in and rent out the basement.

 

[mistafab]

The real question is if you would want to do this regardless of med school. If the answer is yes, then you'll find a way to make it happen and may find it rewarding. If the answer is no, then don't do it because it isn't worth the headache.

Full disclosure, I own investment real estate and manage it in residency.

 

[voxveritatisetlucis]

Student tenants also trash houses and usually don’t have any assets if you take them to small claims court

 

[Goro]

Never underestimate the amount of damage tenants can do to a place.

I write this from hard experience.

 

[GettinAfterIt]

I think so. I’m a non-trad that is planning to do this as well. I’d be interested to see what others have to say. The only issue I foresee is the stress of managing the property as a med student. I’m considering using a property management company so that I can focus on my studies.

Let me know what you end up deciding on!

 

[GettinAfterIt]

Real estate is a terrible investment right now since according to Robert Schiller (Yale winning Nobel laureate) the housing market lags the equity market. If you look what has happened to the stock market, it seems likely that it will also happen to the real estate market in the near future. Wait until rates and prices come down

Good point, it won't be for another five months. It seems like the market is starting to drop. We shall see!

 

[GettinAfterIt]

Have you ever owned a home? It's an unbelievable pain in the neck. You won't know what problems there are in a home until you and your tenants live there. Home inspectors often stink. Then there's the problem of dealing with tenants. You might end up with people who don't pay rent, trash the place and/or constantly complain about trivia. In many states landlord tenant law has become a nightmare for property owners. Furthermore, many people think we have a real estate bubble. You could end up with negative equity. There's also the problem with time. Do you want a pipe to break the day before an exam?

If you perform well in medical school and live like a duke and not a king, you'll get rich enough. Worry about med school.

I appreciate the feedback! Yea I've never owned a home, it sounds a like a lot. I'm thinking of either using a management company or waiting until residency.

 

[MDMechEngr]

You will be buying high if you purchase a house now. It will appreciate, but you will be upside down on it for many years. I would wait for the price to bottom out first, and the bottom is several years away. Interest rate will continue to rise to deal with inflations. If you are a long term owner (10+ years) you will make money for certain, especially if you buy in places like CA, TX, Az.

 

[GettinAfterIt]

Never underestimate the amount of damage tenants can do to a place.

I write this from hard experience.

Student tenants also trash houses and usually don’t have any assets if you take them to small claims court

The real question is if you would want to do this regardless of med school. If the answer is yes, then you'll find a way to make it happen and may find it rewarding. If the answer is no, then don't do it because it isn't worth the headache.

Full disclosure, I own investment real estate and manage it in residency.

Agree 100%. I feel like student tenants lowers a risk because its recession proof. You could have perfectly great tenants who are no longer able to pay rent because they lose their jobs. For the most part, med student funds are derived from loans so even in a bad economy, your tenants will be able to pay on time.

I'm also not familiar w/ VA home loans, but another option is purchasing a home with a basement, and finishing the basement in time to rent it. That way you can get the loan for a single family home you are living in and rent out the basement.

I think it's feasible, but it's a risk (like any investment). I would try to focus on finding tenants that are other medical students or graduate students so at least you have some known quantity. If you have some savings from your service that could help handle the unexpectedness of repairs. Ideally, you would be considering staying in the area as trying to rent out the place fully and do residency some place else would make this a less viable plan. Also consider that the VA home loan is for your primary residence so I'm not sure about whether renting out a portion would be allowed. (I know technically renting out the full home would definitely not be allowed but I don't know how they enforce that. You definitely can only have one VA home loan at a time so a new place wouldn't be eligible unless you changed the loan type on the old place.)

I loved and miss owning a home but mine was built solid and inspected well and it was still frequently a pain in the rear. I don’t think I’d want to deal with that plus tenant drama while trying to do med school. It was hard enough as a single grad student.

I think this is workable, live in 1/2 of the duplex and rent out the other half, as long as real estate prices are not crazy high in this area.
You could sell it after graduation & recoup all that you would have paid in rent.

You all brought up some phenomenal points. I really appreciate the information. It's going to take a while to think through all of this.

As of now, I am leaning toward waiting for the market to dip a little more, and either purchasing a multi-unit in 2nd year or possibly residency. We shall see!

 

[Rachapkis]

I would be leery of buying a home during medical school because (i) you may be required to move for residency, fellowships, etc., (ii) it is difficult and expensive to manage a rental property from afar, and the (iii) transaction costs associated with real estate are quite high if wish to sell the property because you have to move.

 

[barnebasguitano]

Congrats on starting med school soon! Buying a duplex or triplex near your university sounds like a smart move, especially with the VA loan. It's a great opportunity to invest and potentially cover your living expenses through rental income.

However, it's crucial to consider the extra responsibilities and time commitment that come with being a landlord, especially while in medical school. Make sure to weigh the pros and cons carefully and maybe consult with a financial advisor to see if it aligns with your long-term goals.

Best of luck with your decision! If you ever find yourself in the position of selling your home, check out the "Seven Steps To Selling Your Home" guide for some helpful tips.

 

[mistafab]

One thing to consider is that many people move for residency.

Could it all work out? Yes. But you also might just break even after 4 years of stress. If you move for residency, then you’re selling or becoming a long-distance landlord.

I own real estate and don’t recommend long distance landlording. I would become a landlord if you want to become one, not because of a few bucks.

Do your cash flow assessment. If all is said and done, other side is rented, and you net $400/month after all expenses/insurance/maintenance… is the stress really worth 4800/year in profit? Because if you sell after 4 years with a VA “nothing down” loan, you’d be lucky to clear anything above zero if you sold. Give your profit to a property manager, and your cash flow becomes zero real quick - then what happens if you need to replace the hvac?

All of this to say - don’t break your back with stress during med school in exchange for 4800 dollars of cash flow. When you’re an attending your gains won’t be pathetic, and you can invest in much higher yield real estate.

Many vets get into trouble buying real estate all over the country - end up getting almost no cash flow and over leveraging with these low money down loans. I’m not saying that’s you, just don’t make that mistake.

 

[Dr. Anonymouss]

I did this 4 years ago when interest rates were extremely low and the housing market was cheap. I had roommates all throughout medical school who paid for my mortgage and gave me extra money to live on. I definitely wouldn’t recommend it in the current market though. Interest rates are too high and house prices are just absurd. Even with your VA loan you’re looking at what 5.75-6%? I wouldn’t say that is low, merely lower relative to the high interest rates everyone else has to pay. I also believe a recession is just over the horizon and we will see corrections in every market, don’t get stuck holding the bag. Sometimes the only thing that separates a good idea from a bad one is nothing more than timing…. Be smart and just rent.