Buying a House/getting a pet as an M1?

[21isFun]

Hi,

So I've been thinking... if I'm going to sink more than $30k into rent over 4 years of med school, I may be better off buying a small house, and having some equity when I graduate. I was just wondering how many people do this, and if anyone has- was it in your opinion a good or bad idea? I know lots of stuff comes with owning rather than renting- stuff like a busted pipe the night before a test or having to make time to mow the lawn, etc- but are these things worth it to have something to show in the end for all of the money you've been paying for living expenses. It also would be easier to have a dog if you own rather than rent-I'm considering this since moving away from family, friends, boyfriend, etc may leave me lonely at night in a house by myself, and I would love the companionship and motivation to exercise.

Overall, if I do this, I'm thinking that trying to get the house and dog early in summer before M1 is best, so that the house will be fixed up and ready and the dog trained before school gets into full swing. If not before M1, maybe summer before M2?

Thoughts?

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[alwaysaangel]

Hi,

So I've been thinking... if I'm going to sink more than $30k into rent over 4 years of med school, I may be better off buying a small house, and having some equity when I graduate. I was just wondering how many people do this, and if anyone has- was it in your opinion a good or bad idea? I know lots of stuff comes with owning rather than renting- stuff like a busted pipe the night before a test or having to make time to mow the lawn, etc- but are these things worth it to have something to show in the end for all of the money you've been paying for living expenses. It also would be easier to have a dog if you own rather than rent-I'm considering this since moving away from family, friends, boyfriend, etc may leave me lonely at night in a house by myself, and I would love the companionship and motivation to exercise.

Overall, if I do this, I'm thinking that trying to get the house and dog early in summer before M1 is best, so that the house will be fixed up and ready and the dog trained before school gets into full swing. If not before M1, maybe summer before M2?

Thoughts?

Buying houses right now is really risk in almost any market in the country. The market is falling and you may find that the house is worth less than you paid for it when you sell it. You'll wish you rented if you lose 50k on the value of the house + all the costs for upkeep. Generally, your logic would work but right now its not a good idea - especially if you're alone and won't have help for the upkeep/repairs of the house.

Another thing to consider regarding buying a house is the commute. Most houses near universities are pricey. So you'd have to live 10+ miles from campus. Thats 100 miles/week - a tank of gas a month - which is going up every day. You may find that rent is cheaper than mortgage+gas, especially if you can get an apartment very close to campus.

Also, consider the down payment. Usually 30% of the house cost or so. I don't know anything about you, but if you're the average 1st year - most 22 year olds don't have 30,000 lying around to pay for a down payment.

As far as dogs - search pets and there are lots of people's views on that. Don't get a puppy if you're living alone - puppies take almost a full year to truly train and no way will you have enough time during your first year to do it. If you had a spouse/live-in SO it would be a different story. But alone, you simply won't have enough time. You will get frustrated about having a badly behaved dog, the dogs behavior will worsen because as first year goes on you'll have less and less time and in the end you may end up giving him up because neither of you are happy. Not a happy prospect.

If you get an older dog (like 4-5+) it may be doable because they won't need as much playtime. But even then, you have to remember that dogs are really really needy animals and its not fair for you to leave a dog completely alone for 20+ hours during your rotations/residency. Having an SO or roommate helps for that. But alone, its unfair to the animal.

If you really want a pet, a better idea would be a cat. They're pretty independent, can deal with being alone more often (but certainly not all the time). I got a kitten when I got to med school and even he takes up more of my time then I should probably allow. I always study at home so he's not alone all the time, and I make an effort to play with him multiple times every day. Its still a lot of work but its worthwhile to have something that I can come home to and love every night. But keep in mind, even I have a roommate who helps. She watches him if I'm out of town for a weekend or something.

But yeah, before you get an animal things to consider:
-cost of keeping an animal (can you fit it in your budget - my cat costs about 65/month in food, litter and pet rent - a dog would be more. Plus you have to worry about emergency vet bills)
-what you will do when you're out of town. Will you have someone where you are to take care of it? I assume you'll go home to your family and bf on breaks - will you be able to fly/drive your pet with you? Pay for a pet sitter?
-can you study at home? Many people need to study in a library or out of their own home. Its not fair to keep an animal if you'll be studying in the library 16hrs/day.
-cost of getting an animal. This could include the adoption fees/initial vet bills/shots/spay or neuter/pet deposit for your rental. My cat cost over 500 dollars once all was said and done - again, a dog would be more.
-how good is your time management? You can't ignore your animal just because you are in finals and don't have time for it. You still have to feed it, play with it, give it attention, possibly walk it. As great as animals are, they can at times add to your stress if you don't plan ahead.

Good luck in your decisions about the house and pet, just be sure to really think both through. Those are both HUGE decisions that should never be taken lightly.

 

[alwaysaangel]

Here are some articles on renting vs. owning. And they are especially true right now - the buyers market is dropping so much that condos are being converted to rentals, and there are more rentals available than usual which is driving down the cost of rent.

http://michaelbluejay.com/house/rentvsbuy.html
http://www.nytimes.com/2005/09/25/realestate/25cov.html
http://lifehacker.com/software/pers...might-be-better-than-buying-a-home-311379.php

As you can see, most of the pros of owning a home (pride, customizability, deducting interest payments from taxes) won't apply to you as a med student.

 

[Abilene85]

People I know with dogs...

- One couple, both in my class, drop the dog off with her non-working mom to watch all day
- One girl is married to a non-med student
- One guy rarely goes to class, so he is home to take care of them

 

[suissemiss]

Hi,

So I've been thinking... if I'm going to sink more than $30k into rent over 4 years of med school, I may be better off buying a small house, and having some equity when I graduate. I was just wondering how many people do this, and if anyone has- was it in your opinion a good or bad idea? I know lots of stuff comes with owning rather than renting- stuff like a busted pipe the night before a test or having to make time to mow the lawn, etc- but are these things worth it to have something to show in the end for all of the money you've been paying for living expenses. It also would be easier to have a dog if you own rather than rent-I'm considering this since moving away from family, friends, boyfriend, etc may leave me lonely at night in a house by myself, and I would love the companionship and motivation to exercise.

Overall, if I do this, I'm thinking that trying to get the house and dog early in summer before M1 is best, so that the house will be fixed up and ready and the dog trained before school gets into full swing. If not before M1, maybe summer before M2?

Thoughts?

I am in the same position as you right now, except that I already have the dog and a SO (who will also be a student). We would really like to buy a house right now, but are worried about the falling market, the unforseen costs of owning a house, and the amount of work that goes into maintaining a property. I think we will probably wait a year to feel out the market (and hopefully reach its low before turning back up!) and to know, realistically, what our monthy budget is. It would also help to know the area well so we choose the best location to live. The problem with waiting to buy is that you really should own a house for about 5 years before trying to sell. Ideally, we would stay in the same place for residency (post-doc for my SO) and make a nice profit by the time we move.

As far as the dog goes, alwaysangel is right - puppies are A LOT of work! When I got mine (she was 3 months old), I had to take her out every 45 minutes or she would pee on the floor. She required a lot of play time. Even now, a year later, she has so much energy that I have to take her running 5-10 miles every day or go to the dog park for an hour. Otherwise, she goes crazy and destroys my apartment. What I've heard is that dogs become more adult and start to calm down at 1.5-2 years of age. I'm counting down the days! If I were you, I would adopt an adult dog from the SPCA or humane society. I will say, however, that having a dog is awesome. She is always happy to see me and after a really bad day, puts me in a much better mood. If I didn't have her I would be bored and out of shape. Even in med school, you need to make a little time for relaxation every day.

Good luck with your big decisions!

 

[cfdavid]

Buying houses right now is really risk in almost any market in the country. The market is falling and you may find that the house is worth less than you paid for it when you sell it. You'll wish you rented if you lose 50k on the value of the house + all the costs for upkeep. Generally, your logic would work but right now its not a good idea - especially if you're alone and won't have help for the upkeep/repairs of the house.

Another thing to consider regarding buying a house is the commute. Most houses near universities are pricey. So you'd have to live 10+ miles from campus. Thats 100 miles/week - a tank of gas a month - which is going up every day. You may find that rent is cheaper than mortgage+gas, especially if you can get an apartment very close to campus.

Also, consider the down payment. Usually 30% of the house cost or so. I don't know anything about you, but if you're the average 1st year - most 22 year olds don't have 30,000 lying around to pay for a down payment.

.

This is very sound advice.

The whole "renting is just throwing your money away" arguement does not always hold true. But, I hear it time and time again, from educated people.

While loans are being structured differently these days (due to the current fiasco and subsequent clampdown on creative lending), it's still true that most people aren't really agressively paying down their principle. Most of their monthly payment goes to servicing interest on the mortgage. So without natural growth in equity (actually, there's negative growth and the trend is continuing downward in most markets), it's currently a really bad investment for most people.

The other factor to consider is the benefit of deducting mortgage interest from income. But how many medical students (and even residents given their salaries) actually have any income in which this "write off" would be of benefit? And don't forget property taxes which can easily be 1-3k per year, which is a fixed cost that you'll need to consider.

The last position you want to be in is to HAVE to sell your house in a down market in order to move for residency. This can turn into a major burden and a financial catastrophe. I regularly see emails from newly minted MD's that are trying to sell or rent their homes because they're moving to another city for residency. And if you DO sell, it's entirely possible that you'll need to bring money to the bank on closing if you experience depreciation in your homes value during the course of the next few years.

Sit tight. If you secure a residency somewhere (not too far off, even for MSI's) and anticipate practicing in that area, then maybe it'll be a good idea. At that point, perhaps things will hit bottom (which we're not yet at, in most markets). Then, it'll be a good time for first time buyers. I hope this helps.

Never underestimate the value in being "liquid".

 

[nogolfinsnow]

I agree w/ everyone here. Buying a house when you know you'll want to sell it in 4 years is a pretty risky move right now (except in a few select markets that not many med students are in). Where we are, I've seen nice houses on nice streets on sale since last June. If you can't sell the house in 4 years when you start residency then you'll be screwed. This is a good time in your life to have some flexibility.

 

[makushin]

This is funny. 4 years ago everyone would be saying that it is a great investment etc. Now those people lost their arse and there is a real estate crisis. Right now is a buyers market. Think about what that means for a second. Of course it really depends on the city, I would not buy anything too expensive.

 

[midn]

For some reason, I read "buying a horse/dog".

 

[QuantumMechanic]

There's alot of extremely bearish outlooks in this thread. The OP is prob going to enter school this fall, meaning a 2012 sell date if the OP doesn't do residency in the same location as his med school. If housing prices in markets across America decline from this point until spring/summer 2012 then the economy will be in shambles. The buying of the house would of course have been a bad decision, but the decision to enter medicine would have been a great one.

 

[andtheholograms]

the housing market is supposed to hit its lowest point in 2009. so if you buy now, the market value will still be declining....that said: then it's supposed to go up, who knows if it'll recover its value in time. Along with all the costs of home ownership, there are a lot of perks too: painting your rooms, fixing the place just as you wish, getting pets, always having a place to park your car (stupid apartment complexes with no parking )--there has to be more than this...no crappy upstairs neighbors to wake you up with their ridiculously loud alarm clocks...no hearing people at all hours through your walls--and vice versa, you can be loud if you'd like.

I'm entering med school in the fall with an SO who'll be working and then applying to pharm schools next year, and we're considering buying. It doesn't make sense to sink another 12K into someone else's pocket. Even if you break even, you're in the homeowner's circle now---you're building your credit--you're a better bet for a future lender since you have a history.

Also, regarding paying interest vs principle: some mortgage companies penalize you for paying off your principle before the end of your mortgage period, but not all of them do: if they don't, you can break up your monthly mortgage payment (say $1000--in a dream world) into two biweekly $500 payments to be automatically deducted from your account. Because some months have more than 4 weeks, you'll be making your payments ahead of schedule, and over the life of your mortgage, paying thousands of dollars less in interest. It's worth looking into...

 

[TheMightyAngus]

I'm entering med school in the fall with an SO who'll be working and then applying to pharm schools next year, and we're considering buying.

Essentially you are planning on using school loans to make mortgage payments. No?

I hope you realize that compound interest also applies to debt. Have you crunched the numbers yet? What ROI are you expecting?

Maybe if you had a time machine, went back to 1978 and borrowed money to buy a house in Palo Alto for med school at Stanford, then this would qualify as an investment, albeit still high risk.

You only build your credit when you pay off debt, not when you accumulate more. Making mortgage payments with stafford loans will lower your credit.

 

[Rhuby]

I am an MS1 and bought a condo before school started. Fortunately for me though, I actually bought it the summer before my last year in college, i.e., I've owned it for almost two years now. I think it has been an incredible investment. It is only 6 blocks from school so I can always walk and it will also be in high demand in 3 years regardless of how the housing market it because it is so close to school. The perks of ownership are definitely true in my situation, but you really have to look at your own like everyone else said, especially with the housing market and that you will only be owning for a short time. Also, a lot of homes that a first year med student can afford are either very old and need a lot of work or are very far away from school in start-up communities that don't yet charge a lot, but that generally means a substantial commute with very high gas prices that will continue to rise. So, think very very carefully about this decision, it is a very big one!

I also got a puppy the summer before MS1. While I absolutely LOVE my little guy, I'm not sure that I would recommend it. I got him at the end of July as a 10-week old and he is still not 100% house trained. I actually had to give him to my fiance (who lived with his parents at the time) because I could not take care of him as much as he needed, go to school, and study adequately, despite living so close to school to get home for potty breaks and whatnot. He is back with me now because my fiance is here much more now and we can split the duties. Granted, I wouldn't change having him at all, he is a great companion and sleeps on my feet while I study. My biggest concern would be MS3/4 with rotations and traveling for residencies. If you aren't married or have an SO, this could be a significant challenge having a dog. If you absolutely have to get a dog, then I would recommend a local humane society and getting an older dog that has been housebroken and doesn't need/want nearly as much attention from you. That would probably be the best way to go--and it will be cheaper! Their fees are significantly less expensive and the dogs are always neutered there if not before. They also sometimes provide a first vet visit for free.

You have a lot to think about, good luck with your decisions!

 

[Abilene85]

Here is a pet possibility: Don't get a dog. Let your classmates get dogs. Make friends with those classmates and hang out at their place a lot so you can play with the dogs.

 

[cfdavid]

I'm glad a few of you have had good experiences with buying homes/condos.

I just want to reiterate how strongly I feel one should avoid buying as a med student. Even if you may capture some upside (in 4 years, you won't make a very big dent in principle) in the market, it's likely not to exceed a lot of the fixed costs (just property taxes alone in some desireable areas can approach 3-4k).

Please consider that the LAST thing you will need is to try managing a rental home (the one you couldn't sell unless you were prepared to give it away) while juggling intern year in another city. Try imagining that. I see emails monthly from 4th years or even residents trying to sell homes or offering rental options. Granted, my area is particularly depressed in terms of the market, but most areas have a glut of supply.

Even for an MSI, you'll still be able to pick up a VERY good buy as a resident. Just don't get yourself into something that has the possibility of causing you the kind of stress that is the last thing you need.

 

[nogolfinsnow]

Here is a pet possibility: Don't get a dog. Let your classmates get dogs. Make friends with those classmates and hang out at their place a lot so you can play with the dogs.

This is a good idea for babies too.

 

[makushin]

dp

 

[makushin]

I'm glad a few of you have had good experiences with buying homes/condos.

I just want to reiterate how strongly I feel one should avoid buying as a med student. Even if you may capture some upside (in 4 years, you won't make a very big dent in principle) in the market, it's likely not to exceed a lot of the fixed costs (just property taxes alone in some desireable areas can approach 3-4k).

Please consider that the LAST thing you will need is to try managing a rental home (the one you couldn't sell unless you were prepared to give it away) while juggling intern year in another city. Try imagining that. I see emails monthly from 4th years or even residents trying to sell homes or offering rental options. Granted, my area is particularly depressed in terms of the market, but most areas have a glut of supply.

Even for an MSI, you'll still be able to pick up a VERY good buy as a resident. Just don't get yourself into something that has the possibility of causing you the kind of stress that is the last thing you need.

There are property management companies that handle this sort of thing with minimal involvement of the owner.

 

[cfdavid]

This is funny. 4 years ago everyone would be saying that it is a great investment etc. Now those people lost their arse and there is a real estate crisis. Right now is a buyers market. Think about what that means for a second. Of course it really depends on the city, I would not buy anything too expensive.

It's a buyers market, but it'll still be a buyers market (and likely a better one) in the next few years. That's IF we can avoid a prolonged recession. We're entering uncharted waters. Mark my word.

 

[cfdavid]

There are property management companies that handle this sort of thing with minimal involvement of the owner.

I'm sure. But that's yet another outlay, because they sure as hell aren't going to do it for free.

All I'm saying is that medical students with minimal to no real income aren't generally in a position to take risks. There are significant risks in this economy. This is a great time to be in school and not overly involved in various "investments". It's a good time to lay low and then as one actually has some income and stability, THEN buy something. Who has a crystal ball, but most of the indicators suggest the market will present even better buying opportunities in a couple years as we haven't even hit bottom yet. Can you predict the very bottom? Usually not, but the market won't rebound like most expect if we're in a sustained recession, which is highly likely, IMO.

There are some bearish investment pundits that think that our economy almost relies on "bubbles". First was the dot com bubble. Then the real estate bubble. One credible pundit thinks the next big craze with be in green energy. So, just be weary whenever things get unbalanced, regardless of how tempting it may be to get involved. Or, if you do get involved, sell in advance while things are still going up and before the "flags" start to show up on the radar which they inevitably will. This is harder to do than it sounds, actually.

 

[Crazy4F1]

get a goldfish. i've even got an electronic feeder on mine now so when i'm away on breaks it just keeps on feeding them at a regular time. theyre pretty to look at and dont pee on the rug.

 

[amkd]

my husband and i went rounds about this topic!
ultimatly - we are renting a townhouse and are incredibly happy!

we have plenty of room and aren't worried about selling it in 2 years (I am a MS2) b/c I am hoping to leave the state for residency, and if I don't we will still be in a better position to get a nicer home at that point in time.

we also have a chinchilla! he lives in a cage, we let him out once a day in his little area to get some exercise and he is a fun pet to have when you don't have a lot of time!!

everyone made great points on the rent v. buy debate - good luck with your decision, b/c it is YOUR decision!

 

[-Goose-]

Follow the Dave Ramsey rule of thumb: < 5 years: rent, don't buy.

 

[21isFun]

thanks for all of the replies- i am really glad I have about a year to feel out the market b/c you guys have all given me good things to think about! Though the area will have very reasonable rent, the housing crisis has also produced a number of foreclosures and its seems like some really decent houses are selling in the 25-40k range just b/c the banks want to get rid of them. So, it looks like I'm have some real options to look into. If I can get one close enough to campus though ( and the attached hospital), I have to wonder if it would be an easy investment to get rid of at some point after I graduate.

Once again, thanks for all of the great replies!

 

[Sol Rosenberg]

I am an advocate of home ownership. Especially now. You can look up my past posts -- I'm not going to repeat them. However, I have a few comments:

1. You haven't said where you plan on buying. All of the "advice" that you have gotten in this thread is absolutely irrelevant, because it is not market-specific. There is not a global (or even country-wide) real estate market. Whether you should buy or rent depends on the local market. Period.

2. To the people that essentially said, "It's a buyer's market, it's not a good time to buy a house," you win the "Duh" award of this thread.

3. To the previous poster that insinuated that using borrowed money to pay a mortgage was somehow stupid: Not any more so than throwing it away on rent. Mortgage Interest = Rent, for all intents and purposes, so using borrowed money to pay rent or using borrowed money to pay mortgage interest is equivalent. At least some portion (though small at first) of your monthly payment is going to equity when you own your home.

4. To those that think that they can time the market (i.e. when it will bottom-out or when it will recover): Why are you going to medical school? If you can successfully time the market, you stand to make beaucoup $$$ in real estate. So much that you can probably even BUY THE HOSPITAL.

 

[ChimpanzeeMinky]

4. To those that think that they can time the market (i.e. when it will bottom-out or when it will recover): Why are you going to medical school? If you can successfully time the market, you stand to make beaucoup $$$ in real estate. So much that you can probably even BUY THE HOSPITAL.

Yes, but knowing I can't time the market is the very reason I don't believe I should be buying. The typical wisdom is that your time horizon for home ownership should be *at least* five years, and if I'm relatively sure I will be completing my residency in another location, why would I buy to own for only five years? (I am not interested in being a landlord during residency, btw)

 

[Sol Rosenberg]

Yes, but knowing I can't time the market is the very reason I don't believe I should be buying. The typical wisdom is that your time horizon for home ownership should be *at least* five years, and if I'm relatively sure I will be completing my residency in another location, why would I buy to own for only five years? (I am not interested in being a landlord during residency, btw)

<shrug> Typical based on what? I bought a house in Dec '03. Sold it in Dec '07 (in the midst of this "horrible" housing market.) I made money. It can go any way.

There is risk in any investment. Only you know whether you can tolerate that risk or not. I agree that if you are taking out $100k+ in loans, for example, you shouldn't be considering short-term investments, since you probably have very little tolerance for loss. Everyone is different in this regard. This ALL needs to be taken into account when buying a house. It is the largest investment that most people make, therefore, it demands (deserves?) lots of time spent for analysis. It's not as simple as people are trying to make it here.

I'm not telling people that they SHOULD buy. I'm just telling the people that are telling people that they SHOULDN'T buy that their advice (tha I've seen here, at least) is based upon nothing relevant.

 

[ChimpanzeeMinky]

<shrug> Typical based on what? I bought a house in Dec '03. Sold it in Dec '07 (in the midst of this "horrible" housing market.) I made money. It can go any way.

There is risk in any investment. Only you know whether you can tolerate that risk or not. I agree that if you are taking out $100k+ in loans, for example, you shouldn't be considering short-term investments, since you probably have very little tolerance for loss. Everyone is different in this regard. This ALL needs to be taken into account when buying a house. It is the largest investment that most people make, therefore, it demands (deserves?) lots of time spent for analysis. It's not as simple as people are trying to make it here.

I'm not telling people that they SHOULD buy. I'm just telling the people that are telling people that they SHOULDN'T buy that their advice (tha I've seen here, at least) is based upon nothing relevant.

You bought your home in the middle of the peak market, while prices were still rising substantially. That you were able to sell your house at a gain is not a surprise, nor is it any indicator of what would happen for someone purchasing a house now. The market is dropping right now, and while I would never advocate attempting to time the market, purchasing a house now without acknowledging that it's very possible you will be selling at a substantial loss in 4 years upon graduation is not very wise.

 

[Sol Rosenberg]

You bought your home in the middle of the peak market, while prices were still rising substantially. That you were able to sell your house at a gain is not a surprise, nor is it any indicator of what would happen for someone purchasing a house now. The market is dropping right now, and while I would never advocate attempting to time the market, purchasing a house now without acknowledging that it's very possible you will be selling at a substantial loss in 4 years upon graduation is not very wise.

You seem to be not getting it.

Which market?

But, for the record, the market in which I sold my home did not behave as you described. It declined all through '07 (maybe a bit at the end of '06, but I forget.) I still made money. It is possible. The sky is not necessarily falling. All markets are different.

I said that there was risk involved. How is that not acknowledging that there is a possibility for a loss? I thought the meaning of "risk" was pretty well-understood.

 

[ChimpanzeeMinky]

You seem to be not getting it.

Which market?

But, for the record, the market in which I sold my home did not behave as you described. It declined all through '07 (maybe a bit at the end of '06, but I forget.) I still made money. It is possible. The sky is not necessarily falling. All markets are different.

I said that there was risk involved. How is that not acknowledging that there is a possibility for a loss? I thought the meaning of "risk" was pretty well-understood.

I said that you *bought* your home during a period of rising home prices. Yes, the prices were declining during '07, and you still made money. That is because you bought early enough when prices were still low enough. You made money buying in 2003 and selling in 2007. You are comparing apples to oranges. The market did not start its collapse until 2007!

Ask all the people that bought with the expectation that houses would continue to rise indefinitely whether they understand the meaning of "risk." The housing market in the US, which happens to be one market with regional variations, is in a state of rapid descent right now, making it much more risky than it had been at any other time in recent history.

The only argument you have been making to support purchasing today is that you made money from 2003-2007, when a ******ed monkey could have made money. You *can't* be serious.

 

[Sol Rosenberg]

I said that you *bought* your home during a period of rising home prices. Yes, the prices were declining during '07, and you still made money. That is because you bought early enough when prices were still low enough. You made money buying in 2003 and selling in 2007. You are comparing apples to oranges. The market did not start its collapse until 2007!

Ask all the people that bought with the expectation that houses would continue to rise indefinitely whether they understand the meaning of "risk." The housing market in the US, which happens to be one market with regional variations, is in a state of rapid descent right now, making it much more risky than it had been at any other time in recent history.

The only argument you have been making to support purchasing today is that you made money from 2003-2007, when a ******ed monkey could have made money. You *can't* be serious.

The US housing market is NOT one market (with or without regional variations.) Prices in one market are only somewhat correlated with prices in another. However, I'm not going to argue over semantics. So, go back and re-read my posts and substitute "region" for market.

Some questions:

1. How do you make money buying a house? Oh, I forgot, you can predict the market with 100% accuracy, so you know when you buy (maybe even before you buy?) that you are going to make money. Is that what you were talking about when you said that I made money when I bought my house? (NOTE: Prices were NOT rising when I bought my house. Not in my "region." I can provide tax assessment records to prove it.)

2. Would you consider buying a house when prices are rising to be a good time to buy a house?

3. Have you even bought/sold/otherwise dealt in real estate before? With what authority can you analyze the relative risk of today's "regions" (you still haven't said to which region you are referring when you make these claims. My point is that there are "regions" TODAY where real estate is appreciating in price. Real estate is regional. If you don't consider it as such, and don't get to know your local "region," (instead relying on the talking heads on CNN to tell you what is going on in the "market") I would bet on you losing, rather than making, money in real estate.) I don't calim to know any of these things. I try to be somewhat in tune with conditions in my local "region," but I wouldn't be so stupid to claim to know with ANY certainty what the "region" will do short or long-term. Your "******ed monkey" will probably do as well as any "experts" (including yourself, apparently) in predicting the market.

THAT is the only point that I am trying to make here.

 

[Sol Rosenberg]

The only argument you have been making to support purchasing today is that you made money from 2003-2007, when a ******ed monkey could have made money. You *can't* be serious.

Just so I make myself CRYSTAL clear, I have not been making ANY argument to support purchasing or not purchasing today. Not without knowing which market -- sorry, "region," about which we are talking. Indeed, I have been arguing that the whole process deserves MUCH more [highly specific to one's own regional and financial situation] analysis and thought than you will get from any stranger on the internet (including me, who has, BTW, been buying and selling real estate for over 10 years)

 

[HanginInThere]

thanks for all of the replies- i am really glad I have about a year to feel out the market b/c you guys have all given me good things to think about! Though the area will have very reasonable rent, the housing crisis has also produced a number of foreclosures and its seems like some really decent houses are selling in the 25-40k range just b/c the banks want to get rid of them. So, it looks like I'm have some real options to look into. If I can get one close enough to campus though ( and the attached hospital), I have to wonder if it would be an easy investment to get rid of at some point after I graduate.

Once again, thanks for all of the great replies!

Here's a point that hasn't been made yet: selling a house costs money. There are lawyers' fees, expenses (and lots of work) to clean/fix up your house in preparation for showing it, sales tax in some states, and - the HUGE one - the realtor's commission. Realtors currently charge the seller 5% of the home's sale price. So if you sell a $200K house (I have no idea what your situation is, and that number could be way off in either direction), the realtor gets $10,000 of your money. There's no way you will have paid off that much of the mortgage's principal during your med school years. [A 30-year mortgage is structured such that your monthly payments are almost all interest at the beginning and shift to almost all principal at the end. Over the first four years, you'll just pay down a few thousand dollars.] Now ideally the house's value would have appreciated reasonably over four years and you'll come out ahead, but do you want to gamble on that?

Chances are you won't be matching into a residency in the same location as your med school, which means you're going to be stuck trying to sell the house at a specific time regardless of what the market is like then. And even in a great market, you can't plan for how long it will take to sell your house - what do you want to do if it sells two months before you graduate? Four months after your internship starts?

Then there's the ongoing stuff other people have discussed - property tax, homeowner's insurance, upkeep expenses, upkeep time, one-off problems that will take your time, energy, and money, etc. Do you want to learn you have termites a month before the boards? How about a broken furnace the morning of an anatomy exam, or a leaky roof that needs to be replaced while you're getting ready to sell the house and move to another state for residency?

With all that said, I'm going to be buying a house for med school. BUT I'm already married with kids, I've been a homeowner for the past seven years, and I don't want to take a step backward to renting again. I recognize the financial risk - we probably won't make any money on our house and I'm hoping we don't lose a lot, but for us owning our own home is worth the cost. In your position, I'd strongly recommend against it.

 

[sciencebird]

www.hotpads.com

It gives a list of both rentals and homes for sale in your area, and has a rent vs. buy option. After looking at the site, I plan to rent. It's true that most of the homes I could afford with no roommates look like they would require upkeep, which sounds stressful to me.

On hotpads, they suggest you take the money you save by renting vs. buying and invest it in a cd or mutual fund. Of course cds do not earn much interest now. Maybe a Roth IRA. You can take up to $10000 tax-free out of a Roth IRA to put as a down payment on a home after 5 years. On a four-year time scale, or even longer, renting isn't throwing money away, so you are not being "dumb", which is what a few people have told me.

 

[sprinkibrio]

Don't get a dog. You don't need to limit your freedom any more than what med school will do. Feeling like a bad owner is a real downer... worse than being lonely.

 

[sprinkibrio]

This is funny. 4 years ago everyone would be saying that it is a great investment etc. Now those people lost their arse and there is a real estate crisis. Right now is a buyers market. Think about what that means for a second. Of course it really depends on the city, I would not buy anything too expensive.

way to be ahead of the curve

 

[Skymastre]

If you had a spouse with a pimp job, as well as a downpayment saved, I can see a very good argument for purchasing a house in the right market. Once the Petro-dollar is secure and a new prez. elected the US will be fine. Too much of the global market and countries economies' depend on the US's purchasing power...

What other country is going to buy dog food with plastic mixed in, toys for tots that contain lead paint?

If you had a spouse, you could have a baby instead of a pouch. I'm not sure of any state that lets you keep babies in a cage, though. I think they have laws against this sorta thing.

Too bad, you'll just have to get use to it pissing on the floor. Kinda like how surgeons have to get use to M3s pissing in the OR...life is full of these little ironies

 

[shevie]

to the OP - I dont know how much my response will help you in making a decision, but just if you need someone to compare with, heres me. Im assuming youre 21 based on your name. Im 22, got married 2 years ago, and plan on starting school in the fall. We have saved up a sizeable amount (enough for a down payment, plus were hoping our parents will help out a bit too) over the last two years, and I am having a baby this summer (just a tad bit more responsibility than a dog, but you get the picture). We figure: where Im going to be for medical school (hopefully, if all goes acc to "plan"), is where we truly want to settle. True, I might get screwed and not get into any residencies in the entire tri-state area, but, a) im not going into neurosurg or derm here, b) im trying to take things one day at a time and c) im going to just HAVE to make things work in terms of residency because in my husbands industry, its more difficult to work (making the same amount of $) anywhere other than where he does.

Most of my friends in school are renting, but we figure, if we are starting a family anyway, why live in a crappy apartment for four more years, deal with annoying landlords, broken heaters, etc etc. Not that we wont have "issues" in a house, but at least we will have something to call our own. I think you have to ask yourself fiscally if you can handle it. Im assuming youre single (you said youre leaving your family and thus want to get a dog right?), and therefore, youre not really going to have any income whatsoever for the next four years. If i WERENT married, i would still be living at home (why not freeload if i can?). But being that we will be living off of one (nice) income for the next four years, its not so outlandish to do what were doing.

So-while you might have $ set aside for a down payment on a small piece of something, where will the rest of the payments come from? are your parents going to be helping out? If so, then great. You have s/o to fall back on, no problem. are you just going to take out more loans to pay off those loans? Because thats probably not a good idea. I know there were millions of answers offered on here and I didnt read thru all of them, I just thought, maybe, telling you that im in a similar position as you - but telling you heres whats similar, heres whats different, will help you decide?

whatever. feel free to pm me if you need advice

 

[EM_Rebuilder]

Hi,

So I've been thinking... if I'm going to sink more than $30k into rent over 4 years of med school, I may be better off buying a small house, and having some equity when I graduate. I was just wondering how many people do this, and if anyone has- was it in your opinion a good or bad idea? I know lots of stuff comes with owning rather than renting- stuff like a busted pipe the night before a test or having to make time to mow the lawn, etc- but are these things worth it to have something to show in the end for all of the money you've been paying for living expenses. It also would be easier to have a dog if you own rather than rent-I'm considering this since moving away from family, friends, boyfriend, etc may leave me lonely at night in a house by myself, and I would love the companionship and motivation to exercise.

Overall, if I do this, I'm thinking that trying to get the house and dog early in summer before M1 is best, so that the house will be fixed up and ready and the dog trained before school gets into full swing. If not before M1, maybe summer before M2?

Thoughts?

Depends largely on where you are. If you are in a place where 60-80 will by a decent home in a decent part of town, I am a HUGE fan of buying a home. Certainly you will be MUCH money ahead in 4 years as you will have equity and I dont care what these people say, a 60K house can not depreciate that much in 4 years.... espically when you factor in the money you would have lost to 'rent'.

Dont forget with home ownership there is more than 'monthly payments'. There are taxes/insurance, upkeep and possible small and sometimes pricey repairs, yard work. On the plus side, you have your own place, probably much more room than an apt, and its just nicer to live in a home than an apt.

If you get a house with a yard, I highly recommend a pet or two. I got two weiner dogs the middle of 1st year. They've been my boys since. They have been through a lot with me and certainly helped keep me together at times....

Good Luck...

 

[Skymastre]

a 60K house can not depreciate that much in 4 years....

Good Luck...

Agreed!

 

[HanginInThere]

Depends largely on where you are. If you are in a place where 60-80 will by a decent home in a decent part of town, I am a HUGE fan of buying a home. Certainly you will be MUCH money ahead in 4 years as you will have equity and I dont care what these people say, a 60K house can not depreciate that much in 4 years.... espically when you factor in the money you would have lost to 'rent'.

I don't agree with the equity argument. In the first four years of a mortgage, you'll be paying mostly interest and very little of the principal. In other words, your mortgage payment disappears the same way rent does, rather than building equity.

I agree that a 60K house probably won't depreciate all that much in four years in the worst case. The flip side is that it probably won't appreciate a ton in the best case, either. Add in the fixed costs of buying and especially the costs of selling a house, and I think it's going to be really hard to come out ahead over four years. Just looking at the finances, I think renting makes a lot more sense.

But then there are the non-financial considerations:

Dont forget with home ownership there is more than 'monthly payments'. There are taxes/insurance, upkeep and possible small and sometimes pricey repairs, yard work. On the plus side, you have your own place, probably much more room than an apt, and its just nicer to live in a home than an apt.

Along with the cost of upkeep and repairs there's the time and effort. It's a lot easier to call the landlord than to have to deal with it yourself.

EM_Rebuilder is very right about the plus side - you'll get more space, you get to live in a house instead of an apartment, and it's your own property - that goes a long way, and that's why I'm looking at real estate now instead of looking for a rental place in spite of the financial issues. But if I were in the OP's position, fresh out of college without a family in tow, I'd be renting.

 

[shevie]

It's a lot easier to call the landlord than to have to deal with it yourself.

OMG. Then I guess my landlord is just evil? Lets see. My neighbors had a BAT in their apartment (took a picture w/o flash i guess? just as proof), took 2 days for maintenance to show up, I had to threaten to sue before they sent an exterminator over (because of course, calling my own, was against the bylaws or whatever), and when i got fed up after waiting 2 weeks for them to fix my broken dishwasher, I finally did call sears myself, and paid for the repairs out of my own pocket. i would much rather own than deal with this bull.

Nevertheless, without knowing her entire situation, I think i agree w/ this statement:

if I were in the OP's position, fresh out of college without a family in tow, I'd be renting.

its just that weve had enough, and theres no room (comfortably) in our two bedroom for a baby

 

[45408]

For most people, paying your mortgage with your student loans is a terrible idea. If you have roommates who are also paying towards your mortgage, that's a better idea. If you have a spouse/SO who is working full time and paying most/all of your mortgage, that's a great idea. I have a spouse who works full time and makes good money, but we don't have a house, because we don't want to be tied into anything right now.