Buying vs Renting During Residency

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Do you RENT or BUY your housing during residency?

  • RENT

    Votes: 23 63.9%

  • BUY

    Votes: 11 30.6%

  • I started off with one, and went to the other

    Votes: 2 5.6%
  • Total voters
    36
FiveRivers

FiveRivers

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Hello all,
Do most residents (yourself, fellow residents/fellows) buy or rent an apt/condo/house during residency? Renting for 3- 8 years (if you do a fellowship) seems like a lot. However, buying would clearly be more costly initially. Obviously the decision can change if you get married during residency/fellowship, have children, ect. But on average, what would you say most residents do? Thanks for any insight.
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There are tons and tons of threads on this. There are merits to both - it depends on your location, length of residency, personal financial situation, desires, etc.

I am perfectly content renting. Housing in my area has been pretty stagnant and I'm not entirely convinced we ever hit the bottom after the bubble burst a few years back. Prices are starting to rebound now but I'd like to see where the market goes for a while. Plus my rent is super cheap.

I don't plan to own a home for another 5-6 years at least (through the end of my residency, then through fellowship, then through 1-2 years of being a junior attending).
 
southernIM said:
There are tons and tons of threads on this. There are merits to both - it depends on your location, length of residency, personal financial situation, desires, etc.

I am perfectly content renting. Housing in my area has been pretty stagnant and I'm not entirely convinced we ever hit the bottom after the bubble burst a few years back. Prices are starting to rebound now but I'd like to see where the market goes for a while. Plus my rent is super cheap.

I don't plan to own a home for another 5-6 years at least (through the end of my residency, then through fellowship, then through 1-2 years of being a junior attending).
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I'll echo this - it's incredibly situation-dependent. We bought - but we were already married, have a plan for kids, have a 4 year residency, a full-time professional non-resident, didn't have any med school debt, parents helping with a down payment, and live in an area where renting a decent place, especially close to the hospital, is expensive compared to buying. Buying is a significant commitment.
 
As noted above, there are tons of threads on this topic and it really is situation dependent.

I and others found that if you're single, renting tends to be easier. When the dishwasher breaks or you have another maintenance problem it can be difficult to arrange to be home to wait for the repair person. No lawn or garden maintenance either.
 
Winged Scapula said:
As noted above, there are tons of threads on this topic and it really is situation dependent.

I and others found that if you're single, renting tends to be easier. When the dishwasher breaks or you have another maintenance problem it can be difficult to arrange to be home to wait for the repair person. No lawn or garden maintenance either.
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This. And considering that I started residency knowing I would be moving after training, that made it a no-brainer.

Actually, I've never owned any kind of home, and odds are good that I never will. But my situation (single, move around a lot, value convenience/flexibility over stability/community) makes me a good candidate to rent permanently. I don't expect to stay in my first job for longer than a year or two. I don't expect to do fellowship in the same city where I have my first job. I don't expect to find my second job in the same community where I do fellowship. In general, I expect to have multiple jobs in multiple cities during my career. I would be open to moving across the country if a good opportunity arose, and I wouldn't completely rule out the possibility of changing careers again either. In contrast, buying a house will be a lot more appealing to people who have to think about their spouse's employment prospects and kids' schools, or who have a strong desire to be in a specific area of the country, etc.
 
Winged Scapula said:
I and others found that if you're single, renting tends to be easier. When the dishwasher breaks or you have another maintenance problem it can be difficult to arrange to be home to wait for the repair person. No lawn or garden maintenance either.
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I think renting is always easier, married, single, kids, whatever. Whether it's a good financial move is up to you.

I started by renting because, a) I moved from NYC where as a med student married to a performing artist, I had no chance to save any money for a down payment and b) I moved at the peak of the housing market and watched most of my residency classmates who bought and moved after 3 years lose 10-40% of the value when they sold. I've continued to rent for all the reasons WS outlines above.
 
gutonc said:
I think renting is always easier, married, single, kids, whatever. Whether it's a good financial move is up to you.

I started by renting because, a) I moved from NYC where as a med student married to a performing artist, I had no chance to save any money for a down payment and b) I moved at the peak of the housing market and watched most of my residency classmates who bought and moved after 3 years lose 10-40% of the value when they sold. I've continued to rent for all the reasons WS outlines above.
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Yeah, but NYC's housing market is pretty stable. In fact, I doubt it really took much of a hit and is probably back to original values or better. You really can't lose by buying property there, so long as you can tolerate the astronomically inflated prices.
 
ruralsurg4now said:
Seriously? You don't think you'll ever have a permanent job?
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No. Medicine is already my second career. I'll be 39 when I finish residency this summer, mid-forties when I finish fellowship. I've already lived in nine cities in six states, plus worked in two locations abroad. While it's not impossible that I'd spend the rest of my career in one place, I certainly haven't followed that pathway up to this point!
 
ruralsurg4now said:
Yeah, but NYC's housing market is pretty stable. In fact, I doubt it really took much of a hit and is probably back to original values or better. You really can't lose by buying property there, so long as you can tolerate the astronomically inflated prices.
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Way to miss the point. Which was that, when I lived in NYC, we had a combined annual income of ~$35K (in our best year) so saving up money for a down payment on a house (there or anywhere) was unrealistic.

But you're certainly correct that, if one does in fact have the $200K saved up for a down payment (median NYC sales price was over $1M last year), it's a good place to buy.
 
QofQuimica said:
I'm going to work for a few years, then do fellowship. The fellowship itself is not five years long. 😉
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You sure once you start working that you'll want to go back to being a fellow?
 
ruralsurg4now said:
Yeah, but NYC's housing market is pretty stable. In fact, I doubt it really took much of a hit and is probably back to original values or better. You really can't lose by buying property there, so long as you can tolerate the astronomically inflated prices.
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NYC prices were stagnant and dropped some as well, although not nearly as significantly as the rest of the country.

As far as renting vs. buying, if I were starting residency right now I'd rent. I bought during medical school and sold at a profit. I looked around at the beginning of residency and realized that I couldn't afford to buy where I wanted to live, but I could afford to rent there. I thought the market was still bottoming out and I was right. 4.5 years later and everyone in my program who bought is either still trying to sell months after residency ended or is unable to do so because they can't afford to price their property for the market.
 
SoCuteMD said:
4.5 years later and everyone in my program who bought is either still trying to sell months after residency ended or is unable to do so because they can't afford to price their property for the market.
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After 4.5 years, I'd just take the loss and dump the property. That's sort of ridiculous because they're losing property taxes, maintenance, and mortgage costs.
 
ruralsurg4now said:
Nah, because then you're a landlord. And that can be quite a nightmare. Is it really worth it?
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Actually, yes. You're the landlord but you have a rental company manage it for you for a monthly 10% flat fee of the rent amount (industry standard) for looking after it for you. Your rent "rate" just includes that fee, covers your mortgage and a little something extra for the girl/guy in your life.
 
Shikima said:
Actually, yes. You're the landlord but you have a rental company manage it for you for a monthly 10% flat fee of the rent amount (industry standard) for looking after it for you. Your rent "rate" just includes that fee, covers your mortgage and a little something extra for the girl/guy in your life.
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Huh, didn't know about the rental company bit, but I guess that sounds doable. 👍
 
ruralsurg4now said:
Seriously? You don't think you'll ever have a permanent job?
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I haven't had a perm job as a physician more than 3 months. It's not a reach to say that one will never have a perm job. Depends on what you want. Q has no debt so she could go deliver pizzas on the weekend if she wanted and still be ahead of the game.
 
another thing to think of is upkeep of a property that you own. Depending on what kind of a residency/fellowship you do, and how responsible of a person you are, you may not have the time to properly take care of your property. I know in my apartment building where I rent, if anything goes wrong I can just call the landlord and he fixes it. I don't have to pay for anything unless I actually caused damage to it.
 
Definitely buy! Even if your single, no kids, BUY! it's the smartest financial thing you can do. When you rent your just throwing money in the trash. IF you buy your investing. Lets say you buy a property for $150 000, an MD can easily get a mortgage with no down-payment (assuming your not in new york city). When your done residency you can just sell the place for what you paid, net loss $(property taxes and interest you paid, and maintenance) which is way less than 5 years of renting. Hell even if the value falls by 10% its still less of a loss than all that rent! If the market really goes south just don't sell and rent the place out. The renters will pay your mortgage and once that's paid your getting free money while your sitting on your ass in another city. If you don't want to deal with the hassles of being a landlord, you hire a rental company for 10% (as mentioned in an above post).
 
Staradmiral said:
Definitely buy! Even if your single, no kids, BUY! it's the smartest financial thing you can do. When you rent your just throwing money in the trash. IF you buy your investing. Lets say you buy a property for $150 000, an MD can easily get a mortgage with no down-payment (assuming your not in new york city). When your done residency you can just sell the place for what you paid, net loss $(property taxes and interest you paid, and maintenance) which is way less than 5 years of renting. Hell even if the value falls by 10% its still less of a loss than all that rent! If the market really goes south just don't sell and rent the place out. The renters will pay your mortgage and once that's paid your getting free money while your sitting on your ass in another city. If you don't want to deal with the hassles of being a landlord, you hire a rental company for 10% (as mentioned in an above post).
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The only thing worse in this post than the financial advice is the inability to distinguish your vs. you're properly. For one, $150K is way too little to budget for a decent home in many markets. A 10% drop in value on a $450K home is a lot bigger deal than on a $150K house. Secondly, it is an investment, and just like with any other investment, you run the risk that you'll lose money. It's silly to just categorically say that owning will be cheaper than renting. In some markets that's true; in others the opposite is correct. There's still a pretty decent rent vs. own calculator available online through the NY Times that might help you with this decision that I suggest the OP check out; it may be helpful.
 
colbgw02 said:
The only thing worse in this post than the financial advice is the inability to distinguish your vs. you're properly. For one, $150K is way too little to budget for a decent home in many markets. A 10% drop in value on a $450K home is a lot bigger deal than on a $150K house. Secondly, it is an investment, and just like with any other investment, you run the risk that you'll lose money. It's silly to just categorically say that owning will be cheaper than renting. In some markets that's true; in others the opposite is correct. There's still a pretty decent rent vs. own calculator available online through the NY Times that might help you with this decision that I suggest the OP check out; it may be helpful.
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That, plus this belief that you'll always find a renter is silly, or that the renter will be "paying your mortgage." If that were true, then your best bet would be to quit medicine and just start buying properties like Monopoly.
 
I think it really depends how much risk you are willing to take (I also disagree that "always buy" is the answer--I think "usually rent" is the better answer for residents).

I'll be moving in a little over six months for my advanced residency and I could buy a decent home in a decent area for $70-$80k or a nice home in a nice area for $90-$150k. All quite affordable. The trouble is my residency will just be three years. While it's very possible we'd save money, we have closing costs to worry about, the "double rent" factor since we'd likely buy the home a few months before moving in, costs to maintain/insure the home, buy appliances, pay for utilities you don't normally pay for in a rental, etc. Honestly I think in my case we could still come out ahead given how cheap the houses cost in the first place, but that also means the home isn't likely to appreciate much in value, and I'm concerned with having to hold onto the home for quite some time after finishing residency. I've heard all-to-often first-hand from non-traditional medical students who weren't able to unload their home and it took a while for them to either find renters, or find renters they were willing to rent to (seeing as you can really get screwed over by bad tenants). It just seems like too much risk for not enough gain--other than some extra privacy and "my own home," I just don't think we gain much. We're not going to make or save $20,000--so why take on even more debt? Sure, I'd love to do some home improvement (even more costs...), but it can wait. If my residency was longer or we had kids I'd give a little more consideration to buying, but I'd still have all the same reservations.

Our plan is to rent for the next three years, and probably at least 6-12 months once I become an attending. That'll 1) give me time to make sure I like the job I start and 2) get to know the area we move to so we can better decide where we'd like to really settle down. You can always research neighborhoods/cities and visit ahead of time, but you never really know which of those places you'd really love to settle down in until you've lived in an area for a while. My favorite apartment was actually one of the ugliest I've lived in--but literally steps away from my favorite restaurant, grocery store, and all kinds of culture that we only knew about because we'd lived in that city for a year already. In addition to all of that, we can be a more predatory buyer if we're looking for a home in the off-season.
 
ruralsurg4now said:
That, plus this belief that you'll always find a renter is silly, or that the renter will be "paying your mortgage." If that were true, then your best bet would be to quit medicine and just start buying properties like Monopoly.
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On that note, and this is just anecdotal, but I've had a few landlords that charged us less than the mortgage/maintenance costs because they couldn't charge more and still be competitive. One specifically told me he didn't plan to make money until he sells the home and that renting the home was just minimizing his losses until he sold the home.
 
Staradmiral said:
Definitely buy! Even if your single, no kids, BUY! it's the smartest financial thing you can do. When you rent your just throwing money in the trash. IF you buy your investing. Lets say you buy a property for $150 000, an MD can easily get a mortgage with no down-payment (assuming your not in new york city). When your done residency you can just sell the place for what you paid, net loss $(property taxes and interest you paid, and maintenance) which is way less than 5 years of renting. Hell even if the value falls by 10% its still less of a loss than all that rent! If the market really goes south just don't sell and rent the place out. The renters will pay your mortgage and once that's paid your getting free money while your sitting on your ass in another city. If you don't want to deal with the hassles of being a landlord, you hire a rental company for 10% (as mentioned in an above post).
Click to expand...

This is truly horrible advice.
 
If you're living in a city that has relatively low housing prices and can put in a down payment, then it's not the worst idea right now. Interest rates are really low and not likely to stay that way. Once you have some equity in the place, you can roll student loans into your low interest mortgage. Qualifiers: You really need to have a down payment and a mortgage you can afford to pay down, you need to find a house in a good location, and you need to be staying for at least four years. If you have those things, you'd be surprised how quickly you can build equity and being able to take even 20% of your 8% interest loans and turn it into a 3.5% loan is helpful. It is a risk, and you are gambling, but right now while housing prices are depressed but rising, and interest rates are low, it's not the worst bet you could make.
 
I agree. Buying now is a good investment. Interest rates are low. Prices are depressed for the most part. Never know, you may stay in the area after 3 years of residency!
 
Dylasa said:
If you're living in a city that has relatively low housing prices and can put in a down payment, then it's not the worst idea right now. Interest rates are really low and not likely to stay that way. Once you have some equity in the place, you can roll student loans into your low interest mortgage. Qualifiers: You really need to have a down payment and a mortgage you can afford to pay down, you need to find a house in a good location, and you need to be staying for at least four years. If you have those things, you'd be surprised how quickly you can build equity and being able to take even 20% of your 8% interest loans and turn it into a 3.5% loan is helpful. It is a risk, and you are gambling, but right now while housing prices are depressed but rising, and interest rates are low, it's not the worst bet you could make.
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To clarify, I'm not saying no one should buy. But to make a blanket statement that everyone should buy a house, regardless of personal financial situation, any knowledge of an individuals' local housing market, length of training, availability of financing options, and the recommendation of taking a zero down loan carte blanche is ridiculously naive and simplistic.
 
ruralsurg4now said:
Holy smokes, we must have wildly different opinions on what constitutes "nice"!! 🙂
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Having grown up in the the SF Bay Area where my Dad bought "nice" 4-bed 50's era home (ie., nothing special) for a family of 6 in the mid-80's for ~$150k and sold it for over a million just before the housing bubble burst (talk about timing!), I was also quite surprised at how cheap the homes in my new city will cost. I believe $250-$400k gets you very big and very nice home (much bigger and nicer than what I grew up in).

For my wife and I, a 2-bed, 1-ba post-war home in a nice, quiet, and safe neighborhood is what'd I'm classifying as "nice," and those seemed to generally be in the $100-150k range, with the "nice enough" ones in the $70-80k range.

In the city where I'm doing my TY, you can actually get a nice home for closer to $80-120k. I don't even know what the "nice enough" ones would be...

Clearly I'm in the Midwest... The housing prices (almost) make up for the lack of mountains 🙂
 
southernIM said:
To clarify, I'm not saying no one should buy. But to make a blanket statement that everyone should buy a house, regardless of personal financial situation, any knowledge of an individuals' local housing market, length of training, availability of financing options, and the recommendation of taking a zero down loan carte blanche is ridiculously naive and simplistic.
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I concur. The only reason to buy a house is to gain equity on it so that you can leverage that equity against other expenses, and that's not as likely if you don't put anything down on it.
 
Staradmiral said:
Definitely buy! Even if your single, no kids, BUY! it's the smartest financial thing you can do. When you rent your just throwing money in the trash. IF you buy your investing. Lets say you buy a property for $150 000, an MD can easily get a mortgage with no down-payment (assuming your not in new york city). When your done residency you can just sell the place for what you paid, net loss $(property taxes and interest you paid, and maintenance) which is way less than 5 years of renting. Hell even if the value falls by 10% its still less of a loss than all that rent! If the market really goes south just don't sell and rent the place out. The renters will pay your mortgage and once that's paid your getting free money while your sitting on your ass in another city. If you don't want to deal with the hassles of being a landlord, you hire a rental company for 10% (as mentioned in an above post).
Click to expand...

I feel like I just got timewarped to 2005. Buy buy buy! There's no where to go but up!

By the way, don't start thinking that being a landlord is as easy as just hiring a rental company and raking in the cash. First you have a to find a decent company. Then they have to find a renter, and hopefully a good one. I've known people, all going through rental companies, who had tenants who didn't pay the rent, absolutely trashed the house, or both. A good friend of mine had his house basically destroyed after having to evict the tenants for not paying rent, and then they had the gall to turn around and sue him for someone "getting injured" on the property just before the eviction. He won the case, but it was a nightmare for him and he never did recover costs. And yes, he had hired a rental company and they found these wonderful tenants for him.

Also consider that you're responsible for repairs. When your rental company calls to tell you that the furnace just croaked, you have no choice but to get a new one in there pronto. And bam, just like that you're out 3 or 4 months of rental income on a new furnace. Remember as well that the market will determine what you can charge for rent. There is no law that says you get to charge what mortgage + property taxes + repairs and upkeep +/- utilities cost you. The landlord I rented from during med school just sold her rental house of 10 years this summer, and told me that even with a good renter like myself who paid rent on time, didn't trash stuff, etc, she wasn't breaking even - especially as the house got older and started having more issues.

There's certainly a time for buying a house, but I in no way subscribe to the idea that it makes a good 3 or 4 year investment. One need only look at the last decade to see literally millions of people burned by this way of thinking. Now, settling into a community with a real long-term job - yeah, I can't imagine renting instead of buying then.
 
Last edited:
Interesting observations thus far, and some great points have been made. First of all, location seems to be one of the biggest factors for even considering the option of buying. Based off of my assessment, renting seems to be the best for your "typical" 1st year resident: Single (not married), mid twenties (25-28), and living off of a resident's salary. (BTW, I know, there are MANYYYY people who do not fall under this "typical" scenario. However, I'm just speaking about the perceived majority. Like I said before, if you are married, have children, ect, your options may be different). After your PGY-1 year, and spending a year in a possibly new area, you may learn so much more about the area that you did not know going in. Buying in a new location, when not being from that area can be somewhat risky. If you do residency in the same city where you are originally from, this is obviously not an issue.

Regarding the cost of renting for 3-8 years vs buying, a very valid point was made on the price of upkeep of your property, including the headache of repairs and maintenence if you buy.
 
This buy/rent calculator may be useful.

The real wild card is being able to sell when you need to move. The big mistake people often make is underestimating the amount of work at house can be and the money that needs to be invested back in for upkeep. I see it time and time again that people have unrealistic expectations of sale price and have done next to nothing to upkeep a property.
 
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