Considering Buying a Condo Before Med School

[buffywannabe]

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I found a super cheap and nice condo near the medical school I plan on attending. Monthly payments would be way less than money allotted for rent at school. At this point I am working and am pretty sure I would be able to get a mortgage. I would then be in the area to live in it 4.5 years which I think is a reasonable amount of time. I also know there is that 8000 tax break thing for first time home buyers (condos do count). What do you guys think of this idea?

 

[willen101383]

This is my exact plan. I live with my girlfriend and she has a great job so I think this makes the most sense. Financially I think its a good decision. We are in a recession...we will be in the same spot for 4 (or more) years...and I would rather be gaining some equity..rather than throwing away 1600 a month on rent to some landlord..that is likely going to screw me in the end. (I am very bitter about having been screwed over by my two previous landlords.)

 

[willen101383]

Also. Does anyone know of any federal incentives for medical students to buy homes? I know that exists for residents. I really need to supplement what I am putting away for a DP.

 

[Stratego]

I think it's a fine plan, if you have the ~20% down payment. Don't forget to figure in property taxes, home insurance, and utilities you may not have needed to pay for before. And all the closing costs. Chances are very good, though not guaranteed, that the economy will be in good shape by the time you need to sell.

 

[flip26]

I found a super cheap and nice condo near the medical school I plan on attending. Monthly payments would be way less than money allotted for rent at school. At this point I am working and am pretty sure I would be able to get a mortgage. I would then be in the area to live in it 4.5 years which I think is a reasonable amount of time. I also know there is that 8000 tax break thing for first time home buyers (condos do count). What do you guys think of this idea?

Read the fine print on the taxpayer credit deal-o...be sure about length of ownership issues, etc.

 

[flip26]

This is my exact plan. I live with my girlfriend and she has a great job so I think this makes the most sense. Financially I think its a good decision. We are in a recession...we will be in the same spot for 4 (or more) years...and I would rather be gaining some equity..rather than throwing away 1600 a month on rent to some landlord..that is likely going to screw me in the end. (I am very bitter about having been screwed over by my two previous landlords.)

After paying closing costs when you sell in 4 years, unless the house appreciates in value, you could be losing equity...you will not build up much equity in the first few years of a mortgage loan repayment (mostly interest).

 

[Parts Unknown]

...and I would rather be gaining some equity..rather than throwing away 1600 a month on rent to some landlord...

Be careful. In only 4-5 years you will have very little equity unless you have a sizable down payment. Just substitute "some landlord" with "interest." When you relocate, assuming your condo value has remained stable (which may or may not happen), you will likely get stuck paying closing costs when you sell. Kiss a few more grand goodbye. Oh, and don't forget condo fees, homeowners insurance, and property taxes while you occupy. And upkeep.

Here, play with the handy rent versus buy calculator to see when buying would pay off. I'm of the mindset that 5 years of occupancy is the absolute minimum to reliably break even in most markets, and that's assuming no more sudden declines in home prices.

 

[futureboy]

After paying closing costs when you sell in 4 years, unless the house appreciates in value, you could be losing equity...you will not build up much equity in the first few years of a mortgage loan repayment (mostly interest).

The realtor's fee (5-7% of the sale price) tends to eat up a lot of the equity.

 

[flip26]

I'm of the mindset that 5 years of occupancy is the absolute minimum to reliably break even in most markets, and that's assuming no more sudden declines in home prices.

I totally agree with you here - 5 years is the rule of thumb, and the assumption even then is that one will break even after all costs are accounted for.

 

[J ROD]

The only way I would buy is if I planned to stay longer in the condo or you rent it out to med students after you are done and let them pay the mortgage for you. But, then you are the landlord and have the crap that comes with that.

I would think hard....I decided not to buy because I dont want the hassle. I rather piss it down the toilet with paying da man!! Called landlord....😀

 

[buffywannabe]

So the place I have now is on the bad side of town and I pay 600 for a 1br. The place I am considering costs 60,000 and when I used the mortgage calculator it came out to 450/mo. I tried to call to see what the association fees are but am waiting for a call back. The place is a 3br and seems really nice. I just called my bank to get a preapproval to see if it is even plausible...

 

[J ROD]

So the place I have now is on the bad side of town and I pay 600 for a 1br. The place I am considering costs 60,000 and when I used the mortgage calculator it came out to 450/mo. I tried to call to see what the association fees are but am waiting for a call back. The place is a 3br and seems really nice. I just called my bank to get a preapproval to see if it is even plausible...

run the numbers and think HARD!!

 

[buffywannabe]

run the numbers and think HARD!!

exactly who knows if the online mortgage calculator is relevant to my situation. i will ask my parents too. we will see. it would be really exciting but if it isn't worth it...

 

[Dr Yiot]

I am also excited to see your results as my fiance and I are looking to do the same sort of thing. however I would be willing to rent out the home while in residency and hopefully gain some cash as well.

 

[J ROD]

exactly who knows if the online mortgage calculator is relevant to my situation. i will ask my parents too. we will see. it would be really exciting but if it isn't worth it...

those association fees can be alot...😱

Added a couple hundred to what I looked at one time.

Plus, you pay repairs, insurance, taxes, etc...

I like to pay da rent and tell someone else to worry.

Plus, you will not get equity that soon...

 

[J ROD]

I am also excited to see your results as my fiance and I are looking to do the same sort of thing. however I would be willing to rent out the home while in residency and hopefully gain some cash as well.

That would be the only way that makes alot of sense to me, but then you have to be the landlord and have all the hassles.

It is not that easy and can be a b*tch!!

 

[Rolling Stone]

I found a super cheap and nice condo near the medical school I plan on attending. Monthly payments would be way less than money allotted for rent at school. At this point I am working and am pretty sure I would be able to get a mortgage. I would then be in the area to live in it 4.5 years which I think is a reasonable amount of time. I also know there is that 8000 tax break thing for first time home buyers (condos do count). What do you guys think of this idea?

Do it by all means. You'd be glad you did.

 

[futureboy]

So the place I have now is on the bad side of town and I pay 600 for a 1br. The place I am considering costs 60,000 and when I used the mortgage calculator it came out to 450/mo. I tried to call to see what the association fees are but am waiting for a call back. The place is a 3br and seems really nice. I just called my bank to get a preapproval to see if it is even plausible...

Does the $450/mo include property taxes and homeowners insurance?

I would say it will be $100 to $150/mo minimum for maintenance fees. Keep in mind that the fees only cover common areas (sidewalk, parking lot, maybe hallways). If something breaks inside the unit (water heater, water leak, etc.), you have to pay to fix it.

I bought a house 4 1/2 years ago. I like the house, but home ownership can be expensive, and just a pain in the a**. Even with a solid pre-sale home inspection, I've spent a chunk of change on unforseen repairs: $2,000 for a new living room window, $2,000 to clean out storm sewer pipe blockage that was causing basement flooding, $2,500 to locate and repair leak in the city water supply line coming into the house. To this $6,500, add $4,500 to refurbish the tub and shower in two bathrooms, and $1,500 for new carpet in the family room. $12,500 and counting...

 

[futureboy]

That would be the only way that makes alot of sense to me, but then you have to be the landlord and have all the hassles.

It is not that easy and can be a b*tch!!

Yes, indeed. If the tenant doesn't pay the rent, the bank will still insist on timely mortgage payments from the owner. You can evict the tenant, but it can take a while, and can get expensive.

 

[ApoK]

those association fees can be alot...😱

Added a couple hundred to what I looked at one time.

Plus, you pay repairs, insurance, taxes, etc...

I like to pay da rent and tell someone else to worry.

Plus, you will not get equity that soon...

I lived in a condo for all 4 yrs of my undergrad. No mortgage but our association fees are $400/month 😱😱😱... it's a ripoff and I can't wait to sell it. It wasn't my decision to purchase it, although it was nice for my brother and I to both have our own place when we went through college.

 

[zinki949]

...I think that is a great idea...

my suggestion,

...if you will be living in the condo, then I suggest it should be close to your preferred medical school (better commute)...

 

[flip26]

Yes, indeed. If the tenant doesn't pay the rent, the bank will still insist on timely mortgage payments from the owner. You can evict the tenant, but it can take a while, and can get expensive.

As landlord, you will be paying all the same bills as when you lived in the property - you own the house - so you are on the hook for mortgage, taxes, insurance, repairs and maintenance - good chance that the total monthly outflow on this will be greater than the market rent - so as owner, you will be in "negative cash flow"...more $ going out than is coming in...not too mention that if you live in another city or state doing a residency, and your tenant doesn't pay the rent, you are totally screwed. Not like you have tons of free time as a resident to be dealing with this bullspit...

Before voluntarily becoming a landlord, you need to understand the laws in that state and locality regarding eviction proceedings, etc...and now you are paying a lawyer...and when your tenant leaves (or is evicted), you will have in all likelihood a damaged apartment - oh sure, you can keep the security deposit, but if you have to replace the carpets or repair holes in the wall, that is coming out of your pocket - oh sure, you can sue and probably "win" a judgment, but your lawyer will bleed you dry on this...

 

[BennieBlanco]

As landlord, you will be paying all the same bills as when you lived in the property - you own the house - so you are on the hook for mortgage, taxes, insurance, repairs and maintenance - good chance that the total monthly outflow on this will be greater than the market rent - so as owner, you will be in "negative cash flow"...more $ going out than is coming in...not too mention that if you live in another city or state doing a residency, and your tenant doesn't pay the rent, you are totally screwed. Not like you have tons of free time as a resident to be dealing with this bullspit...

Before voluntarily becoming a landlord, you need to understand the laws in that state and locality regarding eviction proceedings, etc...and now you are paying a lawyer...and when your tenant leaves (or is evicted), you will have in all likelihood a damaged apartment - oh sure, you can keep the security deposit, but if you have to replace the carpets or repair holes in the wall, that is coming out of your pocket - oh sure, you can sue and probably "win" a judgment, but your lawyer will bleed you dry on this...

I worked in mortgages and have done somewhere around 500-1000 loans.

Tenant eviction is very difficult, most states it will require 6 months. Basically, don't be a situation where you need to do it. Get a good credit report and a good deposit/references.

 

[futureboy]

I worked in mortgages and have done somewhere around 500-1000 loans.

Tenant eviction is very difficult, most states it will require 6 months. Basically, don't be a situation where you need to do it. Get a good credit report and a good deposit/references.

I've represented clients in evictions. In my state, it's about 2-3 months. If the tenant gets a lawyer and asserts frivolous defenses or counterclaims, it can take quite a bit longer.