Housing Dilemma

[DrVanNostran]

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I'll be in Chicago next year for internal medicine. Here are my options:

1. My in-laws graciously offered my wife, daughter and I a place at there house which is 25 minutes away from work. Her parents would already be babysitting our daughter in the first place, so my wife would drive to her parents drop off the baby and head to work.

2. Rent an apartment/1 bedroom most likely about a 20 minute train ride from the hospital. Rent is about 1100-1400 before utilities.

3. Buy a condo, with mortgage, taxes, assessment and utilities, we are looking at 1200 a month. My parents offered to make a down payment so the mortgage won't be to high (hence 1000-1200 for everything). I'm somewhat worried about this since I may have to leave after 3 years for fellowship.

What would you guys do? I really like option 1 since I get along with her parents really well (I have known them for 20 years or so now). I could save a crap load and pay off some loans. But, instead of being a mooch I could buy a condo in the city and have a potential investment. Any help would be appreciated!

 

[shantster]

If it was me, I would definitely go with number 1 to start with and then start looking for a rental. With the option of number 1 you are obviously on no lease or mortgage and can move out whenever you want so you'd be able to take the time to do a good look around the area and figure out what areas you like, what price range you'd be comfortable with, quality of the landlord/neighbors, and then find a quality place to stay for the remainder of residency. You would not be pressured into finding a place that you are locked into for a year that you might hate right away.

If you are a three year residency, there's no way I would look into buying a place, especially in a place like Chicago. Rent through residency and fellowship, pay down loans, save up for a downpayment (and see if your parents will also give you the same money towards a downpayment in the future), and then buy a place once you are an attending and will likely live in the area for a while. You would not break even at the 3 year point buy owning, and you don't want to be stuck with a mortgage a place that might not sell right away or you would have to sell for a very reduced rate if you have to get out of it to move to another city for fellowship or a job.

 

[Dejavu]

If you truly get along with the inlaws, it's a no-brainer. If you don't, it's also a no-brainer the other way.

Forget about an investment condo until you have money, as in, after you have a real job. Use what little salary a resident makes on enjoyment for yourselves, to offset the stress of residency.

Just my $0.02

 

[TexasPhysician]

If it were me, #1 followed by #2.

 

[dpmd]

You shouldn't buy anything unless you have the ability to continue paying that mortgage plus housing wherever else you might end up. For most residents this isn't going to be possible, but the reality is you have no idea if you will be able to sell a place when the time comes to move, for a profit, to break even, or even at all so relying on the idea of selling is out. Even relying on being able to rent it out is a bad idea, because you have no idea what rents are going to be like when you need to move. If you can't find a renter and you need the money to avoid foreclosure, that will be a bad situation as well.

You don't have to be a mooch. Your in laws are graciously offering you guys a place. Be appreciative, offer to pay some rent (a reduced amount that still lets you guys pay off loans or save money-they might not take it but you could offer), do nice things for them (like cook/take them out to dinner, invite them on a trip, whatever), give them a fat check to reimburse them once you are financially secure. There are a lot of options to alleviate your guilt. Plus you can always move out if there is an issue.

 

[Dr. USMLE]

You shouldn't buy anything unless you have the ability to continue paying that mortgage plus housing wherever else you might end up. For most residents this isn't going to be possible, but the reality is you have no idea if you will be able to sell a place when the time comes to move, for a profit, to break even, or even at all so relying on the idea of selling is out.

Yeah, this is my general feel. Do you think the dynamics change if I lucked out on a foreclosure property? After my 4 year residency, I could short sell it and still break even. Even if I lost a little by either renting the property or short selling, it's still better than "throwing away" all of the money by renting, right?

 

[TexasPhysician]

Yeah, this is my general feel. Do you think the dynamics change if I lucked out on a foreclosure property? After my 4 year residency, I could short sell it and still break even. Even if I lost a little by either renting the property or short selling, it's still better than "throwing away" all of the money by renting, right?

If it were that easy, sure. Foreclosures, once you find one, can take 6+ months to close. If there aren't large damages to the house, there will be competing bids. If there are damages, be prepared to shell out plenty of cash. Most foreclosures need work. There will also be realtor fees included in the purchase price and again when you sell the home. Usually these fees come out to 12% of the home purchase price when all is said and done (3% for each realtor upon purchase and sale). Foreclosures would be difficult to manage without a realtor that knows the market. Otherwise, you could save money by not using a realtor. Don't forget costs to upkeep the home. Insurance and taxes will be there too. If you spend months learning the market, find the right investment property without a realtor, and learn tax strategies to work the home to your advantage, it may be worth purchasing for just 3 years.

If that sounds like too much trouble, don't buy. This coming from someone who usually tells people to buy.

 

[dpmd]

Yeah, this is my general feel. Do you think the dynamics change if I lucked out on a foreclosure property? After my 4 year residency, I could short sell it and still break even. Even if I lost a little by either renting the property or short selling, it's still better than "throwing away" all of the money by renting, right?

Not if you end up in a money pit (most foreclosures have damages-I looked at some that were tore the hell up, decided not to look at them anymore because what I wanted was something move in ready). It isn't really throwing money away if you consider that most of what you pay early on in a mortgage is interest. I don't understand what you are saying with the bolded sentence. Short sale means you sell it for less than what is owed. So you "threw away" whatever you paid on the place (including upkeep expenses, property taxes, insurance) and ruined your credit. Renting would definitely be better.

 

[gutonc]

Yeah, this is my general feel. Do you think the dynamics change if I lucked out on a foreclosure property? After my 4 year residency, I could short sell it and still break even. Even if I lost a little by either renting the property or short selling, it's still better than "throwing away" all of the money by renting, right?

Shorting a house and shorting a stock are two different things. Shorting a stock is a high risk/high reward prospect.

Shorting a house means you failed and are trying to get out from under it without a foreclosure on your credit report.

 

[Dr. USMLE]

Short sale means you sell it for less than what is owed.

Sorry...meant "quick sale." I.e., sell below market value (but at or above purchase price of the foreclosure) in order to liquidate the asset quickly so that I am not paying two mortgages (in the event I move for fellowship).

 

[shopsteward]

If you move in with the in-laws, I would do it on the basis that it will help you get a great start to your residency and you and your wife will be looking for a place to rent once you are settled into your residency. That way, if everything goes well with the arrangement you can talk about staying on, if it doesn't, you aren't causing any offence by moving out.

 

[member0007]

What about your significant other? Any opinions on their part regarding a private and personal living arrangement?