How much apartment can you afford on a resident's salary?

[LadyJubilee8_18]

Hello all! I'm moving for residency, and I'm looking to rent an apartment for a reasonable price. My salary will be around average ($45K) so how much is too much to pay in rent? Thanks!

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[FutureDocDO]

Factoring in ~40% taxes, you'll bring home roughly $18K a year. You need to decide how much you want to save, loan repayment, car insurance, electric, cable, internet, heat, gas, food, entertainment, etc... Divide what's left over into 12 months . I would budget $600-800 a month, $900 max. Depending on where in the country you are, that may not be practical. That's plenty for me to find a nice apartment where I'm going. Good luck!

 

[futuremd22283]

Factoring in ~40% taxes, you'll bring home roughly $18K a year. You need to decide how much you want to save, loan repayment, car insurance, electric, cable, internet, heat, gas, food, entertainment, etc... Divide what's left over into 12 months . I would budget $600-800 a month, $900 max. Depending on where in the country you are, that may not be practical. That's plenty for me to find a nice apartment where I'm going. Good luck!

40% taxes? You shouldn't be in that high of a tax bracket yet.

Taxes will depend on the state that you're living in. Some will take higher income tax, some will take more property tax, etc. I'll be staying in the South for my residency. My sister works at H&R Block and I had her run an example scenario for me. My salary will be around 45K as well and the monthly take home came out to about 3K and so yearly would be about 36K. Usually, I've heard to reserve about 1/3 of your take home pay for rent so that would put you around 1K per month toward rent. I've actually come out with a sample budget for myself and that's the price I used (and I actually found a nice place for pretty much exactly that per month).

 

[LadyJubilee8_18]

40% taxes? You shouldn't be in that high of a tax bracket yet.

Taxes will depend on the state that you're living in. Some will take higher income tax, some will take more property tax, etc. I'll be staying in the South for my residency. My sister works at H&R Block and I had her run an example scenario for me. My salary will be around 45K as well and the monthly take home came out to about 3K and so yearly would be about 36K. Usually, I've heard to reserve about 1/3 of your take home pay for rent so that would put you around 1K per month toward rent. I've actually come out with a sample budget for myself and that's the price I used (and I actually found a nice place for pretty much exactly that per month).

Yeah, I also thought 40% was a bit high. Anyhow, I was thinking around 800 or so, but I found a beautiful place for 1K. It might be a bit too much, but I still have the same car from high school which is paid off and I'm on my parent's car insurance, so that is one less cost for me. I am also on the low end for student loan debt.

 

[Pkboi24]

If you're in Houston or Dallas, $1000 a month will land you a pretty nice place. There's no way that you'll be paying 40% in taxes. I'd say maybe 30% max. In Texas, you can live pretty comfortably on a resident's salary. Wish I could say the same for where I want to go.

 

[FutureDocDO]

40% was just a guess from my paychecks > 4 yrs ago. May not be an accurate figure.

I just looked it up, it seems the federal tax for our bracket alone is 28%.

 

[docbill]

If you're in Houston or Dallas, $1000 a month will land you a pretty nice place. There's no way that you'll be paying 40% in taxes. I'd say maybe 30% max. In Texas, you can live pretty comfortably on a resident's salary. Wish I could say the same for where I want to go.

Wasn't there a recent change to the system and now residents are considered students. Meaning they are now considered students for tax purposes. Does that make any changes?

 

[jdh71]

Yeah, I also thought 40% was a bit high. Anyhow, I was thinking around 800 or so, but I found a beautiful place for 1K. It might be a bit too much, but I still have the same car from high school which is paid off and I'm on my parent's car insurance, so that is one less cost for me. I am also on the low end for student loan debt.

Take it, if you like it.

You'll be taking home ~ $3000/month after taxes, probably closer to $2800/month on 45k/yr. Which will be right at the 1/3 of income threshold.

Understand you'll have a little less to spend on other things, but you'll be able to afford it.

 

[Macguy86]

~3k/month is average after taxes. But if you live in a major city (Boston, Chicago, LA, ect) how the heck do you survive and live comfortably? Rent alone for DECENT place would be anywhere upwards of 1400-1700 (assuming you do not want to live like a college student), parking $100, food/bills $400. So that is already about $2000-$2300. Add on car insurance/gas and going about $400-500. You are almost living paycheck to paycheck! Maybe net savings of $200-400 depending on how much you go out. Forget about paying back loans!

 

[Keg]

This tool (http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp) will give you your paycheck amount. 1/3 of that is what "they" say is the max you should spend for rent.

 

[FutureDocDO]

This tool (http://www.paycheckcity.com/netpaycalc/netpaycalculator.asp) will give you your paycheck amount. 1/3 of that is what "they" say is the max you should spend for rent.

Nice! Thanks.

 

[LadyJubilee8_18]

Nice! Thanks.

follow up question: Is anyone going to buy a place for residency? 3 years seems like not very much time but a real estate agent mentioned to me that I could build equity in that time and get an $8000 tax credit. I'm still not very sure. Any thoughts?

 

[nomogram3]

My wife and I are planning on renting for a year and then buying a place. It will be nice to be an easy walk from the hospital for the intern year, and will give us time to save for a good-sized down payment. The tax credit expires in few weeks, but if you can sign a contract by then you could take advantage of it, we just aren't able to scrape together the ~$12,000 we would need for down payment plus closing costs right now.

 

[jdh71]

follow up question: Is anyone going to buy a place for residency? 3 years seems like not very much time but a real estate agent mentioned to me that I could build equity in that time and get an $8000 tax credit. I'm still not very sure. Any thoughts?

LOL

Who benefits from that information . . . maybe you, definitely the real estate agent!

Build equity for what?! Who gives a ****. People throw that around quite a bit and what exactly does it mean and how does it help you out?

Remember just because you can make payments on the castle, you will also need to be able to defend it, meaning fix the roof, replace the a/c, mow the yard . . .

I'd seriously rent. I promise the economy is going to get worse.

 

[LadyJubilee8_18]

LOL

Who benefits from that information . . . maybe you, definitely the real estate agent!

Build equity for what?! Who gives a ****. People throw that around quite a bit and what exactly does it mean and how does it help you out?

Remember just because you can make payments on the castle, you will also need to be able to defend it, meaning fix the roof, replace the a/c, mow the yard . . .

I'd seriously rent. I promise the economy is going to get worse.

This was my first reaction, and may definitely be the case still. The only reason why I'm considering it is because after doing some number crunching, it might be a good deal for me. I have a friend from grade school who is moving at the same time as I am, and she wants to move with me. If I get a 2 bedroom and she pays rent, it will cover a good portion of the mortgage and with the tax credit, I'd be able to sell (hopefully) for the same price in 3 years and make at least $10,000. My dad says it may be a viable choice, and I'm going to talk to my realtor in houston about it. In the end it may be too much trouble during residency, but we'll see.

 

[gutonc]

This was my first reaction, and may definitely be the case still. The only reason why I'm considering it is because after doing some number crunching, it might be a good deal for me. I have a friend from grade school who is moving at the same time as I am, and she wants to move with me. If I get a 2 bedroom and she pays rent, it will cover a good portion of the mortgage and with the tax credit, I'd be able to sell (hopefully) for the same price in 3 years and make at least $10,000. My dad says it may be a viable choice, and I'm going to talk to my realtor in houston about it. In the end it may be too much trouble during residency, but we'll see.

Start here:
http://michaelbluejay.com/house/rentvsbuy.html

And assuming you don't have a non-medical spouse/partner around to "defend the castle" (as jdh71 so elegantly put it) while you're working 90 hours a week, it is probably going to be a MASSIVE hassle to deal with anything that's not virtually brand new.

 

[jdh71]

This was my first reaction, and may definitely be the case still. The only reason why I'm considering it is because after doing some number crunching, it might be a good deal for me. I have a friend from grade school who is moving at the same time as I am, and she wants to move with me. If I get a 2 bedroom and she pays rent, it will cover a good portion of the mortgage and with the tax credit, I'd be able to sell (hopefully) for the same price in 3 years and make at least $10,000. My dad says it may be a viable choice, and I'm going to talk to my realtor in houston about it. In the end it may be too much trouble during residency, but we'll see.

I see you counting on two variables that I don't think you should 1) you will have a renter (which is great if it's a friend, who is reliable, but if you need the renter to make it work, then you may have to rent to asshats later - you never know you friend might meet "the one" two weeks after moving in, and gets married in 6 months . . .) and 2) That the price of house will be the same in three years. You should buy a house like you would buy any long term, durable, consumer good, (ie car or washing machine).

Assume the worst and tell me if you 1) can make it, and 2) if you'd even want to live like that.

Expecting the worse and hoping for the best will help you tremendously, especially in residency.

The only time I would consider a house in residency is if one has a spouse with a second income.

 

[futuremd22283]

This was my first reaction, and may definitely be the case still. The only reason why I'm considering it is because after doing some number crunching, it might be a good deal for me. I have a friend from grade school who is moving at the same time as I am, and she wants to move with me. If I get a 2 bedroom and she pays rent, it will cover a good portion of the mortgage and with the tax credit, I'd be able to sell (hopefully) for the same price in 3 years and make at least $10,000. My dad says it may be a viable choice, and I'm going to talk to my realtor in houston about it. In the end it may be too much trouble during residency, but we'll see.

Besides maintenance issues and unforeseen repairs, you have to remember that sometimes it can take quite some time to sell a house. If you move to do a fellowship or accept a job in 3 years, you'll have very little time to sell your house and move. If you have to continue to pay mortgage and possibly another mortgage or rent, that money can deplete itself quickly. That's the main reason I didn't buy during residency.

 

[ResidentMD]

Besides maintenance issues and unforeseen repairs, you have to remember that sometimes it can take quite some time to sell a house. If you move to do a fellowship or accept a job in 3 years, you'll have very little time to sell your house and move. If you have to continue to pay mortgage and possibly another mortgage or rent, that money can deplete itself quickly. That's the main reason I didn't buy during residency.

A major issue in the OP's case, who seems to be moving to Nashville for her residency, and may be applying for a non-competitive fellowship. So she may get calls from all the top programs in more attractive cities, and may decide that life in California/New England is better than that in Nashville .

 

[LadyJubilee8_18]

I see you counting on two variables that I don't think you should 1) you will have a renter (which is great if it's a friend, who is reliable, but if you need the renter to make it work, then you may have to rent to asshats later - you never know you friend might meet "the one" two weeks after moving in, and gets married in 6 months . . .) and 2) That the price of house will be the same in three years. You should buy a house like you would buy any long term, durable, consumer good, (ie car or washing machine).

Assume the worst and tell me if you 1) can make it, and 2) if you'd even want to live like that.

Expecting the worse and hoping for the best will help you tremendously, especially in residency.

The only time I would consider a house in residency is if one has a spouse with a second income.

I totally see your point. I just had the idea put into my head today, and I thought I'd check it out to see if it is a viable option. I'm not sure that I really want to be land lord + resident. Also, my realtor in Houston who I trust says it would be a hassle and may not turn into a good deal in the end. I probably will end up renting.

A major issue in the OP's case, who seems to be moving to Nashville for her residency, and may be applying for a non-competitive fellowship. So she may get calls from all the top programs in more attractive cities, and may decide that life in California/New England is better than that in Nashville .

Actually the plan is to move back to Houston after residency. I like the rheum program at UT Houston (it's randomly good) and I want to ultimately practice near my family. So yes, I will be moving for fellowship

 

[avatarftw]

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[LadyJubilee8_18]

I believe that the 8,000 tax credit for first home buyers expired April 15th, 2010. It was also giving 10% of the purchase price as a tax credit (up to 8,000). Thus, you would have to buy a house worth at least 80,000 to do it.

They did extend the tax credit once; they may do it again. FYI, the military has an additional year (I'm 99% sure on this, read a military magazine just now) to take the credit.

yeah, I just found out it expires April 30th, so that realtor wanted me to buy in the next 10 days...from a different state...probably not

 

[gutonc]

I totally see your point. I just had the idea put into my head today, and I thought I'd check it out to see if it is a viable option. I'm not sure that I really want to be land lord + resident. Also, my realtor in Houston who I trust says it would be a hassle and may not turn into a good deal in the end. I probably will end up renting.

Just to add to this. A grad student in my lab is headed to Vandy for a post-doc next month. She just sold her house for $100K in profit (bought a dump in a good neighborhood 6 years ago and her husband is a furniture builder and finish carpenter so able to make some money after years of sweat equity). They're planning to rend in Nashvegas for at least 2 years simply because they don't know the place well, don't know how long they'll be there and are getting the same pushy vibe from realtors there (buy now or you'll never be able to afford a house here). Way too much trouble, especially to deal with from 2000 miles away.

 

[jdh71]

yeah, I just found out it expires April 30th, so that realtor wanted me to buy in the next 10 days...from a different state...probably not

Yeah and get her 3-5%

Not saying they shouldn't make money, but there's a little bit of secondary gain here, donchathink?