Mortgage vs Renting for Pod School

[ConsciousCalc]

Hi everyone!

So I just got accepted to BUSPM today!!! Super stoked. And so I have a couple of months to gather up some more money to move down to Miami before next fall and wanted to see if anyone had some experience on this subject.

My current circumstances: Moving down with my S/O. (will be paying half of rent/mortgage) Will have enough for the downpayment for a mortgage. Both very creditworthy etc.

From my research on SDN from MD/DO forums as well... Its seems like buying ISN'T the best option. I just honestly don't understand why when renting is just tossing the loan money in the toilet for the sake of flexibility. It just seems like a no brainer to go for a small mortgage and build equity while in school. I understand the risk. I might or might not break even/make more at the end of it all. But i still think its a wiser option than renting? Correct me if im wrong.

I already have a completely furnished apt. I have a paid off car. So I'm not worried about any of that.

I just don't know which route to go. Any guidance would be greatly appreciated guys!

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[de Ribas]

From my research on SDN from MD/DO forums as well... Its seems like buying ISN'T the best option. I just honestly don't understand why when renting is just tossing the loan money in the toilet for the sake of flexibility. It just seems like a no brainer to go for a small mortgage and build equity while in school. I understand the risk. I might or might not break even/make more at the end of it all. But i still think its a wiser option than renting? Correct me if im wrong.

Maybe because after 2 years you might end up with a hassle of selling your place due to rotations and then 3 year residency.

Depending on the cost and interest rate, but you may only save around 4K during those 2 years building equity.

 

[ConsciousCalc]

Maybe because after 2 years you might end up with a hassle of selling your place due to rotations and then 3 year residency.

Depending on the cost and interest rate, but you may only save around 4K during those 2 years building equity.

But I'de most likely continue to pay it with my S/O. Or is that a stretch?

OR I can rent it out

 

[Weirdy]

Nothing is permanent.

You will do rotations. You will do residency. Your rotation, residency, and first job out of school may not be in the city or state you went to school in.

I do not think you are the first to think that building equity is a good idea.

But you need to remember, like with every new job, school, or major life choice, nothing is permanent. Nothing will span out the way you plan it.

Plan with flexibility in mind. That is why most suggest you rent.

 

[ConsciousCalc]

Nothing is permanent.

You will do rotations. You will do residency. Your rotation, residency, and first job out of school may not be in the city or state you went to school in.

I do not think you are the first to think that building equity is a good idea.

But you need to remember, like with every new job, school, or major life choice, nothing is permanent. Nothing will span out the way you plan it.

Plan with flexibility in mind. That is why most suggest you rent.

Of course. I totally understand and you stated it perfectly. i just think renting could also be a very smart move? With the right tenant of course.

Maybe i'm being overly optimistic here. Renting seems like the hassle free option.

 

[de Ribas]

Of course. I totally understand and you stated it perfectly. i just think renting could also be a very smart move? With the right tenant of course.

Maybe i'm being overly optimistic here. Renting seems like the hassle free option.

I own a house now. And when I was initially thinking, I thought to buy a house during school. My school has 3rd year rotations locally. But even then I think I will go with rent just to stay flexible in case I need to move. It's a lot easier to move out from a rented place then owned one.

 

[ConsciousCalc]

I own a house now. And when I was initially thinking, I thought to buy a house during school. My school has 3rd year rotations locally. But even then I think I will go with rent just to stay flexible in case I need to move. It's a lot easier to move out from a rented place then owned one.

I see. Yeah, it really does seem like it would be the less stressful route. Thanks for the input!!!

 

[med2345]

What they said. Plus not to mention it is Florida and Miami houses are anything but affordable. Flood/other insurance is outrageous due to the hurricane potential. Much easier a safer bet to rent.

 

[Certified Corsair]

I see. Yeah, it really does seem like it would be the less stressful route. Thanks for the input!!!

I am also moving out with SO to Philly this coming year and plan on buying. In my opinion, it's worth buying and building equity as opposed to rent under a few conditions, especially if you have other types of loans/payments paid off (car, etc.). My main reason is that we can afford a down payment and have good credit, and no prior school loans or anything over our heads. We found a few places that I am capable of making changes to over the few years, such as paint jobs, new backsplash in kitchen or new tiles in the bathroom, yard improvement, etc. If you or SO can do some of these it's all the better.

Main thing when looking for a place, in your scenario, is finding something with good resale value. Get something slightly pricier if it's in a nice/safe area, is relatively new with things like HVAC or plumbing, and you know will have good curb appeal when you're ready to sell. (Knowing a realtor would help as well).

The obvious cons are it's a house, so everything is DIY or has a bigger price tag if things need fixing. Also extra money spent on things like property tax and the inconvenience of having to sell when you leave.

However, if you find the right deal, you could pay less monthly on a mortgage with HOA and taxes/bills than rent with 2 bed 1 bath.

 

[de Ribas]

I see. Yeah, it really does seem like it would be the less stressful route. Thanks for the input!!!

In addition, if you will have to sell in 2-3 years, it might cost 10-15K for realtor fees depending one price of the house.

So, living in the house for 2-3 years is not the best idea in terms of saving money.

 

[de Ribas]

I am also moving out with SO to Philly this coming year and plan on buying. In my opinion, it's worth buying and building equity as opposed to rent under a few conditions, especially if you have other types of loans/payments paid off (car, etc.). My main reason is that we can afford a down payment and have good credit, and no prior school loans or anything over our heads. We found a few places that I am capable of making changes to over the few years, such as paint jobs, new backsplash in kitchen or new tiles in the bathroom, yard improvement, etc. If you or SO can do some of these it's all the better.

Main thing when looking for a place, in your scenario, is finding something with good resale value. Get something slightly pricier if it's in a nice/safe area, is relatively new with things like HVAC or plumbing, and you know will have good curb appeal when you're ready to sell. (Knowing a realtor would help as well).

The obvious cons are it's a house, so everything is DIY or has a bigger price tag if things need fixing. Also extra money spent on things like property tax and the inconvenience of having to sell when you leave.

However, if you find the right deal, you could pay less monthly on a mortgage with HOA and taxes/bills than rent with 2 bed 1 bath.

What you say may work for some people but it' not ideal. Staring a remodel of any kind during first 2 years of schools will affect both of you. I am currently finishing remodeling a house while I am in school and I can only day it's crazy. It takes time and it will definitely affect the studying.

Also, one has to rememer there are fees with buying a house besides down payment and also there are a lot of them when selling the house.

Owning a house takes more time and money for maintenance. There are condos, apartments and town houses that you can rent and gave utilities paid and won't have to worry about any maintenance, lawn care, garbage, snow removal or anything.

The ideal part is when you are compltely free from other problems to focus on your studies.

How much equity will one build in 2-3 years? on 150K house you can get about 6-7K which will be spent on realtor when you will sell the house.

 

[trev5150]

Speaking as an owner of two houses I don't want:

NEVER BUY A HOUSE YOU DON'T PLAN ON LIVING IN LONG TERM. Rent until you're in your permanent place where you're going to live your life.

You think once you're done you're gonna get your mortgage plus maintenance out of the rental income (and it is taxed as income kids)?

Nope. You're gonna get stuck with a financial boat anchor hanging around your neck. I have a house in AZ that I rent out because I'll never be able to sell because of the subprime crash of 2008 (forever upside down). Your tenants will break something or a tree will fall over. Then you're going to lose money in the sale on closing costs.

Unless you plan on staying in that town after you graduate, just rent. Make your life simpler. Goin in on a house with your S/O that's not your spouse? Nothing bad ever happened there.

Oh and by the way Miami will be the new Venice on 30-50 years anyway. And I don't mean Venice, CA (although that will be gone, too).

 

[GypsyHummus]

Third times a charm.

Speaking as an owner of two houses I don't want:

 

[trev5150]

Third times a charm.

Kill me now.

 

[ConsciousCalc]

Speaking as an owner of two houses I don't want:

NEVER BUY A HOUSE YOU DON'T PLAN ON LIVING IN LONG TERM. Rent until you're in your permanent place where you're going to live your life.

You think once you're done you're gonna get your mortgage plus maintenance out of the rental income (and it is taxed as income kids)?

Nope. You're gonna get stuck with a financial boat anchor hanging around your neck. I have a house in AZ that I rent out because I'll never be able to sell because of the subprime crash of 2008 (forever upside down). Your tenants will break something or a tree will fall over. Then you're going to lose money in the sale on closing costs.

Unless you plan on staying in that town after you graduate, just rent. Make your life simpler. Goin in on a house with your S/O that's not your spouse? Nothing bad ever happened there.

Oh and by the way Miami will be the new Venice on 30-50 years anyway. And I don't mean Venice, CA (although that will be gone, too).

Well the possibility of staying in Miami is there. Plus, if Miami becomes the new Venice... The housing market just might sky rocket.

Lol but all jokes aside, I certainly understand and appreciate the advice. I know I’m young and for the most part naive about these things so I like to take advice from people who have been there already.

I am now more inclined to rent after these posts/researching the market in Miami. (Seems like the ONLY affordable route is to buy a foreclosed home)
My S/O will be in law school so someone has to stay in Miami regardless lol. So it seemed like an easy decision to me. But yeah, the flexibility is where the worth is at here.

 

[Mad Jack]

Hi everyone!

So I just got accepted to BUSPM today!!! Super stoked. And so I have a couple of months to gather up some more money to move down to Miami before next fall and wanted to see if anyone had some experience on this subject.

My current circumstances: Moving down with my S/O. (will be paying half of rent/mortgage) Will have enough for the downpayment for a mortgage. Both very creditworthy etc.

From my research on SDN from MD/DO forums as well... Its seems like buying ISN'T the best option. I just honestly don't understand why when renting is just tossing the loan money in the toilet for the sake of flexibility. It just seems like a no brainer to go for a small mortgage and build equity while in school. I understand the risk. I might or might not break even/make more at the end of it all. But i still think its a wiser option than renting? Correct me if im wrong.

I already have a completely furnished apt. I have a paid off car. So I'm not worried about any of that.

I just don't know which route to go. Any guidance would be greatly appreciated guys!

With fees, taxes, and frontloaded interest requirements you're often not touching the principal of the property for around five years. If you intend to stay in the area or keep it as a rental (difficult to be an absentee landlord as a resident), buy, if not, rent. Otherwise you'll end up in the hole or barely bragging even with rent between all the fees and taxes you pay when it comes time to sell.

 

[trev5150]

My S/O will be in law school so someone has to stay in Miami regardless lol. So it seemed like an easy decision to me. But yeah, the flexibility is where the worth is at here.

Yeah so you two aren't even done accruing debt yet and your debt/income ratio right now is not your friend, since you probably have at least some debt and if you're both students, you have no income either. I don't know your ages but you probably don't have that much of a credit history (aside from accruing debt of course) and this is a great way to start off in really bad shape.

 

[Cranjis McBasketball]

10 Reasons Why Residents Shouldn't Buy A House | The White Coat Investor - Investing And Personal Finance for Doctors

 

[OlderGeorgiaPreMed]

Plan with flexibility in mind. That is why most suggest you rent.

You make an often mentioned statement that I wanted to comment on for the benefit of the OP.

Everyone has to make their own choices, of course, but let me share some information from a former Florida resident (who rented the entire 5 years I lived there). Florida is EXTREMELY pro-landlord with regards to their laws. This is not always a bad thing, but with the wrong landlord it can be a mental, and legal, nightmare. As you say, "nothing is permanent", and that goes for the company that might hold onto your rental property as well. In other words, you might start out with a great landlord or rental company, and then partway through your lease find out that the contract was sold to a different company that handles things completely different. This happened to me, and it took over 5 years AFTER I left Florida to finally get everything legally straightened out. The company that took over our apartment complex during our last lease made claims of damage to the apartment (without substantiation - i.e. no pictures, etc.), and, also, tried to charge us for a renovation they had already planned (and would have completed whether we stayed or not). Again, Florida is VERY pro-landlord, so when we tried to challenge this legally we were met with legal obstacle after legal obstacle (for example, who knew that in Florida a landlord being investigated by the State can refuse to cooperate and the State can't compel them to provide supporting documents?!?!?!). The case literally had to become a federal one (meaning the federal government finally got involved before it was determined that the company had falsified their documents to try to basically force money out of us to fund their planned renovation - and we weren't the only ones they tried to do this to), but by that time the complex had been sold two more times already.

When it was all said and done, I could have bought a house when we moved down, sold at a loss, and still saved money and mental wellbeing.

So, if you decide to rent in Florida (and plenty of people have good experiences too, of course) make sure you check the ownership of the property through the county (this little extra time is well worth it in the long run). If the property has been sold repeatedly then look somewhere else. I don't care if it is the best deal around, look somewhere else. Some properties sell multiple times a year because the companies purchase them, and then sell them at a loss later. See if the owners maintain an office in Florida, and if they do not then get an attorney and insist that the contract state that any legal proceedings will be carried out in Florida (if the company refuses this clause, then look elsewhere). Many rental properties are owned by companies out of State, and Florida is even worse with dealing with these companies during disputes than they are those actually based in Florida. Get references for the landlord and follow up on all of them. If they seem too good to be true, then they probably are (i.e. the landlord is providing references to people that will only make them look superior). Also, absolutely, get a lawyer that you can trust involved BEFORE you sign any lease agreement. If you decide to rent from your best friend's Mom still make sure an attorney, with experience in Florida Landlord/Tennant law, looks over the contract first. Be careful of "move in specials". Often these "special rates" are prorated over two or three lease periods (i.e. you might actually only be "saving" $5 a month not the hundreds they claim).

Finally, Florida is expensive to live in for two main reasons 1) everyone wants to move to Florida because it is sunny and beaches are pretty much close by to everywhere with a decent commute (high demand with limited supply), and 2) the reality of hurricanes drives up the cost of insurance substantially (either you pay for it when you buy, or you pay extra on your rent to cover it - either way you pay for it). Also, quite a few communities have homeowner's associations whose fees can be as much as the mortgage (or more in some cases).

So, the final word is this: do your homework and decide on rent or purchase based on what is best for you not on what is more flexible or more likely to turn a profit for you, etc.

Good luck in Florida, and congrats on starting podiatry school!!

 

[OlderGeorgiaPreMed]

There are condos, apartments and town houses that you can rent and gave utilities paid and won't have to worry about any maintenance, lawn care, garbage, snow removal or anything.

Be careful of this, too, in Florida. Quite a few places "include utilities", etc. with a very small cap (meaning you go over that you pay what they charge versus you paying the utility company directly which is often cheaper in Florida). Many apartments, condos, etc. in Florida also charge for garbage service in addition to rent (not the case everywhere, of course, but it's common in Florida for garbage service to be an add-on). Also, condos and townhomes are a special case in Florida as well. Many of these are rented out either by a Home Owners Association or by a home owner in the association. Sometimes these people add extra fees into the rent for these places that goes to cover at least part of the HOA fees.

As a Florida attorney once told me "there is buying and renting in the US, and then there is buying and renting in Florida . . . it's a whole different ball game". Which is why I would recommend anyone - rent or buy - go through a realtor, check around extensively before making a commitment, and always involve an attorney.

Just speaking from experience here.

 

[OlderGeorgiaPreMed]

I am now more inclined to rent after these posts/researching the market in Miami. (Seems like the ONLY affordable route is to buy a foreclosed home)

If you are willing to commute then you can rent/purchase (your choice, of course) outside Miami cheaper than in (again, might involve a commute, but if you are OK with that then it is something to look at). Also, be very aware of constantly changing crime trends in Florida's big cities like Miami. What is cream of the crop real estate today might be the get the heck out neighborhood six months down the road (I know of people in Orlando, for instance, who moved into a nice apartment at the start of the year, and had to pay off the lease to get out before the end of the year because of an increase in crime). This warning goes for renting or buying (and, honestly, having lived in Florida, and having friends from Miami, if I decided to buy I wouldn't buy inside the city of Miami - "good deal" or not).

Good luck with everything!

 

[ConsciousCalc]

You make an often mentioned statement that I wanted to comment on for the benefit of the OP.

Everyone has to make their own choices, of course, but let me share some information from a former Florida resident (who rented the entire 5 years I lived there). Florida is EXTREMELY pro-landlord with regards to their laws. This is not always a bad thing, but with the wrong landlord it can be a mental, and legal, nightmare. As you say, "nothing is permanent", and that goes for the company that might hold onto your rental property as well. In other words, you might start out with a great landlord or rental company, and then partway through your lease find out that the contract was sold to a different company that handles things completely different. This happened to me, and it took over 5 years AFTER I left Florida to finally get everything legally straightened out. The company that took over our apartment complex during our last lease made claims of damage to the apartment (without substantiation - i.e. no pictures, etc.), and, also, tried to charge us for a renovation they had already planned (and would have completed whether we stayed or not). Again, Florida is VERY pro-landlord, so when we tried to challenge this legally we were met with legal obstacle after legal obstacle (for example, who knew that in Florida a landlord being investigated by the State can refuse to cooperate and the State can't compel them to provide supporting documents?!?!?!). The case literally had to become a federal one (meaning the federal government finally got involved before it was determined that the company had falsified their documents to try to basically force money out of us to fund their planned renovation - and we weren't the only ones they tried to do this to), but by that time the complex had been sold two more times already.

When it was all said and done, I could have bought a house when we moved down, sold at a loss, and still saved money and mental wellbeing.

So, if you decide to rent in Florida (and plenty of people have good experiences too, of course) make sure you check the ownership of the property through the county (this little extra time is well worth it in the long run). If the property has been sold repeatedly then look somewhere else. I don't care if it is the best deal around, look somewhere else. Some properties sell multiple times a year because the companies purchase them, and then sell them at a loss later. See if the owners maintain an office in Florida, and if they do not then get an attorney and insist that the contract state that any legal proceedings will be carried out in Florida (if the company refuses this clause, then look elsewhere). Many rental properties are owned by companies out of State, and Florida is even worse with dealing with these companies during disputes than they are those actually based in Florida. Get references for the landlord and follow up on all of them. If they seem too good to be true, then they probably are (i.e. the landlord is providing references to people that will only make them look superior). Also, absolutely, get a lawyer that you can trust involved BEFORE you sign any lease agreement. If you decide to rent from your best friend's Mom still make sure an attorney, with experience in Florida Landlord/Tennant law, looks over the contract first. Be careful of "move in specials". Often these "special rates" are prorated over two or three lease periods (i.e. you might actually only be "saving" $5 a month not the hundreds they claim).

Finally, Florida is expensive to live in for two main reasons 1) everyone wants to move to Florida because it is sunny and beaches are pretty much close by to everywhere with a decent commute (high demand with limited supply), and 2) the reality of hurricanes drives up the cost of insurance substantially (either you pay for it when you buy, or you pay extra on your rent to cover it - either way you pay for it). Also, quite a few communities have homeowner's associations whose fees can be as much as the mortgage (or more in some cases).

So, the final word is this: do your homework and decide on rent or purchase based on what is best for you not on what is more flexible or more likely to turn a profit for you, etc.

Good luck in Florida, and congrats on starting podiatry school!!

Wow... Thank you for your time and responding such detailed feedback. I really do appreciate it. I'm sorry about what happened to your lease, that really sucks! But yes, I think I will keep my options open and really just keep doing some research since i have some time on my hands. I mean I live in Orlando now and pay 1400 for a studio so its definitely expensive, especially if you want to live in a good area.

 

[OlderGeorgiaPreMed]

Wow... Thank you for your time and responding such detailed feedback. I really do appreciate it. I'm sorry about what happened to your lease, that really sucks! But yes, I think I will keep my options open and really just keep doing some research since i have some time on my hands. I mean I live in Orlando now and pay 1400 for a studio so its definitely expensive, especially if you want to live in a good area.

You are welcome! I wish you all the best in school and life in general!!

 

[Sweatshirt]

If I had the money for a down payment on a house/condo I'd totally do it. I hate pissing money away with rent. Plus, it's super easy to rent the house out to podiatry students when you leave

 

[de Ribas]

condo is easier to rent out, but house may sometimes lead to problems especially if you are in school or residency and you are away from that state.

If you buy a 150k house/condo with 4% interest, you only keep about 2K per year, the rest is insurance, taxes, interest, other fees and maintainance. let' say you keep the house for 5 years. you keep only about 10K which will go to closing/realtor fees. Why so much troubles for no profit at the end?

Also, living in rent while in school leaves so much flexibility if you dont like the place, the neighborhood or such.