Renting vs. Buying a home as an intern

[JulianCrane]

---

Members don't see this ad.

Hey,
As a soon-to-be intern, I would like to make some money during residency by building up equity. But, how feasible is it to buy a home/have a mortgage during residency? Anyone in either boat?

 

[DrDawg]

Several years back I was in your position. It was actually a pretty hot topic in the forums. Then the market was much better. Lots of residents were suggesting to take an interest only loan. My wife and I eventually settled on a thirty year fixed. As Surgical resident we figuired I would be here for at least 5 years, and likely 1 to 2 more because of research. Although we like our first home, we bought into an improving neighborhood in hopes to get the most out of our investment. We sold after two years wanting to be in a better neighborhood for when we start a family. We were lucky to turn a modest profit, but we are unlikely to see a similar return on our current home.
Having a mortgage is definately possible as a resident. If you are in a three year program your may not see a huge return. But with the market the way it is I'm sure there are some really good deals out there.

 

[Blade28]

Depends where in the country you'll be living.

 

[nykka3]

I was also considering buying a home as a resident. However, I have approx. 20K in personal debt (residency interview loans, credit cards, car loan) that I want to pay off before considering buying a house. I don't want to be house poor. If I didn't have the personal debt, I would definitely consider purchasing a condo or small house. I plan on renting a cheap apt. wherever I match and paying off this darn debt first.

 

[Dr Serenity]

The more I think about it, the more I think I'll be renting rather than buying wherever I end up for residency. First off, there is absolutely NO guarantee that a house will appreciate in value AT ALL over the next few years. Any appreciation you do have will likely be lost in realtor fees and closing costs if you sell after residency.

Plus, I feel like I'd be stupid to try to buy a house if I couldn't do it with a reasonable down payment, a 15 or 30 year fixed mortgage, AND enough money in the bank for at least 6 months worth of expenses. I won't touch ARMs with a 10-foot pole...that's how a lot of people got into the situation they're in with facing foreclosure and such. Plus, like nykka3, I do have some consumer debt that I'd like to get rid of.

I say all this being in the position of a person who has rented apartments for several years. I, frankly, am sick of living in apartments and dealing with yearly rent increases, paper-thin walls, and the inability to make the modifications I'd like. I do think, though, that the risks and costs of trying to buy at this stage in my life would outweigh the potential benefits. I think the best compromise for me and my wife at this point would be to try to find a decent townhome or single-family house to rent during the term of my residency.

Just my $0.02.

 

[deleted162650]

There's a very similar thread in the anesthesia forum right now that getting a lot of attention. You should take a look.

 

[Dr Serenity]

There's a very similar thread in the anesthesia forum right now that getting a lot of attention. You should take a look.

Here's the link to said thread.

 

[nykka3]

Great discussion on the Anesthesiology forum, but they usually have great, very detailed and interesting threads. Reading that forum reaffirmed that renting is a better option for me right now. I want to buy a house one day when I have a better income, better savings, no debt (including student med school loans!). I figure I can still buy a real nice home then and not be house poor at all. However, I do agree that I am getting tired of renting all of these years.

 

[Winged Scapula]

An issue that may or may not have been mentioned is the one of whether or not you are single and/or in a time intensive program.

There would have been no way, as a single person in a work hour heavy residency, that I would have had the time to mow the lawn, be home when the dishwasher went on the fritz and I had to wait for the repairman, etc.

 

[nykka3]

An issue that may or may not have been mentioned is the one of whether or not you are single and/or in a time intensive program.

There would have been no way, as a single person in a work hour heavy residency, that I would have had the time to mow the lawn, be home when the dishwasher went on the fritz and I had to wait for the repairman, etc.

Very true. I will be an single OBGYN resident and I definitely considered all the maintenence issues i would have to tend to. I am at the point of wondering if I can fit a maid into my budget.

 

[TysonCook]

The only way you can answer this is to look at where you are going to live. Location, not just what city, but where in that city, is going to determine the most.

A lot of housing that is selling for cheap right now, there are some real bargains and if you are home improvement inclined you can make a sizeable profit, even if it is only for 3 years.

 

[TysonCook]

An issue that may or may not have been mentioned is the one of whether or not you are single and/or in a time intensive program.

There would have been no way, as a single person in a work hour heavy residency, that I would have had the time to mow the lawn, be home when the dishwasher went on the fritz and I had to wait for the repairman, etc.

Personally when I'm post call I get a lot done on my condo. I don't sleep during the day because it messes my day/night cycle, but I'm too tired to read/study. I hardly ever watch the idiot box (TV). So in the end I get a lot of remodeling done (new hardwood floors, new granite countertops, faucets, crown molding, painting, etc.).

You DEFINITELY have time for repairs, upkeep, and remodeling if you look for it, and for some of us it's fun too🙂

 

[Winged Scapula]

Personally when I'm post call I get a lot done on my condo. I don't sleep during the day because it messes my day/night cycle, but I'm too tired to read/study. I hardly ever watch the idiot box (TV). So in the end I get a lot of remodeling done (new hardwood floors, new granite countertops, faucets, crown molding, painting, etc.).

You DEFINITELY have time for repairs, upkeep, and remodeling if you look for it, and for some of us it's fun too🙂

You forget I trained in the pre-80 hr workweek for much of my residency. So post-call did not exist, unless you count getting home at 10:00 pm and having to be back at 4:30 as plenty of time to get the above done.

Even after the 80 hrs when I did go home post-call there wasn't much time for anything but studying, laundry, usual ADLs, etc. I enjoy remodeling as much as the next person, but for most people its probably unreasonable to expect that they can do all that, especially if they are training somewhere where the work hours regulations are "fluid".

Obviously in your field and others which are less time intensive, there can be time to do the above, but it would be a mistake to assume that is true for everyone, in every field, at every program.

 

[JulianCrane]

Yeah, I'll be a single OB/GYN resident as well and prolly too tired to even think let alone do repairs. Renting sounds nice. 🙂 Thanks guys.

 

[jacksparrow82]

Buying a home and reselling in 3 years can go one of two ways IMO. If you're lucky and the market is steadily increasing and you find a good deal, you can turn a nice profit after three years even after closing costs, realtor fees and minor improvements. However, if the market stays where it is now (bad in most areas) or decreases further, you will likely lose money on the investment. Especially if you go with 100% financing.
I think the decision to buy or rent really says a lot about a person's over all personality. I think most dr.s are more inclined to being conservative with their money and not willing to take risks in real estate, especially early in the game. However, others are fine with taking a risk with the potential to gain money.
You have to be smart if you do buy though. From personal experience, don't buy a house thats going to need any work in the next 5 years. You likely won't have time to do it yourself and you likely won't have the money either.
Purchasing a condo or a loft in an upcoming area is potentially a very good idea IMO. My wife and I are in the process of doing that now as I start residency. Since its a brand new downtown loft, we won't have to make any repairs or do any yard work or maintenance. And if the area continues to grow as its expected to do, we will likely be able to sell in 3-5 years and make a nice profit. However, as mentioned above THERE ARE NO GUARANTEES. The market might fall, the area may not take off as expected, etc.. So, its risky, but at the same time kind of exciting? Plus its more fun owning your own place and not having to deal with landlords. But, again these are personal tastes.
Right now is actually a very good time to buy. Interest rates are low and houses are selling for cheap. If you find a good deal in the right area you could potentially do very well 3-5 years from now.

 

[Pir8DeacDoc]

Make sure before you buy you factor in condo fees and property taxes.

I am looking hard at buying a place but the $200-300/month that condos require for landscaping and plowing/snow removal is tough to stomach. But, they are doing tasks that I probably don't/won't have time to do myself. Currently BoA is estimating about $6 to your mortgage payment per $1000 financed. You can do the math and figure out how much more house you could get with that $200-300 if not for the fees. Also, don't ever buy a place without knowing what your property taxes will cost. Here in northern NE the property taxes will add $300-500 a month to your total monthly expenses. Make sure you know exactly what your monthly expenses will be before signing on the dotted line.

 

[jacksparrow82]

Good point on the condo fees and taxes. You definitely have to take that in to consideration when determining how much mortgage you can afford. In my situation our condo fees are going to be relatively inexpensive at 120/month and our property taxes are abated for 10 years. So we won't have to worry about taxes. This is because its a new development in a historic area and building.

 

[Rasengan]

Good point on the condo fees and taxes. You definitely have to take that in to consideration when determining how much mortgage you can afford. In my situation our condo fees are going to be relatively inexpensive at 120/month and our property taxes are abated for 10 years. So we won't have to worry about taxes. This is because its a new development in a historic area and building.

New developments are a mixed bag. You dont inherit any of the chronic problems from a previous owner, but all the manufacturing defects pile up and you're the first to deal with them.

 

[jacksparrow82]

New developments are a mixed bag. You dont inherit any of the chronic problems from a previous owner, but all the manufacturing defects pile up and you're the first to deal with them.

Could you please explain a little more about what you mean by manufacturing defects piling up? Thanks.

 

[elwademd]

Could you please explain a little more about what you mean by manufacturing defects piling up? Thanks.

certain builders have a reputation of/for quality, while others do not. with that said, sometimes there are things that go wrong... brand new water heater doesn't function... house begins to settle... carpet piling... things unpainted... in the end, it can be a variety of things, from very minor to potentially major, that add up.

most new home builders have a warranty period where you literally mark down over the first 90 days or so (time span dependent on contract/rep) things that go wrong, and they (the manufacturer/home builder) fix the problem. of course, not everything is necessarily agreed upon, which can bring a whole other can of worms!

 

[jacksparrow82]

Okay, I see what you mean. Well, in our case we're covered for a full year if anything goes wrong with the condo at all its in our contract that they will be responsible for it. Additionally, all of the manufacturers warranties on the new appliances are transferred to us upon closing so if the appliances break they are covered under the manufacturer also.
Also, another very important part of buying any property is the property inspection you buy before you close. If they find ANYTHING in that inspection thats not absolutely perfect, we will demand that the seller fixes and or replaces whatever it is or we walk away from the deal. Additionally, unlike the last time my wife and I purchased a home, I am very willing to completely back out of the deal if for any reason I'm not 100% satisfied with what we find on inspection.
Thank you guys for reminding me of that though, its certainly important to keep in mind even when buying something new.

 

[DrDawg]

Wow for $300 a month you could probably pay an neighborhood kid to take care of the lawn, shovel in the winter, and have someone come clean your house and do your laundry!

 

[Pir8DeacDoc]

Wow for $300 a month you could probably pay an neighborhood kid to take care of the lawn, shovel in the winter, and have someone come clean your house and do your laundry!

Yeah, I know.. I don't really see how they can justify such high fees but people pay it. I know people that pay $400. They do plow the neighborhood areas and also upkeep a pool at some places but really $400/month per house/condo is some serious cash.

 

[EUA]

Yeah, I know.. I don't really see how they can justify such high fees but people pay it. I know people that pay $400. They do plow the neighborhood areas and also upkeep a pool at some places but really $400/month per house/condo is some serious cash.

The key lies with what exactly the fees cover. If you're paying $250 a month, but still have a lot of out-of-pocket costs, then sure, it can be ridiculous. However, the HOA often pays for water and city services such as sewer and garbage in addition to the usual maintainence type stuff like landscaping and pest control. My HOA even pays for basic cable. Another bonus is that if there is damage or some other issue to the outside of your building, it's the HOA's responsibility. The whole condo living thing has turned out pretty well - I like it.

 

[3dtp]

Very true. I will be an single OBGYN resident and I definitely considered all the maintenence issues i would have to tend to. I am at the point of wondering if I can fit a maid into my budget.

Get the maid! I did. Best decision I ever made. I initially wanted a qMonth, but the owner talked me into a qW for not a lot more. House is clean, tidy and organized. Dishes are washed, clothes are washed and hung up.

And the best part is I have a roomie. Wrote the maid service into the lease, get a little extra rent for the convenience and can deduct the maid service from the rental income, since the lease requires it.

I was lucky enough to own a house before med school. Right now, selling it is going to be rough, but I'd be happy to rent it to a resident when I move to the great world beyond residency. Big house, close enough to hospital, near a river and lakes, grocery stores within walking distance.
I did the 30 year fixed rate instead of the ARMS and am very satisfied with the arrangement.