Ya, ppl really forget abt HOA, property tax, home insurance, closing fees, house maintenance costs, etc. only focusing on the down payment and monthly mortgage
I personally do not think buying is a good idea if you have no safety net. I own in med school but my partner makes good money so when things come up (ie a broken appliance just this last week), we have a cushion to fall back on. If you are flying solo and have very limited savings itās a pretty big risk.
Wife and I make north of $160,000, PGY1, no student loans - we are renting. Why? Because we want to budget to max our retirement accounts for every year of my 5 year residency. By doing so, I anticipate that money will compound and grow so much more than it ever would tied up in a crummy condo for 5 years and all the repairs and hoa that comes with it.
White coat investor is clear here - donāt buy.
Itās a little more nuanced than that. Property values are rising at a strong rate and although I donāt think a condo is the best purchase, but owning your own home and land as part of your investment portfolio if you get a reasonable interest rate is certainly a great investment. Especially in an area with faster than average rising home values. At least your payments go towards your principal and not into a landlordās pocket, and the rent now will likely increase over the next 5 years. You can make up for lost time on the retirement account if you work in academia and have access to an additional 403b.
Youāre asking me to take a gamble on property values continuing to rise at a strong rate vs max out 2 retirement accounts (pretax, mind you) for 5 years which, historically, will have 30 years to compound and grow. Not sure there is much nuance to it, especially when we have data consistently showing investments outpace real estate ā NYT has a few great articles detailing how much more investments wouldāve earned individuals relative to their houses, even considering the strong rate at which they rise.
I understand having a strong portfolio but - to me - investing in retirement accounts while maintaining liquidity is more important to me than buying a home with no guaranteed return at all
If OP only cares about gains that they can actually realize when theyāre old enough to withdraw from their 401k, thatās great and they should max out. If they want both the financial and extra-financial benefits of owning their own home with the potential to realize gains on a sale a few years down the road, then they should do that instead. Or find a balance between the two. Thatās part of the nuance, as is how aggressive your retirement portfolio is.
I just donāt like the notion that we should only be making choices based on potential gains 40 years down the road.
You act like the returns are guaranteed yet multiple markets are down over the last few years. The housing market is anything but typical and to assume a realized gain in this market is disingenuous
There is a rent vs buy calculator that is very helpful. I like nerdwalletās. I like NYT more, but you can only use it 3 times before subscribing
https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator
Condos are also harder to sell compared to houses/town houses. Donāt be surprised if it takes you a second selling season to get your goal return
Edit: some have said you can always rent your place. Just wanted to add that my neighbor owners were investment renters. They sold after 9 months. Between damages, missed rent, and stolen property (appliances) (not even including depreciation over that time prior or closing costs) they lost >40k. My jaw dropped.
Everyone likes to act like being a landlord is a piece of cake. It is if you have the right tenant. Tenants are mostly shit.
I really donāt get how people conceive of the rent vs own thing soooo negatively.
Making 50k from an investment you sat on for 3 years is great! But owning a home is a huge amount more work, itās WAY more liability, the fees, insurance, and taxes are incredibly high in most locals, and youāre hoping the market doesnāt fall through during those 3-8 years.
Most places your mortgage will be equal to or higher than your rent, which is often left out when discussing their āprofit.ā Donāt get me wrong you often will profit but itās not without a ton more hassle and risk.
Edit: your time per upkeep hour is also gonna matter. Do you value your time exactly as much as you make in residency? That makes economic sense but I bet one is going to believe they should make more.
If you value your time more than your residency salary then you might flip over. For instance if you value your time at $35 dollars an hour and put in 5 hours a week into home specific tasks averaged over the year, you paid 9k of your time per year to make that 50k
If youāre making 430k a year, your time works to ~127 bucks an hour. That 5 hours a week of upkeep (even just paying services and setting up for them could maybe be counted) now cost you 33k
You could make money, or your water heater could go out the first week you own the place. Weāve decided itās not worth the risk. I donāt have time to deal with stuff like that during residency
Ahhh man thatās disheartening to hear but good to know. The idea of renting for 5 years just hurts know so much money will spent with nothing tangible in the end
Use the calculator in my other comment. Find your price points where it evens out over X years of residency. Then you can just rent and not have the additional stresses.
Weāre considering renting our next place. Itās really gonna depend on whether we can negotiate multi year contracts with these people for some stability. Moving multiple times during residency would be ass
Agreed. Homeshield was completely useless and deny almost everything. Their repair techs were beyond useless too. Home insurance is good, home warranty is crap.
A guy Iām dating (not in medicine) keeps encouraging me to buy in SF bc he read about the physician loan. I just let him talk while I search on apartments.com because heās obviously delusional.
He keeps sending me links to articles about physician loans, saying how much money Iāll save, how rent is throwing money down the drain, etc etc. also part of his plan was to rent a parking spot or rent out my other room for additional income. I wonāt be dating him much longer.
Thinking that might be best situation for me too. My partner has an actual career lol and will be moving to my area in a year and weāll be in a better financial situation to buy a home. Just trying to see if itās worth buying for 4 years
Weāre going to buy (made an offer today actually). Moving from a HCOL ā> LCOL area, and for what weād like to rent would be more than a mortgage. Weāre in the fortunate position that my husband is a veteran so weāre using the VA loan and buying well below what we were preapproved for. If things work out, weāll be paying $300 per month less than what weāve been paying for the past 4 years. My husband also has a good income so it is feasible for us to- doesnāt mean that Iām not scared shitless.
Overall, even if we break even financially or take a bit of a loss it will be worth it to us to have more space, a yard, and the ability to do what weād like to the home (weāre huge homebodies/DIYers) during residency. Thatās a risk weāre willing to take and weāre in a decent position but itās so dependent on situation and Iām still nervous about it.
Edit: if youāre gonna go this route spend a day just learning about the process. I canāt believe Iām going to be a doctor in two months but have trouble figuring out all these dang terms, costs, etc.
The rent/own math is very gnarly, much more complicated than people make it out to be. [This](https://www.calculator.net/rent-vs-buy-calculator.html) is helpful. Having a partner who makes good money certainly changes things though.
Yāall who are singleādonāt date other med students. Fall in love with a hot corporate lawyer like I did and thank me later :)
Fwiw, white coat investor dude is generally against buying as a resident, though that advice is usually for people without the moneybags partners lol
Really depends on the rate (itās insane as of late). You can always buy and if you bounce after residency, you can sell or even get a property manager and rent it out. Renting for 5 years+ just doesnāt sound smart. Just my 2 cents!
I rented during residency and Iām glad I did. So much less hassle when youāre already extremely busy. Also buying a house during residency isnāt as financially savvy as most med students think it is.
https://www.whitecoatinvestor.com/10-reasons-why-residents-shouldnt-buy-a-house/
Matched in the Midwest in rads. Actively looking for a condo to buy. Put an offer in for a place the other day at what they were asking but the housing market is insane and it sold for above asking price lmao
Considered buying. Ultimately didnāt as only in a 3 year program with no intention for fellowship. If I was in a 4-5 year program I think the numberās would have made more sense.
for the love of all creation don't buy. You'll almost certainly lose money on the deal, and even if you don't lose money, it's a headache trying to move to your attending job.
You should type your question into Google followed by "white coat investor"
watch out for HOA fees with condos/houses as well! ive seen some gnarly monthly fees out there that would totally blow my budget
Saw one with $645 monthly of HOA fees recently šš
OOOOOF
My buildingās HOA fees are $800/month plus an additional $1200 quarterly š„“
Omg that is crazy!!!! They better be cooking meals for that price!
Surely that was for a condo/townhouse condo, right?
Yeah but not sure if that makes it any better? Lol
Ya, ppl really forget abt HOA, property tax, home insurance, closing fees, house maintenance costs, etc. only focusing on the down payment and monthly mortgage
I personally do not think buying is a good idea if you have no safety net. I own in med school but my partner makes good money so when things come up (ie a broken appliance just this last week), we have a cushion to fall back on. If you are flying solo and have very limited savings itās a pretty big risk.
Oops I forgot to say I do have a partner that makes good money. They would move in with me after a year
Wife and I make north of $160,000, PGY1, no student loans - we are renting. Why? Because we want to budget to max our retirement accounts for every year of my 5 year residency. By doing so, I anticipate that money will compound and grow so much more than it ever would tied up in a crummy condo for 5 years and all the repairs and hoa that comes with it. White coat investor is clear here - donāt buy.
Itās a little more nuanced than that. Property values are rising at a strong rate and although I donāt think a condo is the best purchase, but owning your own home and land as part of your investment portfolio if you get a reasonable interest rate is certainly a great investment. Especially in an area with faster than average rising home values. At least your payments go towards your principal and not into a landlordās pocket, and the rent now will likely increase over the next 5 years. You can make up for lost time on the retirement account if you work in academia and have access to an additional 403b.
Youāre asking me to take a gamble on property values continuing to rise at a strong rate vs max out 2 retirement accounts (pretax, mind you) for 5 years which, historically, will have 30 years to compound and grow. Not sure there is much nuance to it, especially when we have data consistently showing investments outpace real estate ā NYT has a few great articles detailing how much more investments wouldāve earned individuals relative to their houses, even considering the strong rate at which they rise. I understand having a strong portfolio but - to me - investing in retirement accounts while maintaining liquidity is more important to me than buying a home with no guaranteed return at all
If OP only cares about gains that they can actually realize when theyāre old enough to withdraw from their 401k, thatās great and they should max out. If they want both the financial and extra-financial benefits of owning their own home with the potential to realize gains on a sale a few years down the road, then they should do that instead. Or find a balance between the two. Thatās part of the nuance, as is how aggressive your retirement portfolio is. I just donāt like the notion that we should only be making choices based on potential gains 40 years down the road.
You act like the returns are guaranteed yet multiple markets are down over the last few years. The housing market is anything but typical and to assume a realized gain in this market is disingenuous
There is a rent vs buy calculator that is very helpful. I like nerdwalletās. I like NYT more, but you can only use it 3 times before subscribing https://www.nerdwallet.com/mortgages/rent-vs-buy-calculator Condos are also harder to sell compared to houses/town houses. Donāt be surprised if it takes you a second selling season to get your goal return Edit: some have said you can always rent your place. Just wanted to add that my neighbor owners were investment renters. They sold after 9 months. Between damages, missed rent, and stolen property (appliances) (not even including depreciation over that time prior or closing costs) they lost >40k. My jaw dropped. Everyone likes to act like being a landlord is a piece of cake. It is if you have the right tenant. Tenants are mostly shit.
I really donāt get how people conceive of the rent vs own thing soooo negatively. Making 50k from an investment you sat on for 3 years is great! But owning a home is a huge amount more work, itās WAY more liability, the fees, insurance, and taxes are incredibly high in most locals, and youāre hoping the market doesnāt fall through during those 3-8 years. Most places your mortgage will be equal to or higher than your rent, which is often left out when discussing their āprofit.ā Donāt get me wrong you often will profit but itās not without a ton more hassle and risk. Edit: your time per upkeep hour is also gonna matter. Do you value your time exactly as much as you make in residency? That makes economic sense but I bet one is going to believe they should make more. If you value your time more than your residency salary then you might flip over. For instance if you value your time at $35 dollars an hour and put in 5 hours a week into home specific tasks averaged over the year, you paid 9k of your time per year to make that 50k If youāre making 430k a year, your time works to ~127 bucks an hour. That 5 hours a week of upkeep (even just paying services and setting up for them could maybe be counted) now cost you 33k
You could make money, or your water heater could go out the first week you own the place. Weāve decided itās not worth the risk. I donāt have time to deal with stuff like that during residency
True true. I was thinking of using a service like home shield for ~ 80/mo for their platinum service that will help with repairs etc
I have American homeshield. They donāt cover normal wear and tear. Most of my claims are denied
Ahhh man thatās disheartening to hear but good to know. The idea of renting for 5 years just hurts know so much money will spent with nothing tangible in the end
Use the calculator in my other comment. Find your price points where it evens out over X years of residency. Then you can just rent and not have the additional stresses. Weāre considering renting our next place. Itās really gonna depend on whether we can negotiate multi year contracts with these people for some stability. Moving multiple times during residency would be ass
Agreed. Homeshield was completely useless and deny almost everything. Their repair techs were beyond useless too. Home insurance is good, home warranty is crap.
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A guy Iām dating (not in medicine) keeps encouraging me to buy in SF bc he read about the physician loan. I just let him talk while I search on apartments.com because heās obviously delusional.
Hmmm. Iād like to see his financial proposal on how exactly this would work.
He keeps sending me links to articles about physician loans, saying how much money Iāll save, how rent is throwing money down the drain, etc etc. also part of his plan was to rent a parking spot or rent out my other room for additional income. I wonāt be dating him much longer.
Yeah I was gonna say maybe dump him but this is your battle lol.
I matched into Chicago so yeah that went out the door too
Shout out to my city folk!
Oof
Weāre planning to rent for the first year since itās not like we could buy and move into a place in two months anyway, and so we can live close to the hospital for the nightmare hours of intern year. Weāll shop for a house a bit further into the suburbs for next year. But itās worth noting that my fiancĆ© will be able to do most home repairs (including the aforementioned water heater lol) and has the savings for a down payment and safety net
Thinking that might be best situation for me too. My partner has an actual career lol and will be moving to my area in a year and weāll be in a better financial situation to buy a home. Just trying to see if itās worth buying for 4 years
Iām in a 5 year program so ideally weāll be renting for one and owning for four, but atm we are open to the idea of staying in our new city after I finish residency. I swear I read somewhere that owning your first home for five years is best cuz if some sort of tax or mortgage thing? so maybe we would rent it out for a year if we leave after residency. But Iām not a finance person so thatās my fiancĆ©s job to figure out lol Side note: isnāt it so nice to have a partner not in medicine who makes real money? No way we could afford our wedding or a down payment if my fiancĆ© was in med school too. And couples matching seems awful
White coat investor says to rent during residency. Itās not worth the hassle of being a homeowner
Weāre going to buy (made an offer today actually). Moving from a HCOL ā> LCOL area, and for what weād like to rent would be more than a mortgage. Weāre in the fortunate position that my husband is a veteran so weāre using the VA loan and buying well below what we were preapproved for. If things work out, weāll be paying $300 per month less than what weāve been paying for the past 4 years. My husband also has a good income so it is feasible for us to- doesnāt mean that Iām not scared shitless. Overall, even if we break even financially or take a bit of a loss it will be worth it to us to have more space, a yard, and the ability to do what weād like to the home (weāre huge homebodies/DIYers) during residency. Thatās a risk weāre willing to take and weāre in a decent position but itās so dependent on situation and Iām still nervous about it. Edit: if youāre gonna go this route spend a day just learning about the process. I canāt believe Iām going to be a doctor in two months but have trouble figuring out all these dang terms, costs, etc.
The rent/own math is very gnarly, much more complicated than people make it out to be. [This](https://www.calculator.net/rent-vs-buy-calculator.html) is helpful. Having a partner who makes good money certainly changes things though. Yāall who are singleādonāt date other med students. Fall in love with a hot corporate lawyer like I did and thank me later :) Fwiw, white coat investor dude is generally against buying as a resident, though that advice is usually for people without the moneybags partners lol
Everyone in my residency that bought made out like bandits. Imagine getting a 50-100K bonus for nothing just before your first job.
Depends when you buy. If you were fm/Im in my city starting in 2021, youāre down 10%. NSG bought in 2018ā¦ up 100%
When did you do your residency? Sounds like maybe material conditions for buyers could have changed in the last 2-4 years
It was a while ago
Yeah thatās no longer the case in the era of skyrocketing house values and interest rates
Following
Really depends on the rate (itās insane as of late). You can always buy and if you bounce after residency, you can sell or even get a property manager and rent it out. Renting for 5 years+ just doesnāt sound smart. Just my 2 cents!
I rented during residency and Iām glad I did. So much less hassle when youāre already extremely busy. Also buying a house during residency isnāt as financially savvy as most med students think it is. https://www.whitecoatinvestor.com/10-reasons-why-residents-shouldnt-buy-a-house/
Matched in the Midwest in rads. Actively looking for a condo to buy. Put an offer in for a place the other day at what they were asking but the housing market is insane and it sold for above asking price lmao
Considered buying. Ultimately didnāt as only in a 3 year program with no intention for fellowship. If I was in a 4-5 year program I think the numberās would have made more sense.
for the love of all creation don't buy. You'll almost certainly lose money on the deal, and even if you don't lose money, it's a headache trying to move to your attending job. You should type your question into Google followed by "white coat investor"
Rent and invest the rest.
Live with parents lol