4th years - Buying a home when starting residency?

[RRS]

I'm curious as to what the housing plans for 4th years who are moving on to residencies. Do most people plan on buying housing or renting?

There are pros and cons to each. While housing prices are high, they aren't as unreasonable in most parts of the country as the media would make it seem. And there are tax and appreciation benefits to owning a home. Not to mention the psychic benefits of owning.

On the downside to purchasing - renting is easy, generally a bit cheaper, and if you're not staying in a city more than a few years, you don't have to worry about real estate costs taking away any appreciation.

Just wondering what the 4th years out there were thinking about this - if at all. No one can make any serious plans until after Match Day, of course.



Note of disclosure. I am an attending physician who is also a realtor. I have (a purposely unnamed) real estate company that helps residents when they are relocating. Since a number of my clients have purchased when entering residency, I was curious what people were thinking at this stage - before the match has actually happened. I'm not trolling for referrals here as we're pretty busy right now anyway.

TS

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[bjackrian]

FWIW, I'm a second year, and my wife and I are saving and living in a cheaper-than-we'd-like apartment now with the goal of saving enough money for a down payment when I start residency in a three years.

 

[WhoisJohnGalt]

FWIW, I'm a second year, and my wife and I are saving and living in a cheaper-than-we'd-like apartment now with the goal of saving enough money for a down payment when I start residency in a three years.

Ditto the previous poster (only in my case, replace "wife" with "husband" )

 

[MadameLULU]

From my understanding, there's a loan for new physicians that doesn't require a down payment and will not penalize them with a PMI...at least that's here in the Houston area.

 

[Dr. Will]

It depends...3 year EM residency position in a city like LA or Chicago...probably gonna stick with renting. 4 year EM residency in somewhere like Cincinnati...much more likely to look into buying something.

 

[DarksideAllstar]

Most likely will end up in San Francisco, Seattle, or Boston. Buying anything other than a shack about 6 hours from the hospital in any of those places would require a nice windfall from some deceased relative that I never met (nor knew existed). So yeah, probably gonna rent for the next 4-5 years.

 

[SoCuteMD]

2nd year med student in a ridiculously expensive housing market. Managed to find myself a condo that costs about the same as renting. Hope to sell this place and buy another wherever I do residency so that I can avoid taxes.

 

[deleted109597]

I'll probably buy, because I'm sick of renting.

 

[Keg]

For those of you who bought as students, how did you get a mortgage? All the ones I've seen require proof of income, and since I'm in med school, I have no income. Just wondering - thanks!

 

[SoCuteMD]

For those of you who bought as students, how did you get a mortgage? All the ones I've seen require proof of income, and since I'm in med school, I have no income. Just wondering - thanks!

Do a search - this comes up all the time.

 

[Son of a Sailor]

Not to mention the psychic benefits

I've always wanted some of those, I'll be buying too.

 

[me454555]

Why does everyone want to buy a house for residency? have you guys actually run the numbers on renting vs buying? Buying a house entails closing costs as well as other hidden expenses. Sure its nice that you build up equity in your mortgage but what about he property taxes you have to pay each month. Then when you want to sell your house, you've gotta pay real estate person's commissions. A general rule of thumb is that it doesn't pay to buy unless your going to be in a place for at least 5 years. Since most of your residencies will be less than that, it might make sense to rent and wait untill you get a full time position to buy.

 

[mshheaddoc]

Maybe they are planning on staying? Or maybe they are in a market where it is actually cheaper to buy then rent ... even with the "hidden" costs.

Hidden costs include your utilities (sewer, trash, water, electricity, etc), taxes and that's about it. Oh and most property taxes are usually escrowed and paid quarterly, I have never encountered monthly RE taxes (unless in the escrow in that case its automatically in your mtg payment). Other than that as long as you have a house inspection and check out your utility functioning you're pretty safe. (some get a housing warranty in case of the appliance breakage).

While I see your point, everyone has different ideas of why they buy. Usually if you are going to be in your house from 3-5 years, you are safe. And I'm talking starter house, most starter houses last 3-5 years. And some people even keep them as investment properties ( I know a few people that started their investment portfolios this way) so its really an individual outlook on whether to buy or not. Not really a "rule of thumb" since situations can be different.

Oh and if you are in a major city area, unless you plan on staying or renting out, I wouldn't recommend buying unless you'll be there for a few years, only b/c the price is hot and some city markets are a harder market for housing price falls in the upcoming year or two. Unless you are in one of the coveted markets that are growing as per some of the "money" magazines. Then you're safe.

 

[mshheaddoc]

From my understanding, there's a loan for new physicians that doesn't require a down payment and will not penalize them with a PMI...at least that's here in the Houston area.

You can get that type of loan anywhere, but with physician loans, they will not include your loan payback into your "debt to income" ratio which is huge for those of us with large loans

Oh and my husband already bought a home (he's a 4th year) and we are planning on staying in it at through his residency and beyond a few years. I know a few people who are doing the same thing. I really think its location dependant though ... most of my friends from the east coast would only rent ... and it also depends if you are married too. Usually married spouses already have careers established so one might be more likely to stay in a particular area for their spouse.

 

[RRS]

Why does everyone want to buy a house for residency? have you guys actually run the numbers on renting vs buying? Buying a house entails closing costs as well as other hidden expenses. Sure its nice that you build up equity in your mortgage but what about he property taxes you have to pay each month. Then when you want to sell your house, you've gotta pay real estate person's commissions. A general rule of thumb is that it doesn't pay to buy unless your going to be in a place for at least 5 years. Since most of your residencies will be less than that, it might make sense to rent and wait untill you get a full time position to buy.

I certainly wouldn't say there is any kind of rule of thumb for real estate transactions. It depends on what the situation is individually. Keep in mind that people who are in residency usually buy close to their hospitals where they are training - and that there is a steady stream of people coming in each year looking to purchase, too.

Thanks for the feedback, everyone. It's always interesting to hear people's perspective on this subject.