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Did anyone buy a house while they were in school? I would really appreciate any and all advice concerning home buying & home ownership.
1) Buy house and pay house payment while in school with student loan money.
2) Move to new city for residency, rent house out to cover house payment and live in inexpensive apartment. Pay off house as quickly as possible.
3) Sell house and invest all proceeds in ~10-15% mutual fund. Do not touch. Pay off student loan as slowly as possible and beat the student loan interest rate on the market.
4) Become debt free in 40s with sizable portfolio.
If you get 100,000 for your house and find a conservative 12% mutual fund to invest in and don't even add to it, that grows to just under $3,000,000 in 30 years.
So far being a homeowner has been great, though it's tough to afford anything nice on the amount of loan money you're allocated. I've had a few tight months and have had to cut out some extras but I think things will work out in the end. It helps to buy a cheap used car with cash because those car payments will really hold you back.
Just remember the market works both ways. I am moving in a few days and have not been able to sell my condo. Will be paying rent and mortgage until it sells. I did enjoy owning though
Hey, this is a good debate.
Maybe an ok Idea...if you allready have a big nestegg or outside support. Most student loans will give you about 500 bucks a month for housing. That is about enough for a 75-90k (if you can find a house for this, then go ahead, I have no idea where it would be though) loan depending on your rate. If you could rent to a roommate, that would help a bunch as long as you can come up with the 20% down payment and manage the property with ALL your free time.
My medical school allocates $1300 a month for room and board during term (but remember its a 9 month loan). This was enough for a $100000 house and $800 payment + bills. It's a little tight sometimes but really not bad at all. It will be much better year 3 because school is year round. Still there are many ways to make $$$ in the summer during years 1 and 2.
Because managing a property while you work rediculous hours far away for little money is an easy thing??
I never said it was easy.
Assuming you have poured all your equity into the house since you started working. Maybe you end up taking away 80-90k in gain. If the market stands or goes up. This is a pretty risky time to bet on that. I would plan on not going up at this point.
S&P 500 rose an average of 11% over the past 70 years. I hope to beat that but don't plan to. I anticipate the property going up in value (it went up $5000 this last year), but I also concede that it will cost money to sell it too. Hopefully these will even out, give or take.
Finally, 10-15% mutual funds grow on trees. Haha, good luck with that...
Didn't quite understand this sarcasm. What leads you to believe this cannot be done?
...assuming you pull out 75k in gain when done with residency at 30, assume you beat your loan rate by 5% (this is probably a huge overestimate with a small amount of money like 75k). It would take you 20 years to catch up to pay a loan that was 150, from your original 75. Remember the loan grows as does your investment. Assuming you didn't put more of your own money in.
The whole point is to put money into investments INSTEAD of putting the money in your loan. As opposed to putting your extra dollars into a loan payment to pay it off more quickly each month, add it to an investment. You make more money in the long run even though your student loan sticks around longer.
Being frugal and conservative is the first step to wealth. Props on the hard work and gumption to get it going. I just want to shed a little opposing light so we don't have a bunch of eager people jumping on houses unprepared.
It is indeed a risk and I am in no way suggesting that people should "jump on houses unprepared" because they read my post on SDN, or that people should make uninformed financial decisions. I'm not sure if this is what you are insinuating or not. I worked for a year before med school so I had cash for the down payment, but really that is the only thing special about my circumstance and I'm trying to make it work. I'd be happy to answer any questions.
A fund yeilding 10-15-%? Sign me up!
https://flagship.vanguard.com/VGApp/hnw/FundsSnapshot?FundId=0059&FundIntExt=INT
15.12% since 1984. but then again, you had to buy all of your position at the right time, which never happens.
Did anyone buy a house while they were in school? I would really appreciate any and all advice concerning home buying & home ownership.
My story. I bought a condo for $80K, spending about $2-300 more per month than I would have for rent. I sold it four years and two months later (two months when I had to pay rent at my residency AND a mortgage at my med school) for $83K. After real estate commissions and inflation I definitely lost a significant sum.
Good luck with your decision.
A fund yeilding 10-15-%? Sign me up!
Did anyone buy a house while they were in school? I would really appreciate any and all advice concerning home buying & home ownership.
This is not impossible, jeez. But really it's beside the point because it's not like it suddenly becomes dumb to invest if you're making 8% a year or whatever.
Bottom line for me: procure a substantial sum, invest it, and be in a financial situation where I can forget about it/add to it.