Owning a Home (Condo) During Medical School

[pianola]

In order to become a Texas resident for tuition-purposes, I will need to buy property and make it my primary residence. Believe me, I've looked into simpler ways of becoming a Texan, everything from trying to find someone to adopt me to starting a fake company to getting a one-year marriage to a Texan -- there aren't any easier ways of doing this (at least, ethical ways, anyway).

Unsurprisingly, I've never bought property before. Doing some simple number crunching, I will come out significantly ahead with my loans even if I take a huge loss in selling the house at the end of four years.

Naturally, though, I have a lot of questions right now. I have just enough for a downpayment on a small condo, but I don't know how I would find out about things like closing costs, taxes, titles, insurance, condo association fees (how much are each of these?) Also, how much do realtors charge? What do I need to report in my federal taxes? If I buy a 2br place and rent the other one, does that count as income and do I have to report it?

Anyway, I'm confused. Surely there must be other people in my shoes who can help me figure out where to read about all of this?

---

Members don't see this ad.

 

[glp]

Doing some simple number crunching, I will come out significantly ahead with my loans even if I take a huge loss in selling the house at the end of four years.

this makes absolutely no sense. can you explain?

1)closing costs
2)taxes
3)titles
4)insurance
5)condo association fees (how much are each of these?)
6)Also, how much do realtors charge?
7) What do I need to report in my federal taxes? If I buy a 2br place and rent the other one, does that count as income and do I have to report it?

1) and 3) are dependent on a number of things the title company fees, local fees and bank fees. your realtor is obligated to give you an estimate of these fees whenever you make an offer. expect no less than $1500 and prob ~2k or more plus any fees your bank will charge.
2) property taxes are usually calcualted and assessed by the county assessor. google whichever county you plan on buying in (the county assessor should have a website) and look for the local property tax rates.
4) this is based on the amount of insurance and where you live. any property insurance company should be able to give you an estimate. condo insurance should be cheaper than homeowner insurance bc you only insure the interior. the exterior is insured by the homeowner association and covered in condo fees
5) dependent on the complex, sometimes included in the MLS listing, but each time a realtor, shows you a place they will be able to tell you. expect $150/month on the cheap side to $300 or more a month for nicer places in bigger cities.
6)the seller pays 6% of the closing price 3% to the listing agent and 3% to the buyers agent. so buying you dont pay a realtor anything, but keep in mind when you sell you will pay 6%.
7) rental income is income and therefore reportable, but since your interest payment will most likely be more than the rent your recieve, and interest is tax deductible, then you wont actually have to pay taxes on the rental income.

i went through this whole process last yr during my ms2 yr. its a learning process and very locally variable. my best advice is to find a hard-working knowledgeable realtor to assist you.

 

[day]

Are you able to get a morgage? I almost gave up on buying condo since no one really give you an approval without income...even though I was going to put down 30-40% and have a excellent credit score...

If you can find a way to get one, do you mind sharing?

 

[Pinkertinkle]

this makes absolutely no sense. can you explain?

It means that the tuition money he/she can save by buying a property and becoming a Texas resident will likely outweigh any foreseeable depreciation of the property to be purchased.

 

[DrJD]

I'm from NJ and going to school in Texas. What I've read in a bunch of places is that if you get at least a $1000/yr scholarship (finaid office will almost certainly help) you qualify for in-state tuition. I'm not sure why that's the case, but I'm not going to argue with rules that save me a ton of money.

I've also heard this from numerous sources including some official ones. I also heard that if you are accepted out of state they "always" give you at least that 1000 dollar scholarship so that you can be an instate resident for years 2 through 4...

 

[pianola]

I've also heard this from numerous sources including some official ones. I also heard that if you are accepted out of state they "always" give you at least that 1000 dollar scholarship so that you can be an instate resident for years 2 through 4...

Yeah, I didn't want to get into it, but yes, public schools will do that for you. I am not attending a public school in Texas. I am attending a private school that awards significant tuition reductions to in-state residents. (To the best of my knowledge there is only one such school -- the one I am attending...)

And yes to the person who answered before (Pinkertinkle?) I would lose $80K in OOS tuition+interest without buying something to live in. I don't want to buy anything worth more than about $100K and preferably less! If I lost $80K on a $100K condo, that would mean I would have terrible luck indeed.

About getting credit to buy the condo: I forget who asked this, but my parents will have to cosign for this stupid condo I don't want. They have an excellent credit rating. So I can get a mortgage if they cosign.

 

[pianola]

1) and 3) are dependent on a number of things the title company fees, local fees and bank fees. your realtor is obligated to give you an estimate of these fees whenever you make an offer. expect no less than $1500 and prob ~2k or more plus any fees your bank will charge.
2) property taxes are usually calcualted and assessed by the county assessor. google whichever county you plan on buying in (the county assessor should have a website) and look for the local property tax rates.
4) this is based on the amount of insurance and where you live. any property insurance company should be able to give you an estimate. condo insurance should be cheaper than homeowner insurance bc you only insure the interior. the exterior is insured by the homeowner association and covered in condo fees
5) dependent on the complex, sometimes included in the MLS listing, but each time a realtor, shows you a place they will be able to tell you. expect $150/month on the cheap side to $300 or more a month for nicer places in bigger cities.
6)the seller pays 6% of the closing price 3% to the listing agent and 3% to the buyers agent. so buying you dont pay a realtor anything, but keep in mind when you sell you will pay 6%.
7) rental income is income and therefore reportable, but since your interest payment will most likely be more than the rent your recieve, and interest is tax deductible, then you wont actually have to pay taxes on the rental income.

i went through this whole process last yr during my ms2 yr. its a learning process and very locally variable. my best advice is to find a hard-working knowledgeable realtor to assist you.

OK, thank you. I appreciate all of your advice so much. Seriously, it's great.

 

[xanthomondo]

You can't be a resident of the state while renting an apartment? Do all of the people in Texas who rent their place have no state residency?

 

[DrJD]

You can't be a resident of the state while renting an apartment? Do all of the people in Texas who rent their place have no state residency?

They are trying to establish residency, not keep it... in other words, he is an out of state student to begin with.

 

[Droopy Snoopy]

this makes absolutely no sense. can you explain?


1) and 3) are dependent on a number of things the title company fees, local fees and bank fees. your realtor is obligated to give you an estimate of these fees whenever you make an offer. expect no less than $1500 and prob ~2k or more plus any fees your bank will charge.
6)the seller pays 6% of the closing price 3% to the listing agent and 3% to the buyers agent. so buying you dont pay a realtor anything, but keep in mind when you sell you will pay 6%.

Agree with everything except this. Closing costs and other fees are entirely negotiable, and you should try and get the seller to pay for as much of this as possible. Likewise with realtor fees; although 6% is the industry standard, shopping around will get you a 5% fee. We're actually closing Friday at 4%, but it's mainly because we have a dual agent who brought us a buyer at asking price . This last doesn't really apply to you now, since as was stated the seller pays the realtor fees. Just keep it in mind in 4 years when you go to sell.

 

[pianola]

They are trying to establish residency, not keep it... in other words, he is an out of state student to begin with.

She, but otherwise, spot on.

I assume the people born in Texas are probably all right for residency.

 

[dragonfly99]

pianola,
buying a condo = probably a good decision in your situation. You'll be there @least 4 years, and this year there is an 8000 federal tax credit if you buy a first home (or condo) in 2009. If your parents cosign, I think you have to split the tax credit with them.

You can try to get the seller to pay some of the closing costs. Get your realtor to write it into the offer (say, you offer 130k for the condo, with a $4000 credit for the closing fee...seller is essentially giving you $4000 to help pay the closing costs).

 

[Sol Rosenberg]

pianola,
buying a condo = probably a good decision in your situation. You'll be there @least 4 years, and this year there is an 8000 federal tax credit if you buy a first home (or condo) in 2009. If your parents cosign, I think you have to split the tax credit with them.

You can try to get the seller to pay some of the closing costs. Get your realtor to write it into the offer (say, you offer 130k for the condo, with a $4000 credit for the closing fee...seller is essentially giving you $4000 to help pay the closing costs).

Nope, and certainly not if their names aren't on the deed, which is what establishes the legal ownership of the property.