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Started By
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Rent or Buy?
Posted on 3/2/15 at 7:59 pm
Posted on 3/2/15 at 7:59 pm
I'm a medical student finishing up school and will be moving to Dallas for residency for at least 3 years. I'm almost 28 years old and have been renting since undergrad and I feel like I'm throwing away money by renting. I'd like to start getting some kind of equity.
I would be looking to buy a newer house in the $150k range or renting a house in the $1,300-1,400/month range.
I am married with a newborn, so family of 3. I obviously don't have a job at the moment and my wife is an elementary teacher with a very modest salary. However, once I start my residency and my wife gets a job as well, we are expecting to gross about $90k combined (minus ~$800/month for student loans).
I don't have the best credit score (high 600s, the wife's is low 700s) but family has offered to give me a $50k loan for a down payment. So realistically I'd only be financing about $100k. Some preliminary quotes I've gotten for mortgage, HO insurance, and property taxes, etc. comes out to be about $900/month. The difference of $400/month would go a long way but I realize home maintenance, etc could eat into that.
Thoughts?
I would be looking to buy a newer house in the $150k range or renting a house in the $1,300-1,400/month range.
I am married with a newborn, so family of 3. I obviously don't have a job at the moment and my wife is an elementary teacher with a very modest salary. However, once I start my residency and my wife gets a job as well, we are expecting to gross about $90k combined (minus ~$800/month for student loans).
I don't have the best credit score (high 600s, the wife's is low 700s) but family has offered to give me a $50k loan for a down payment. So realistically I'd only be financing about $100k. Some preliminary quotes I've gotten for mortgage, HO insurance, and property taxes, etc. comes out to be about $900/month. The difference of $400/month would go a long way but I realize home maintenance, etc could eat into that.
Thoughts?
7
Posted on 3/2/15 at 8:14 pm to strikingoutsince87
3 years is a close call, but with interest rates the way they are, I would say buy smartly (something you can 100 percent resale). I am in a similar situation. I am a pgy 1 in a 5 year program. My wife is a teacher (no child thankfully for now). We bought a 265,000 house (different real estate environment and had to be within 10 minutes from hospital for home call reasons). Our interest rate is 2.75% with 0 down payment and no Pmi. This is via fifth third bank physician loan program. Our monthly payment with insurance (higher insurance area) is $1400. That is 3/2 + office in a good neighborhood and excellent location. No way we could rent for that in something half as decent. Check out white coat investor blog for help, and feel free to leave your email if you want some more of my advice. Good luck with residency. I am taking it if you already know your match, you are Osteopathic doing either family or IM. Congrats on the match and Dallas is a fun town.
This post was edited on 3/2/15 at 8:18 pm
Posted on 3/2/15 at 8:17 pm to strikingoutsince87
If your only in the area for 3 years you may just want to rent. Closing costs are pretty high in Texas. Less things to worry about and flexibility. If you eventually want to turn into rental then buying may be a better option.
Posted on 3/2/15 at 8:19 pm to strikingoutsince87
Honestly, it's going to be hard to find a good house for $150k in the Dallas area. It can be done, but there aren't a lot of options with safe neighborhoods and good schools. The uppity neighborhoods have crazy high real estate prices.
I would recommend looking in the Arlington area. There are good neighborhoods there that fit better within your price range. I could give you more detailed info on the Fort Worth area but that's an hour from Dallas with morning traffic.
I say buy a house, but obviously you know your situation better than anyone else. The real estate market is in really good shape for the metroplex, so if you can afford it, it's a good investment.
Lastly, I'd be wary about taking $50k from a family member. Once again, it's your business but I've heard a lot of horror stories of broken relationships over unpaid debts; and none of them ever thought it would happen to them. Good luck.
I would recommend looking in the Arlington area. There are good neighborhoods there that fit better within your price range. I could give you more detailed info on the Fort Worth area but that's an hour from Dallas with morning traffic.
I say buy a house, but obviously you know your situation better than anyone else. The real estate market is in really good shape for the metroplex, so if you can afford it, it's a good investment.
Lastly, I'd be wary about taking $50k from a family member. Once again, it's your business but I've heard a lot of horror stories of broken relationships over unpaid debts; and none of them ever thought it would happen to them. Good luck.
Posted on 3/2/15 at 8:20 pm to strikingoutsince87
I don't have any advice but I think your estimation of 900 a month is high. We bought a 100k house with nothing down and our payment is 730 a month.
If it were me I'd look at something that is easy to sell. Maybe a 2 bedroom townhouse or condo,they typically sell quick and you should at least break even after 3 years.
If it were me I'd look at something that is easy to sell. Maybe a 2 bedroom townhouse or condo,they typically sell quick and you should at least break even after 3 years.
Posted on 3/2/15 at 9:07 pm to BoogaBear
I agree with the idea of renting.
When I did my residency, I had little time for home upkeep and your wife will spend a ton more $$$$ decorating your "home" than she ever will spend on your rental.
Intrest rates are about to rise. You will be more likely to take a loss on the new home nand be stuck trying to sell it when you should be focused on your first job out of residency.
Rent. Trust me. Rent.
All the residents we worked with were much happier renting and walking away.
When I did my residency, I had little time for home upkeep and your wife will spend a ton more $$$$ decorating your "home" than she ever will spend on your rental.
Intrest rates are about to rise. You will be more likely to take a loss on the new home nand be stuck trying to sell it when you should be focused on your first job out of residency.
Rent. Trust me. Rent.
All the residents we worked with were much happier renting and walking away.
Posted on 3/3/15 at 1:57 am to SECdragonmaster
I'll also add that many banks have special mortgage loans for Dr.s that you should look into once you are really established some where
Posted on 3/3/15 at 8:23 am to strikingoutsince87
You should watch these videos to learn how to analyze buying vs. renting.
LINK
You're not just throwing money away on rent. You also should think about the potential investment return you lose when you make the down-payment. Also, in the first 3 years of your mortgage, you're paying about $2 in interest for every $1 in equity you gain on the principal.
Amortization schedule on $100k mortgage
LINK
You're not just throwing money away on rent. You also should think about the potential investment return you lose when you make the down-payment. Also, in the first 3 years of your mortgage, you're paying about $2 in interest for every $1 in equity you gain on the principal.
Amortization schedule on $100k mortgage
Posted on 3/3/15 at 9:01 am to mohalk
With a time horizon of just 36 months, I'd rent...you know it's going to be short term, so find some place decent yet affordable. Don't be tempted into upscale rental....keep it modest and save the difference in rent between what you get and what you'd really want; put that cash toward your eventual purchase elsewhere.
Posted on 3/3/15 at 9:11 am to hungryone
I had a 4 year residency. Bought a house my first year (2008) and when I finished (2012) I had to sell my house at a $25k loss.
This was in louisville, KY
This was in louisville, KY
This post was edited on 3/3/15 at 9:12 am
Posted on 3/3/15 at 9:14 am to hungryone
I live in Dallas. Where is the hospital you will be working from?As a young family, I would expect the White Rock and Lakewood area to be great if you are closer to the city. Plano / Richardson if you work farther north. Arlington if you work west. I never venture south of the city to know those neighborhoods.
I strongly suggest renting. You are not locked into Dallas for long enough to make buying worth it. Also, 150k is on the light side unless you live in an undesirable part of town. Dallas has terrific renting choices with tons of new properies. Happy to give my 0.02 if you are interested. I'm close to your age but no family.
I strongly suggest renting. You are not locked into Dallas for long enough to make buying worth it. Also, 150k is on the light side unless you live in an undesirable part of town. Dallas has terrific renting choices with tons of new properies. Happy to give my 0.02 if you are interested. I'm close to your age but no family.
Posted on 3/3/15 at 10:12 am to lynxcat
Rent because there is a good chance you won't stay in Dallas after finishing.
Posted on 3/3/15 at 1:48 pm to strikingoutsince87
My personal opinion is at that price point, it's not worth it. You will be either hella far out or in a not so great hood.
Does the 900/month include repaying your family?
But if you do decide to buy, check out BBVA Compass Bank. They have some pretty good programs for doctors who want to buy homes. I had a few clients go through them in Houston. I'm not 100 percent sure if they cover residents.
Does the 900/month include repaying your family?
But if you do decide to buy, check out BBVA Compass Bank. They have some pretty good programs for doctors who want to buy homes. I had a few clients go through them in Houston. I'm not 100 percent sure if they cover residents.
Posted on 3/3/15 at 6:45 pm to strikingoutsince87
I'd rent. With a 30 year loan, you're basically "throwing you money away" at interest and not principle anyway for the first three years. Not to mention cutting grass, maintenance, taxes (especially in TX with a higher real estate tax), homeowners insurance, and the possibility of significant expenses for a/c repair/replacement, appliances, etc.
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