Rent vs. Buy

[Bittersweet]

Now that we know where we are going … DH and I need to decide whether we are going to rent or buy in Denver. On the buy side: we have enough to put at least 20% down, it’s a buyer’s market and we have two large dogs that limit our rental opportunities. On the rent side: DH’s residency is only three years and he’s planning on doing a three/four year fellowship which may require a move after residency. Also, the money we’d use for a down payment could be added to our savings and/or used to pay off student loan debt.

Neither of us wants to be house poor. What do you think, rent or buy the cheapest house we could get away with in desirable location/neighborhood?

[oceanchild]

Well, for whatever it's worth, we're planning to buy. Although we'll see what actually ends up happening. Mostly this is because DH really, really wants to own a house, but I also think (hope) it'll end up making sense for us.

His program is 3 years, and he wants to do a 3 year fellowship afterward. Obviously, I don't know for sure he'll do the fellowship in the same spot, but we'll have the option of being in the same place for 6 years. It seems like the market should recover in 6 years (and hopefully in 3!).

Denver is pretty affordable right now, and we're looking to live in places that we think will be up and coming (if for no other reason than the new hospital complex is nearby), so that should help. And the tax credit is a nice bonus.

We have enough saved for 20% down but will probably end up using less than that full amount.

So that's us, the total novices at this. We may be off base, but I'm sure someone here will tell me if we are.

(Also, talk to Nellie if you haven't already. She knows her way around Denver!)

[Bittersweet]

Julia, that helps. If nothing else, it's nice to know someone going through the same transition. Just as forewarning, I may have to bounce a couple ideas off of you via PM.

[Deebs]

The financial planners we've talked to (I've recently heard Suzy Orman say this, too) are now saying, that while it used to be around the three year mark of homeownership that it made sense to buy not rent, that year number is now a bare-minimum or 4-5 years. Unless you are guaranteed to stay where you are going for 4-5 years ( or the ability to hold onto that mortgage without using the property as your residence), I wouldn't buy. I'm just going off of what we've been advised to do, but it's really scary in the real estate market and hard to know when we'll really see a turn around.

[houseelf]

My advice would be to ONLY buy with a keen eye towards resale value. This may mean purchasing the house in the better school district with amenities that more people desire as opposed to something that makes your heart go pitter pat, e.g., a downtown loft condo. I would convey your desire for resale-ability (made up word?) several times and specifically describe your circumstances and time frames. Realtors should steer you away from things like busy streets, single bathroom houses, changing demographic neighborhoods, etcetera.

I'm not in the real estate business, but in my experience it seems like affordable houses in good school districts always weather downturns a bit better. Even with today's crap market, moderate priced homes in the excellent rated school districts seem to fare alright. This is especially true because many individuals can no longer afford private school tuition and are looking for good alternatives and/or people are seeking property values that have a bit of a hedge against wild economic swings.

It is a fantastic time to buy and you could break even in a three year time period. Still, if you can't resell in three years, it could make fellowship financially untenable.

Kelly

[SuzySunshine]

If Denver traffic is still as bad as it was when I lived there several years ago I wouldn't consider Englewood - that is quite a trek from the hospitals.

I've said many times before -- I have PTSD from our home selling experience at the end of training. Even before the market downturn, I'd always heard 3 to 5 years, especially to recoup the closing costs. You're looking at a move for fellowship -- not THE job (where carrying two mortgages could be feasible). I wouldn't do it.

If you do, Kelly's advice is spot-on. But I still think it's really risky. ESPECIALLY if the fellowship you're considering only goes through the match.

[alison]

It is a fantastic time to buy and you could break even in a three year time period. Still, if you can't resell in three years, it could make fellowship financially untenable.

Kelly

I agree with Kelly and Jenn on this one.

We considered buying in Chicago, with the idea that we'd either sell or rent out our place once 4 years of training were over. At that time, we didn't think dh would do a fellowship. I'm SO glad we didn't buy a place here, because we're sick of this place and I'm sure we wouldn't be able to afford to leave.

[DCJenn]

Two Words:

DC House.

and that's in one of the markets that's actually still moving! Its about to get yanked off the market again and I'm going to post on CraigsList and I already have it on SDN.

I'm with JennP- I'm pretty sure that I have PTSD from the whole thing and I can tell you that my checking account sure does.

Jenn

[HouseofWool]

This is our dilemma as well. DH will be spending 4 years in residency with the possibility of doing a fellowship in the same location as well. I am so over renting that buying is all I want to do.

The first question I plan on asking the realtors is how the local market has fared.

[Vishenka69]

I can totally understand about being over renting, but I would do some research on the Denver RE market and find a trustworthy realtor. When ours showed us around before we moved, she said not to buy right away and to rent for a year. She was right, the market totally tanked in that time. Be careful and don't rush into anything.

[oceanchild]

I'm going to start contacting real estate agents today, I hope.

(Nellie? Paging Nellie...)

It's clearly a gamble. I grew up in Nevada, and I hate gambling. But like I said, this is important to my husband, so I'm willing to see what we can do.

Nellie is out of town until the weekend.

[oceanchild]

Good to know, thanks.