Buying Houses for Residency

[alotofyarn]

For those of you who bought a house during residency, when did you buy? We're fortunate that we have a couple of extra months to plan, but I don't want to buy too early and have to pay rent and mortgage at the same time. But I don't want to wait too long either. If we didn't end up finding something and closing in time, we could stay with my parents for a little while, but they live 30-40 miles away, and that's not really ideal. Any advice?

[SoonerTexan]

Hmm...I'd be extra cautious about buying, simply because of the city you are moving to. The whole situation there still makes me nervous.

[ladymoreta]

If you can rent a house or apartment you don't hate, I would highly recommend not buying! You have all the unexpected repairs that are not always covered by your warranty, plus right at the end of residency money is very, very tight with all the interviewing, licensing, etc. We had to come up with thousands of dollars to cover repairs, improvements, and realtor fees (6% of selling costs, plus we had to pay part of the buyer closing costs) when we were simply flat broke, so we had to delay putting the house on the market until we could get a couple of paychecks under our belts. That meant leaving the house vacant, which meant a change to our homeowner policy if it didn't sell fast enough, and our realtor tried to drop in occasionally and make sure it was still showing-ready (no spiders, trash, etc.) We were lucky because our house went under contract within about a week, but it still took over a month after that to close. It was a huge headache. Don't do it unless you have to!

Just to share our numbers... We bought the house for $123,500 and sold it for $126,000 four years later. We had to bring $5,700 to closing. If you decide to buy, be prepared for that!

Okay, another edit, to actually answer your question! (oops!) We went house hunting in early April and closed in mid-May. We moved out of our apartment and into our house the first week of June. Your husband may have orientation in June, so you'll want to be there by the middle to end of the month.

[moonlight]

We found our house in late April and moved in late June. I wanted a house that needed as little repairs as possible. That's seemed to work for us thus far!

[Pollyanna]

Listen to ladyM. Unless your residency program is more than 5 years you may want to rent. We are still paying two mortgages and its not fun. You just have no idea what the future will bring with "the job" and training. Best to keep yourselves mobile and your money liquid. Homeownership is wonderful and a great investment but not necessarily during residency.

[MarissaNicole]

We bought but residency is seven years, I wouldn't buy unless your there for more than five years.

We looked in March and closed in mid-May, moved in at the end of May. Had the most of June to get settled...be prepared to possibly start before July 1st.

Wife to PGY3

[MrsK]

Generally speaking, if you are hoping to make a profit from a real estate purchase, the best advise is to buy and hold. Seven years minimum is what we (I'm a retired real estate atty) typically advise but the longer you can hold it the better. I'm not familiar with the current real estate market and I don't know your city but that advise may have changed in light of the recent real estate market crash and whether your city has recovered. Any change will be in favor of holding the property longer assuming that the real estate market will continue to improve. In SoFla, for instance, I bought a condo in 2003, just before the height of the real estate bubble. So, I didn't pay top dollar but I owned it when the market crashed and there were hundereds of foreclosures and short-sales in my neighborhood bringing down the property value. Now, 10 years later, I might be able to sell it for what I paid for it -- so I'd only get my equity back less closing costs. And that's with the recovery. A couple years ago, I would have lost my equity and probably had to bring cash to the closing. Thankfully, we've had nearly continuous tenants but that doesn't cover all the costs of the condo (insurance, association dues, repairs) and we've had to carry the costs through residency because I didn't want to sell at a loss.

[SuzySunshine]

We bought - were there for 7 years and walked away with about $10K - we have a LOT of friends who were there for 4-5 and ended up having to write checks to get rid of their house. Can you rent a house in your location?

With that said, we found our house in February, closed May 1st and made our first mortgage payment in late June. But we were buying from residents so we picked a time line that worked for all of us.

[alotofyarn]

Hmm...I'd be extra cautious about buying, simply because of the city you are moving to. The whole situation there still makes me nervous.

What do you mean? My parents have lived there for 20 years without any problems. At this point, we know which areas have flooded and which haven't, which is a bonus. And we'll of course have good insurance.

[oceanchild]

We took a week-ish house shopping trip in April and picked a place. We closed the last week of May and moved in that day. (We were moving across the country, so we showed up in town with all our stuff the day before closing.) DH started orientation stuff the last couple weeks of June.

We were in a 3-year residency and planning to stay for a 3-year fellowship. We knew buying a house was a gamble with the fellowship, but we didn't go into it with the idea that we were going to make money off it. We did end up staying for fellowship, and our house was really cheap. We may end up ahead by the time we move, but who knows. If we sold today, we would probably be able to list at right about what we paid. So, not ideal.

[alotofyarn]

Thanks all for the advice so far! A few things to help, I guess - we will be there for at least 5 years. Because my parents live nearby, they can help if we move before we end up selling, or if we decided to rent it out. We're not looking to make money off of it, we just don't want to come out of it completely upside down. The market actually never really took a hit, so I don't think that's going to be an issue. We've been renting for the last 10 years, including renting a house for the last almost 3 years. Going to an apartment isn't an option at this point (honestly, I don't think there are many nice apartments in the city), and we've had enough issues renting our current house (having to pay for most of our own repairs anyway) that we really think it will be worth our time and money to buy. My parents know how to fix most things or know who to hire at a good rate for other repairs. I'll also be working on top of my husband's residency, so that will help some with the financial situation during the whole process.

[GrayMatterWife]

If you can rent a house or apartment you don't hate, I would highly recommend not buying!

This. Unless you have a long residency (like we did...7 years) or really know what you are doing and are financially prepared, don't buy. And, this is from someone who bought and actually made money on the ultimate sale. We had to, because there was no other way to get sufficient space for a growing family within walking distance of the hospital. But I would not recommend it.

[peggyfromwastate]

We had 9 years (med school plus residency), bought before the crash, and sold to make a profit if about 20K. It was totally not worth it. I can't emphasize how much our neighborhood changed over those 9 years. Even in a "stable" environment you just never know. Home ownership is way different from renting. Closing and final inspection and the repairs we had to do at the end of residency to sell sucked. Really sucked royally. If you think you want to buy right before the attending job at the end of residency, that could be very tricky to manage. You will be cash poor from selling your house and moving after the whole interview process... So having an extra 50-100K in the bank for a good down payment on the post training job will be an astronomical task.



Cheers!

But if you do buy I would plan on lots of trips out and time for negotiating bc the market is thin. There just aren't a ton of nice houses out there.

[SuzySunshine]

Do you have a down payment? That would be my other tip - if you don't have the money to put at least 10% down it won't matter that you're both working, you still won't have any equity built up in 5 years. I worked for the first 4 years of residency but we still didn't have a ton of equity built up because we had a very small down payment.

[TulipsAndSunscreen]

We bought. We had a downpayment and got an ARM (7 years) that was insanely low (2.75%). It has us at a lower monthly payment than the rent for a similar place. We love our neighborhood and it's not going anywhere and is full of families (e.g. we didn't buy in an "up and coming" area hoping to make a huge profit). For us, we like owning our own home and not having to move because we're renting. We have a child and hope to have more in residency and owning something was important to us.

That being said, we lost a lot of money on our med school house based on net sales price at buying and selling. That being said, when we added up the rent we would have been "throwing away" for those 4 years and factored in our tax deduction on the interest, we didn't really lose that much money. When people say, "we lost money", they usually don't take into account what they would have spent on rent which is not at all tax deductible.