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  • What would you do?

    I'm a 31yo graduating residency and entering a 3y fellowship July 1 in the SE.

    Married.
    No kids.
    No debt.

    My income: $62,000/year as a fellow, hope to have more moonlighting maybe 2nd or 3rd year
    Her income: $180,000/year, will grow to $230,000 in 1-2 months (consultant, works from home)

    Combined retirement accounts: $80,000 total
    Savings: $40k E fund
    Checking: $20k
    Additional Crummey trust fund from parents: $550,000 with the intention to be used for education/house down payment

    We're moving to a place neither of us have lived before and do not have any family ties. I know many will stop reading there and recommend renting.

    Please, please consider the following: we are incredibly, incredibly tired of renting. We've rented since we were 18. We've had horrible experiences with landlords. Which, imo, can be just as stressful as dealing with homeowner issues if things aren't getting done. We're tired of the lack of autonomy/control over a very important part of life: home. I know it's very easy for you all to say "rent, you idiot", but what, really, is the risk of buying a $500,000 home with a $100,000 down payment? Okay, worst case scenario, the home depreciates to $450,000 or even $400,000 in 3 years, and we have to leave town. A $100,000 hit is not the absolute end of the world, doomsday scenario for me. Again, this is our view. From a purely financial perspective, I get that there is a higher financial risk in buying, but there are also non-financial (landlord burnout, lack of autonomy) things that I think matter and aren't discussed in this scenario very often on this site. Thoughts?

  • #2
    You have to take in closing costs, upkeep, taxes etc into consideration vs rent expenses for the 3 years you will be there.

    If you can afford it, go for it. Since you state renting is not for you.

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    • #3
      3 years and it doesn’t sound like you will likely stay there. closing costs, risk of value loss, and risk of not being able to sell it in a timely manner would never be worth the emotional upside for me, and i was a renter for much longer. don’t let recent price appreciation and the trust fund cloud your judgment.
      “. . . And the LORD spake, saying “First shalt thou take out the Holy 401k. Then shalt thou save to 20%, no more, no less. 20% shall be the number thou shalt save, and the number of the saving shall be 20%. 25% shalt thou not save, neither save thou 15%, excepting that thou then proceed to 20%. 30% is right out . . .””

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      • #4
        Rent

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        • #5
          What would I do...? Rent.

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          • #6
            i'm interested in your assessment that losing 100k wouldn't be that big of a deal. It doesn't look like you have debt, or at least you don't list it. If that is the case, you will accumulate a lot of money over the years. Maybe 100k won't be that big of a deal. but the wisest move is to not buy a house for a 3 year time frame.

            with your cash flow, I would rent the nicest house I could find. That's what we did in my fellowship year. it was in a very nice neighborhood. It felt like we belonged and like we owned the joint.

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            • #7
              As others have posted, the wise financial choice for 95% of people in your situation would be to rent. Yes, your wife has a healthy income and in the long run, your financial plan could take the hit related to a potential loss in value, as well as transactional costs, housing upkeep, appliance replacements, repairs, etc. What if the house doesn't sell for 6-12 months after you finish fellowship? Are you going to buy a house right after finishing fellowship, or are you going to rent as an attending? If you can't stand renting now, how will you tolerate renting 3 years from now? Whatever you do, don't have 2 mortgages! So, you better be mentally prepared to rent 3 years from now.

              That being said, I can imagine some unusual situations where you and your wife are wannabe house flippers. If you guys are super handy and have a passion for home renovation, you could buy a run-down fixer upper and make it a 3-year project. Depends on your mindset, talents, and time available (not much as a fellow). Once, I had a surgical fellow who was super efficient at work. He converted regular ICE cars into bio-diesel cars. I knew of another fellow who got his pilots license, so who knows.

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              • #8
                Rent.
                And rent a luxury apartment that’s owned from corporate company. You won’t have much problems with crappy landlords if that’s one of your concerns.

                Owning a house gives you less autonomy and control.

                with that said, go ahead a purchase. It’ll be an expensive lesson.
                but the lesson is free by the advice on here.

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                • #9
                  We don’t know how bad inflation is going to be. We don’t know how much interest rates are going to rise. If… inflation gets out of control and interest rates get very high, there could be a significant drop off in home prices.

                  In your shoes I would work very hard to find a great house and a great landlord to rent from. They are out there. I waited until I was settled in my marriage and settled in my attending job before buying a house. Our primary home purchase added a lot to our net worth because we bought well, we stayed in the house for decades, and inflation did its thing on an asset that was leveraged with 20% down.

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                  • #10
                    Recognize you will have 30k+ in closing costs when you combine buying and selling a 500k house.
                    Then think worst case scenario either you cant sell home and you have to cary mortgage from another state while trying to buy your "forever" home or you take a huge loss say 100K+ on a sale.

                    If 130k loss and or having a double mortgage is more agreeable than renting, then go for it.


                    If I were in your shoes and very insistent on not renting I would focus on a starter home or reasonable single family home and be very focused on price and its potential as an investment property. Then in 3 years if the market is low and it makes sense you can rent it out and higher property manager until you decide to sell it. I agree with your trust fund, family salary, and lack of debt you are in a better position to buy. I would have no worries about lowering my budget and house expectations and buying in your situation.

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                    • #11
                      Rent... For 6-12 months. Not long. Just to get basic "oh crap we actually hate it here" insurance. Then go house hunting.
                      $1 saved = >$1 earned. ✓

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                      • #12
                        Weird there have been multiple bad experiences with landlords. Is this common? When I was younger I rented from a variety from individuals, large and smaller companies and can’t recall any bad experiences even with one apartment that was old and required frequent repairs. I understood it was old but they repaired things quickly. As a small landlord myself I’m very attentive to my tenants needs.

                        In any event OP if you want to buy which I don’t recommend during a hot sellers market and are willing to chance a financial hit, have at it. These things definitely work out well sometimes. Please keep us posted and enjoy your first home.

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                        • #13
                          Originally posted by IordrDDimer View Post
                          Please, please consider the following: we are incredibly, incredibly tired of renting. We've rented since we were 18. We've had horrible experiences with landlords. Which, imo, can be just as stressful as dealing with homeowner issues if things aren't getting done. We're tired of the lack of autonomy/control over a very important part of life: home. I know it's very easy for you all to say "rent, you idiot", but what, really, is the risk of buying a $500,000 home with a $100,000 down payment? Okay, worst case scenario, the home depreciates to $450,000 or even $400,000 in 3 years, and we have to leave town. A $100,000 hit is not the absolute end of the world, doomsday scenario for me. Again, this is our view. From a purely financial perspective, I get that there is a higher financial risk in buying, but there are also non-financial (landlord burnout, lack of autonomy) things that I think matter and aren't discussed in this scenario very often on this site. Thoughts?
                          Please consider the following: you may say that you've had bad landlords in the past but just wait until YOU'RE the one that has to deal with the plumbers, HVACers, electricians, roofers, contractors, etc. There are problem people in all walks of life.

                          You know what the right answer is.

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                          • #14
                            Originally posted by StateOfMyHead View Post
                            Weird there have been multiple bad experiences with landlords. Is this common? When I was younger I rented from a variety from individuals, large and smaller companies and can’t recall any bad experiences even with one apartment that was old and required frequent repairs. I understood it was old but they repaired things quickly. As a small landlord myself I’m very attentive to my tenants needs.
                            I've rented apartments and houses and I've never had any issues with landlords. We also take care of things and would catch any issue quickly plus I'd just take care of minor issues myself.

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                            • #15
                              How about looking at properties that are for rent AND for sale and see what you come up with.
                              The real estate market across the country seems to have very low inventory-there is just nothing out there.
                              maybe just finding a nice place whether it is a rental or a purchase would be a win in This situation.
                              I understand the frustration that comes with being in your 30’s, married with a decent salary and a promising future and all your friends and family are living their best life and you are looking at crappy properties to rent.

                              you want to start living too.

                              As long as you go in with eyes wide open and realize there is a chance of losing money (transactional costs, maintenance, decreased value, etc) and accept that risk, and given your reasonable financial situation, buying a house isn’t a terrible decision.

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