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Buy cheap house(350k) or rent?

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  • #16
    You’ll be ok with the 350k home. It’s not the “right” answer, considering the lack of clear ties to the area you’re moving to, but with your income it won’t have a big effect on your finances and if it helps satisfy enough of the FOMO to prevent you from making the 1M mistake, then it’s worth it.

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    • #17
      Originally posted by Fugue View Post
      You’ll be ok with the 350k home. It’s not the “right” answer, considering the lack of clear ties to the area you’re moving to, but with your income it won’t have a big effect on your finances and if it helps satisfy enough of the FOMO to prevent you from making the 1M mistake, then it’s worth it.
      Thanks. I know people are saying to rent and I understand the reasoning but there are no good options.

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      • #18
        Some times it is important to kept the right perspective in life, 99% of the world would be very happy to live in a cheap 350k house.

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        • #19
          Originally posted by ERRES2288 View Post

          Thanks. I know people are saying to rent and I understand the reasoning but there are no good options.
          Think about this statement. Purely from a financial standpoint, which is the least financial damages,
          A, B, or C?
          When faced with poor choices financially, avoiding financial damage is usually the best choice. I guess my point is your choices were limited by previous decisions. None is a money maker, which option is the least damage?
          That is a pretty easy choice.

          Fact: You just aren’t willing to live like a resident for 5 years. It will end up costing you from a financial standpoint. Just because you can, doesn’t mean you should.
          Full disclosure: I doubt housing wasn’t a factor before. Comp, job, location. Never heard a peep about your previous plan. Gotta live someplace. The ironic thing is “a step down “ from where you are currently at is a deflection, a complete non-factor . Absolutely garbage reason to consider $1m. Geographic arbitrage requires sacrificing something, in this case you need patience until you find a rental. Keep looking. Find a rental.
          That was your plan.

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          • #20
            Originally posted by Tim View Post

            Think about this statement. Purely from a financial standpoint, which is the least financial damages,
            A, B, or C?
            When faced with poor choices financially, avoiding financial damage is usually the best choice. I guess my point is your choices were limited by previous decisions. None is a money maker, which option is the least damage?
            That is a pretty easy choice.

            Fact: You just aren’t willing to live like a resident for 5 years. It will end up costing you from a financial standpoint. Just because you can, doesn’t mean you should.
            Full disclosure: I doubt housing wasn’t a factor before. Comp, job, location. Never heard a peep about your previous plan. Gotta live someplace. The ironic thing is “a step down “ from where you are currently at is a deflection, a complete non-factor . Absolutely garbage reason to consider $1m. Geographic arbitrage requires sacrificing something, in this case you need patience until you find a rental. Keep looking. Find a rental.
            That was your plan.
            Ok agree the 1m house is stupid and not going to do it. But I don’t think renting at 2k/month vs buying the 350k home is for sure a better financial decision. I say our chances of staying at these jobs for at least 5years is >90%. If the market even stays flat wouldn’t this be the better financial decision?

            You’re right we are not willing to live like a resident for 5 years. But buying a 350k home on 700k income(probably 1m after 2 years as no one has not made partner) doesn’t seem like living that high on the hog.

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            • #21
              Originally posted by ERRES2288 View Post

              Thanks. I know people are saying to rent and I understand the reasoning but there are no good options.
              Disagree with the statement that there “are no good options.” Ideally, rent until you make partner, wife will then be a couple years closer to PSLF, and you’ve chipped away at your private loans. If you need to scratch the buying itch, the 350k home ought to do just fine and won’t sink you (while still allowing for progress on the loans and investment additions/appreciation). Besides, large $1m homes are usually money sinks with upkeep, taxes, et cetera.

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              • #22
                Originally posted by ERRES2288 View Post

                Ok agree the 1m house is stupid and not going to do it. But I don’t think renting at 2k/month vs buying the 350k home is for sure a better financial decision. I say our chances of staying at these jobs for at least 5years is >90%. If the market even stays flat wouldn’t this be the better financial decision?

                You’re right we are not willing to live like a resident for 5 years. But buying a 350k home on 700k income(probably 1m after 2 years as no one has not made partner) doesn’t seem like living that high on the hog.
                “High on the hog”, no, not based on the data you presented. But a year or two delay only improves your financial condition (debt-wise) from my understanding of where you and your wife are financially.

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                • #23
                  didn't PhysicianOnFIRE do a post on his experience building an expensive home in a rural area?

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                  • #24
                    Originally posted by ERRES2288 View Post

                    Ok agree the 1m house is stupid and not going to do it. But I don’t think renting at 2k/month vs buying the 350k home is for sure a better financial decision. I say our chances of staying at these jobs for at least 5years is >90%. If the market even stays flat wouldn’t this be the better financial decision?

                    You’re right we are not willing to live like a resident for 5 years. But buying a 350k home on 700k income(probably 1m after 2 years as no one has not made partner) doesn’t seem like living that high on the hog.
                    I did not say any alternative was stupid. Seriously, simply pointing out the math. You seem to be currently "broke", ( $350k) Net Worth.
                    That $450k included retirement. It is what it is. The reason you are confident is the 700k FUTURE income. Probably signing up for 10% friction costs on selling the "cheap house". The numbers say that puts you in the hole $385k. The facts say you are broke. Are you changing jobs or just getting bit by the house bug? Rhetorical question, no need to respond.
                    If nothing else, the pandemic was simply and example that significant events can happen that impact future income. You might be one disability claim or one car accident or one bad outcome that causes a liquidity event. That is not my crystal ball (really cloudy). The future looks bright. But that does not make you different. It can work out well. Just the numbers. No offense intended.

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                    • #25
                      Originally posted by braindoc View Post
                      didn't PhysicianOnFIRE do a post on his experience building an expensive home in a rural area?
                      Yes, he's written about it several times. Here's one of those posts: https://www.physicianonfire.com/doctor-loan/

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                      • #26
                        Originally posted by ERRES2288 View Post

                        Ok agree the 1m house is stupid and not going to do it. But I don’t think renting at 2k/month vs buying the 350k home is for sure a better financial decision. I say our chances of staying at these jobs for at least 5years is >90%. If the market even stays flat wouldn’t this be the better financial decision?

                        You’re right we are not willing to live like a resident for 5 years. But buying a 350k home on 700k income(probably 1m after 2 years as no one has not made partner) doesn’t seem like living that high on the hog.
                        Go ahead and get the house for 350k. Rural areas can have awful rental markets. You and your spouse have a much higher chance of disliking your new job if you are unhappy with your living situation.

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                        • #27
                          Remember that statistically speaking, there is a 50% chance for each of you that you will change jobs. So combined, there is a 75% chance that at least one of you will change jobs. Owning a home is a huge negative when you need flexibility to move for the optimal job switch. If these physician new job statistics don’t apply to you and your spouse, then go ahead and buy. In your shoes, however, I would likely rent a suboptimal house for 12 months, balancing the pros and cons of a nicer home vs greater flexibility.

                          In a year, you will know what you don’t currently know, much of the true, lived experience of the pros and cons of the jobs you have chosen. We waited a year after completing residency, by then we knew better where to buy the optimal house. Our 100k down payment, years of mortgage payments, and one trade up after 2 decades has left us with 3 million in home equity. YMMV

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                          • #28
                            You guys have broken me down . Going to look at a suboptimal rental for 1700/m along with the 350k homes. We shall see

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                            • #29
                              Originally posted by ERRES2288 View Post
                              You guys have broken me down . Going to look at a suboptimal rental for 1700/m along with the 350k homes. We shall see
                              No, no, no! Purely behavioral financial comments.
                              Your choice solely to optimize your financial options. No intent to sub optimize anything. Only to optimize results. Build you up, not any breakdown.

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                              • #30
                                In rural places renting can be super hard, we tried and tried, but ended up buying last minute (literally 2wks before driving). Do regret not getting a tiny bit bigger place even if temporary.

                                350k is cheap for your incomes and it will make it easier and more enjoyable, just make sure its in the easy to sell price range, etc...for the area.

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