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Should I buy a condo?

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  • Should I buy a condo?

    I am currently a PGY3 resident with 3 more years left in training. I am debating if I should buy a condo in the area that costs about $200k. The plan would be to either continue living in the condo once I'm an attending or rent it out. I do have enough money for a 20% down-payment and I would be able to afford the monthly payment of approximately $1800 (mortgage based on 30yr fixed 3% rate on a $160k loan, plus condo fee). I am currently paying around $1800/month anyways for rent. Is there anything I'm missing here? It seems obvious to me that buying the condo would be the financially wiser decision.

  • #2
    Your situation is not different than everyone else wanting to buy during residency. The general advice around here is not to buy in your shoes. It's possible you could make some money, but it's far from guaranteed.

    Your forgetting about transaction fees, maintenance, taxes, etc.

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    • #3
      how much is that condo fee? high taxes? the PI on 160k @3% for 30 is less than 800, not including property taxes. could those taxes go up? could the HOA fee go up?

      on the other hand, your rent could increase as well. There are many variables, but the wisdom on this forum is to not purchase in training. But don't take it from me, I only lost 20k on my training house that I owned for 8 years.

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      • #4
        Condo fee is $1000/month, hence why it would be $1800/month (similar to what I pay in rent). Not sure if condo fee can go up (probably can). Not sure about property taxes. It is a luxury condo in a waterfront property. It can easily be rented out for $2200/month as many of the other condos in the building are going that rate.

        I think I've just realized that renting is basically dumping away money every month. I understand why residents should rent but if I already know I'm staying for another 3 years and I know I want to be in the area as an attending, why not just buy? Even if I don't stay in this condo 3 years from now, I can just rent it out?

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        • #5
          Rent is the maximum.
          Loan payment is the minimum.
          A lot can go south with ownership. Think about this, why is it being sold rather than being rented?
          The current owner rationalized and reached a conclusion to sell with the related additional costs. The association has “power”. Special assessment is one, on top of the condo fee. Appreciation, costs and future rent are not risks a resident is typically in position to take on. Even with the downpayment covered.
          That condo association financial situation and agreement alone could make it a bad deal.

          Short answer: No.

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          • #6
            Holy ************************, do not do this. $1000 a month? Lol.

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            • #7
              If you do this, can you promise to come back in 3 years with an update?
              Why is your situation different than every other "buy a house in residency" post? You have 3 years left--> thats exactly the least amount of time every other new resident has. Time to favor buying vs renting is usually 7-8 yrs
              Buying an investment property to rent is entirely different than buying a place to live- this is where many screw up real estate.
              HOA condo fees will certainly go up.
              Congrats on tying yourself to the area --> hope your job post residency doesn't have a non compete, and its a good one, bc this will tie you to it.
              Your attending self will most certainly not be content living in your residency property even if you do stay in the area

              etc etc etc- Just no.

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              • #8
                You did not mention the rest of your debt situation, do you have an y student loans ?

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                • #9
                  rent isn't throwing money away. It's paying to put a roof over your head. What you're saying is basically the equivalent to you being on the street and taking your rent money and putting it in the toilet every month and flushing. Don't do this

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                  • #10
                    Originally posted by dgu334 View Post
                    Condo fee is $1000/month, hence why it would be $1800/month (similar to what I pay in rent). Not sure if condo fee can go up (probably can). Not sure about property taxes. It is a luxury condo in a waterfront property. It can easily be rented out for $2200/month as many of the other condos in the building are going that rate.

                    I think I've just realized that renting is basically dumping away money every month. I understand why residents should rent but if I already know I'm staying for another 3 years and I know I want to be in the area as an attending, why not just buy? Even if I don't stay in this condo 3 years from now, I can just rent it out?
                    "Luxury" costs more than $200k in my opinion.

                    You'll never get that $1000/month hoa fee back, and it will go up. That is where you will be dumping away money.

                    And even if you did decide to turn it into a rental in the future, are you going to be happy giving away 50% if your income to the hoa?

                    Wanting to stay in the area does not mean that you will stay in the area. Have you already signed a contract? A lot can change in the job market in 3 years.

                    I still vote for renting.

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                    • #11
                      How is a resident affording a waterfront condo anyway?

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                      • #12
                        Admirable you have saved enough to make a downpayment on a condo as a PGY3. What you need to consider are the opportunity costs of forgoing an investment in another vehicle (taxable account, for example). In my experience, rental properties in areas that residents/fellows inhabit tend to do ok. But that is such a broad generalization, I almost hate to even bring it up.

                        The bias (for good reason) in this forum is against buying in residency/fellowship but there are exceptions to the rule. Consider carefully - real estate is a lure for many physicians at the moment - I would almost call it a fad - and it is influencing many with free cash flow to park money there. Compared to a well-diversified long-term investment in a quality equity fund portfolio, rebalanced annually: risks are higher, complexity is higher, time involved is higher (i.e. far less passive), but long-term returns are typically lower. What’s not to like?
                        Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                        • #13
                          Well what are you waiting for? Obviously you should move ahead.

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                          • #14
                            After 3 years of payments of 64800 , you will have paid off 11,000 of your mortgage ? A little blip in the housing market when you want to get out may erase that over night, or you may get lucky and realize some appreciation. but this does not account for 12000 of transaction costs on the buy and then the sell , you could easily lose out on the purchase after paying higher payments for 3 years.

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                            • #15
                              So rent is throwing money away. What is the $1k HOA fee, real estate agent fees, mortgage interest, taxes and homeowners insurance?

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