Hey all. Wanted to get some advice on my situation. I'm an intern with (likely) 4.5 years of training ahead of me. Graduated last year with ~175K federal student loans at the typical 5.8%ish. In REPAYE now on the typical resident salary. Spouse and one child, another little one likely soon. Spouse took some time off but will be starting a new job in the next year at 100k. We are pretty frugal and are diligent in living like residents, saving, no CC debt, Roth, all that gold WCI stuff. Of note, PSLF is unlikely to be in my future.
Before medical school we bought a starter house where we were living at the time, call it location A. I decided on medicine and dragged us to another part of the country, location B, where I've attended both med school and now residency. We lived in that location A house for 2 years, loved it, and have been renting it out for several years now. Buying at that time was rather impulsive in hindsight, but fortunately for us our timing was perfect and it has clearly worked out for our benefit. Luckily we have family in the immediate area and travel there often, so tending to the issues that crop up here and there has thankfully been simple. Bought the house at 240k with 30k down, and it is now worth 500k according to online estimates (take that as you will). Have about 140k left on the mortgage. We are renting it out at essentially twice the monthly mortgage and we could probably raise the rent thanks to a great market, which gives us a nice little income boost as a student and resident. This helped us keep our loan total down (though it still seems astronomical to me). My residency is in a fantastic area in terms of cost-of-living so we are able to almost pay our current rent in location B with rental income from location A. We prrooooobbably will want to settle in location A if the job market is advantageous and honestly would love to move back in to our house, but that is not 100% and can obviously change with time.
So, the question at hand: is the smart move to sell the rental property (assuming it will sell) and pay off the huge loans immediately? This would allow a fresh start going forward free of debt with a decent chunk in my pocket, possibly for a down payment on a house post-residency if we want to go that route again.
Or should we ride out the significant monthly returns on investment with the rental income covering the mortgage itself and covering most of my current monthly rent? My spouse will have a pretty great salary very soon (at least compared to my resident salary), and in 4-5 years I'll be in a decently high paying specialty which will give me the latitude to pay off my loans, which will have grown by then, in the first few years as an attending.
I suppose I'm leaning toward standing pat because it has got me this far with this investment. But on the other hand I don't want to miss a big opportunity and perhaps I should cash in while I can.
Thanks in advance for your thoughts.
Before medical school we bought a starter house where we were living at the time, call it location A. I decided on medicine and dragged us to another part of the country, location B, where I've attended both med school and now residency. We lived in that location A house for 2 years, loved it, and have been renting it out for several years now. Buying at that time was rather impulsive in hindsight, but fortunately for us our timing was perfect and it has clearly worked out for our benefit. Luckily we have family in the immediate area and travel there often, so tending to the issues that crop up here and there has thankfully been simple. Bought the house at 240k with 30k down, and it is now worth 500k according to online estimates (take that as you will). Have about 140k left on the mortgage. We are renting it out at essentially twice the monthly mortgage and we could probably raise the rent thanks to a great market, which gives us a nice little income boost as a student and resident. This helped us keep our loan total down (though it still seems astronomical to me). My residency is in a fantastic area in terms of cost-of-living so we are able to almost pay our current rent in location B with rental income from location A. We prrooooobbably will want to settle in location A if the job market is advantageous and honestly would love to move back in to our house, but that is not 100% and can obviously change with time.
So, the question at hand: is the smart move to sell the rental property (assuming it will sell) and pay off the huge loans immediately? This would allow a fresh start going forward free of debt with a decent chunk in my pocket, possibly for a down payment on a house post-residency if we want to go that route again.
Or should we ride out the significant monthly returns on investment with the rental income covering the mortgage itself and covering most of my current monthly rent? My spouse will have a pretty great salary very soon (at least compared to my resident salary), and in 4-5 years I'll be in a decently high paying specialty which will give me the latitude to pay off my loans, which will have grown by then, in the first few years as an attending.
I suppose I'm leaning toward standing pat because it has got me this far with this investment. But on the other hand I don't want to miss a big opportunity and perhaps I should cash in while I can.
Thanks in advance for your thoughts.
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