Purchasing a place of residence during medical school?

[anxious_101]

What are current med students thoughts on buying a condo during med school rather than renting? How many have done this?

 

I am starting at U of T in August and currently live in North York with parents, but thinking of buying or renting a place downtown near the campus. Any suggestions? My parents would help me buy so the finances aren't that big a deal, but what about the stress of being a landlord? The state of the economy?

[justletmein]

Use the "search" function and you will find several threads on this very topic.

[bidiboom]

The more you own, the more you have things to care. During such a heavy education, I wouldnt prefer this and I would keep my mind available only for the things I give highest priority. But this is me.. I dont know you.

 

Another question: During the economic crisis, for a non-native, to buy a house was a reason to gain citizenship (thus to have more chance to have med education).. how is it now, is there anybody that has any idea about it?

[anxious_101]

Thanks for the responses guys.

 

@bidiboom: Perhaps the career center resource at your school could give you an answer to your question.

[hking03]

What are current med students thoughts on buying a condo during med school rather than renting? How many have done this?

 

I am starting at U of T in August and currently live in North York with parents, but thinking of buying or renting a place downtown near the campus. Any suggestions? My parents would help me buy so the finances aren't that big a deal, but what about the stress of being a landlord? The state of the economy?

 

Are you planning on living in what you own or renting out what you will own?

 

I bought a townhouse back in 2008... Owning isn't any different than renting when you live there. You may pay extra fees for strata and property taxes, but your money is slowly paying off the mortgage.

 

If you plan on renting the place out then it can be a little more work. You have an obligation to work with the tenant if issues come up, but you can also hire a manager to do that work for you... At a % of the rent you charge.

 

I can't comment on real estate in Ontario, but in bc our townhouse dipped 10% in 2008 and has climbed back to that value in the last two years.

 

Real estate should be thought of as a long term (10+ years) investment if you are buying to make money...

 

Anyways, I'm all for buying vs renting... But buying can bemore work because you are responsible for repairs, taxes, hydro, strata and everything else.

[anxious_101]

Are you planning on living in what you own or renting out what you will own?

 

I bought a townhouse back in 2008... Owning isn't any different than renting when you live there. You may pay extra fees for strata and property taxes, but your money is slowly paying off the mortgage.

 

If you plan on renting the place out then it can be a little more work. You have an obligation to work with the tenant if issues come up, but you can also hire a manager to do that work for you... At a % of the rent you charge.

 

I can't comment on real estate in Ontario, but in bc our townhouse dipped 10% in 2008 and has climbed back to that value in the last two years.

 

Real estate should be thought of as a long term (10+ years) investment if you are buying to make money...

 

Anyways, I'm all for buying vs renting... But buying can bemore work because you are responsible for repairs, taxes, hydro, strata and everything else.

 

Ya, I am planning on living at the place during medschool, and possibly residency if I stay in T.O.

 

I see you point about the stress of being a landlord and having to look after issues, should they arise. Real-estate prices in T.O. have continued to increase over the last several years - right through the recession in fact.

[NLengr]

The market is pretty overheated right now and there has been lots of talk of the housing bubble bursting. Even real estate companies are talking about it (Royal Lepage commented on it a few days ago on cbc's website). They're saying that the overvalue is as much as 25%.

 

Something to think about.

[Satsuma]

Also consider that you will not know where you will be in residency - do you want the added stress of trying to sell your place in your last year? You'll get your carms results in March and then will be expected to be wherever you match to in July.

 

It is generally said, that to break even you need to own your home for 5 years. But that is just a rough guide.

 

Condos have pros and cons regarding things such as resale etc.

 

Look carefully into how much your condo fees will be.

[lazyboy]

Everyone is saying NO to the idea of buying a house/condo when ur in medical school.

 

I said YES. If you can afford the mortgage. If you can even afford it when interest rate goes up by 1%, then by all means go for it

 

1/ Nobody has crystal ball; yes, the market looks bad, but that is exactly the time to buy. Buy low sell HIGH. My take is if the so called "expert" ask you to buy, you should sell and vice versa.

 

2/ Interest rate is low. I don't know whether anybody knows this, the lower the interest rate, the more goes to principal. Let's say it is a 4 years medical school, with 3% interest (you can get even lower rate if you go for variable), more than half of your payment will go to principal. Let's assume you mortgage payment is $1000 a month, in 4 years, you pay $48,000, more than $24,000 will go to your principal. Remember, as you pay down your mortgage, more money will go to

principal. If you rent it, it is money you never see. Go to this site to see exactly how much mortgage you're paying down in 4 years.

 

http://www.canequity.com/mortgage-calculator/

 

 

3/ You don't have to worry about increase in rent. Of course, you have to pay for condo feel, property tax etc. However, you are also establish your credit, have asset.

 

4/ after 4 years, if you stay in the same city, then life is perfect...you have a place to live without paying rent. If not, you put the condo/house up for sale, let the real estate salesman worry about it, and you move on.

 

5/ you're making money after 4 years, so life should be a bit better.

[mavrik13]

From my own research on the topic, I've learned that unless you either:

 

1) you plan on staying in that residence for >5 years (i.e. you have a family, or plan on doing whatever it takes to stay in one location);

2) the property value drastically increases; or

3) you have a very large down payment, or a spouse who is going to be paying most of the mortgage

 

you aren't likely to come out ahead in buying vs. renting. In addition, you are taking on a huge financial liability in a house/condo (what if something happens to the condo building and the reserve isn't there? what if when you are trying to sell the house something goes wrong with the inspection?). This is compounded by you paying off the mortgage through borrowed money. You will be paying much more per month owning vs. renting, and accumulating interest on this extra debt.

 

Housing corrections have happened as recent as 20 years ago, and while no one knows for sure what will happen in the next 5 years, I don't care to risk my money on buying a place while in medical school.

[anxious_101]

Insightful posts guys. Valid pros and cons to both options. Among the various people I have spoke to about this, it's almost 50/50 in terms of recommendation for buy or rent. :confused:

[bpatient]

Basically it comes down to when you finish and sell the place that you make more than the cost of paying the mortgage, the real estate agent, and taxes then by renting. If you can come out ahead by a great sum then it might be worth the investment, otherwise its not worth it if its just gonna be the same amount as rent.

[bidiboom]

how about a caravan?.. for a single guy that wont need a big house, and a med student that cant see where to have the residency after graduation, it looks practical..

 

@anxious: thank you for suggestion

[rmorelan]

how about a caravan?.. for a single guy that wont need a big house, and a med student that cant see where to have the residency after graduation, it looks practical..

 

@anxious: thank you for suggestion

 

can you park one of those anywhere near the campus?

[lazyboy]

One more thing, like the OP has noted. The condo price in downtown TO appreciates quite a bit for the last few years. it is not unthinkable that it may goes up by $50K or more during your stay for the next 4 years. As a matter of fact, if you buy a condo near downtown YVR, YYZ or even YYC, it should appreciate in the next 4 years, esp if you think the US$ will depreciate. It is almost like someone pays for your medical education.

[aaronjw]

Why do you people care whether it appreciates while in school? Yes it would be great if it did but the important aspect here is that by buying something (if you can manage it) you are paying yourself instead of someone else.

[JustMe]

Many people think that if you buy a place, you're somehow paying most of your mortgage to yourself rather than a landlord and quickly building equity. While it's true that you're slowly chipping away at your principle, even with interest rates this low A LOT of your mortgage payment evaporates into thin air as interest. Not to mention property taxes and condo fees, which are often ridiculously high in Toronto.

 

There are also one-time costs that must be regained before you actually make money on a place. Land transfer taxes in Toronto are TWICE those everywhere else in Ontario. There are also lawyers fees, home inspections, maintenance... Plus when you do sell the place, 5% will go to the realtors commission.

 

I'm not saying don't buy... It's hard to break into the housing market no matter when you do it. If you're able to RESPONSIBLY do so now then go for it! There's nothing better than taking pride in a home that's yours! Just know that it's not as simple as "when the market goes up I make money" right off the bat.

 

Congrats on starting med school in fall! You'll have a blast!

[bidiboom]

can you park one of those anywhere near the campus?

 

IMHO if you are such a great cook like me, then you may park even right before the window of dean of course you will have to let him too taste your stuff..

 

Seriously, before a decision that makes me stabilize at a specific physical position for a long term, I wouldnt buy a house..

 

eventually I will persuade anxietey101 to rent my house.. hahahaha..

[NLengr]

Having just bought a house, I'm gonna say that the up front costs (taxes, law stuff, inspection, repairs/upgrades prior to moving) are enough to kill you.

 

If you look around at a whole bunch of buy vs. sell analysis, you'll see that generally you need to own for 5 or more years to make it more economically sensible.

[rmorelan]

Why do you people care whether it appreciates while in school? Yes it would be great if it did but the important aspect here is that by buying something (if you can manage it) you are paying yourself instead of someone else.

 

Yeah - because in the first 5 years of paying off a mortgage you basically pay nothing really towards the principle. The math is actually kind of scary if you look at it (side note, 15 year, bi-monthly mortgages save a fortune in the long run). Ok I was scared the first time I saw it - look it up on google and you will see what I mean.

 

I guess as well how would you be paying yourself anyway - most people would be be using a LOC which charges interest to pay off a mortgage which charges pretty much the same interest. That isn't really going to get you ahead.

 

The property has to appreciate for this to make any sense - the high probability of having to sell in 4 years with all those fees, plus the extra fees in the beginning. A bit of a cost there.

[aaronjw]

Yeah - because in the first 5 years of paying off a mortgage you basically pay nothing really towards the principle. The math is actually kind of scary if you look at it (side note, 15 year, bi-monthly mortgages save a fortune in the long run). Ok I was scared the first time I saw it - look it up on google and you will see what I mean.

 

I guess as well how would you be paying yourself anyway - most people would be be using a LOC which charges interest to pay off a mortgage which charges pretty much the same interest. That isn't really going to get you ahead.

 

The property has to appreciate for this to make any sense - the high probability of having to sell in 4 years with all those fees, plus the extra fees in the beginning. A bit of a cost there.

 

The point is you're putting into your own pocket instead of a landlord's pocket. Let's say monthly mortgage was $1000*12months*4years. That's $48000 that you'd have to pay anyway - to a landlord. At least this way you put that money into yourself and when you're done school and want to move or whatever, you have SOMETHING to sell instead of just a hole of $48K in your bank account/LOC.

[rmorelan]

The point is you're putting into your own pocket instead of a landlord's pocket. Let's say monthly mortgage was $1000*12months*4years. That's $48000 that you'd have to pay anyway - to a landlord. At least this way you put that money into yourself and when you're done school and want to move or whatever, you have SOMETHING to sell instead of just a hole of $48K in your bank account/LOC.

 

But almost all of that 48000 would just be paying off the interest on your mortgage or increasing the amount you owe. You don't get that money - this is kind of my point actually. When you buy a house on credit you are not paying yourself, you are paying the bank for the interest on the mortage/LOC etc you used to buy the house.

 

It is only after many years of paying almost completely interest off on your mortgage do you actually start to really have an impact on the principle on your loan.

 

This is just the first example I could find etc, but here:

 

http://michaelbluejay.com/house/interest.html

 

take a look at the principle graph

[JustMe]

The point is you're putting into your own pocket instead of a landlord's pocket. Let's say monthly mortgage was $1000*12months*4years. That's $48000 that you'd have to pay anyway - to a landlord. At least this way you put that money into yourself and when you're done school and want to move or whatever, you have SOMETHING to sell instead of just a hole of $48K in your bank account/LOC.

 

For the first 5+ years you're putting most of that money into the bank's pocket, not your own. Plus, you'd be amazed at how little mortgage $1000/mo gets you. Furthermore... most banks nowadays won't approve you for a mortgage if you'll be paying the monthly payments with credit.

 

I really isn't just putting money into your own pocket.

[moo]

I just bought a townhome in Vancouver and I can't imagine having done that as a student. First you need a down payment of at least 20%. I wouldn't dream of buying with only 5% down (you pay more for insurance, etc.). Thus, for a 300K condo in Vancouver, you'd need at least 60K. Second, I'd rather spend that 60K (if I had it) toward tuition. Third, you never know where you will be in 4 years time. If you decide to do something super competitive be prepared to move somewhere else. And nobody knows how the real estate market will look like in four years. For me right now, I know I will be in Vancouver long term so a townhouse is a long term investment right now, and I know that in 5 years time, when I will have paid off the majority of my home, I can just remortgage it to move up to a bigger house in a better neighborhood.

 

Of course I'm assuming that we're all poor students who just graduated from undergrad. If you have money by way of parents or previous jobs, then all the more power to you.

 

Owning a house/townhouse/condo is a big investment. Don't take it lightly. Sure, you're throwing money down the drain when you're renting. But when I did FM residency in Alberta, everyone was telling me to buy a house at the time because the market was hot. Well if I did I would've taken a huge loss on the place because two years later when I had to move back to Vancouver, the market tanked, much moreso than just by renting.

[HBP]

If you have help (i.e. parents can put down a large downpayment or can pay the mortgage without using other means of credit), buying is definitely a great option. You'll build equity, your house will hopefully appreciate, and you can live almost rent free (hopefully equity + appreciation = mortgage payments after 4 years).

 

If not, no point. You can't do this by yourself with no income. Just rent for 4 years.