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Rent out my home while renting another?

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  • Rent out my home while renting another?

    I'm a newly graduated academic physician in an adult subspecialty, and I wanted to elicit feedback for my (likely crazy) idea. My spouse and I currently own a small home (with a yard, in a popular subdivision) in a SE city, and I am physician-scientist. Our current mortgage is a physician loan that is ~$1100 dollar a month mortgage, which we've owned for 3 years and have $70k equity. No other debts than my current student loans, which are less than $500 dollars a month in repayment. At the end of my current grant, I will have two years left of grant support (through summer 2023) basically that fund my position here. After that, we're not sure we're going to remain in our current location, though we would want to.

    We are having another child and would benefit from a larger home (especially when both of us work from home and we have another child in "virtual school"). Homes like the one we own rent for around ~ 1800-1900 dollars/month, with larger homes that we would be looking to rent going for around ~2300-2500. It's a popular area.

    Given that we are not convinced we would be staying much longer than 2.5-3 years, does it seem crazy to rent out our home at market value while also renting another, larger home to live in? Obviously there is the risk of a lease ending and not continuing, as well as the risk of being a landlord. Our total monthly housing cost would likely fall in this circumstance. I'm just not convinced it makes sense to buy another home, say next spring, if I only can guarantee 2 years. I just want to calibrate my thinking overall and see if it's a crazy idea.

    Any feedback?


  • #2
    Why not just sell it and rent a bigger place? Unless you want to be a landlord.

    If you are not planning on staying in the area, I wouldn't buy a new place.

    Overall I don't think it's a crazy idea if you are meeting the rest of your financial goals.

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    • #3
      It depends on how much you would 'benefit' with a bigger home. I'm sure most people say they would 'benefit' from a larger home. Do you need or want a larger home?

      Comment


      • #4
        Originally posted by Aequinamitas View Post
        No other debts than my current student loans, which are less than $500 dollars a month in repayment.
        Are your loans <$500 per month on a 25 year repayment schedule or are they <$500 per month if you pay them off in five years or less?

        Generally it's a bad idea to buy a house until you are at least 1.5 to 2 years into attendinghood. Ideally you should pay off all of your student loans (or fully fund a PSLF side payoff fund) prior to buying a house.

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        • #5
          What is the value of your home? If around $200k, rent it out. If $400k, sell it. $300k maybe sell, maybe rent.

          New house, definitely don't buy. As you say, good chance you'll leave shortly.

          Now here's another idea. Buy a lightly used small travel trailer or Class C motor home. Park it in your driveway. Make sure the wifi mesh reaches it. Second office, voilá. Spare bedroom, voilá. Cheaper than moving or renting a more expensive place. When you move in 2-3 years, take a cross country road trip and enjoy the journey.

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          • #6
            First of all you have to be sure you want to be a landlord then you have to more accurately calculate your costs. You need to include property taxes, insurance, turn costs, repairs and maintenance costs of the rental. Your likely cash flow may not be worth the hassle. With your short time frame I would vote for staying where you are until the future is more certain.

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            • #7
              Originally posted by Aequinamitas View Post
              I'm a newly graduated academic physician in an adult subspecialty, and I wanted to elicit feedback for my (likely crazy) idea. My spouse and I currently own a small home (with a yard, in a popular subdivision) in a SE city, and I am physician-scientist. Our current mortgage is a physician loan that is ~$1100 dollar a month mortgage, which we've owned for 3 years and have $70k equity. No other debts than my current student loans, which are less than $500 dollars a month in repayment. At the end of my current grant, I will have two years left of grant support (through summer 2023) basically that fund my position here. After that, we're not sure we're going to remain in our current location, though we would want to.

              We are having another child and would benefit from a larger home (especially when both of us work from home and we have another child in "virtual school"). Homes like the one we own rent for around ~ 1800-1900 dollars/month, with larger homes that we would be looking to rent going for around ~2300-2500. It's a popular area.

              Given that we are not convinced we would be staying much longer than 2.5-3 years, does it seem crazy to rent out our home at market value while also renting another, larger home to live in? Obviously there is the risk of a lease ending and not continuing, as well as the risk of being a landlord. Our total monthly housing cost would likely fall in this circumstance. I'm just not convinced it makes sense to buy another home, say next spring, if I only can guarantee 2 years. I just want to calibrate my thinking overall and see if it's a crazy idea.

              Any feedback?
              I bought in residency x 2 and turned both into rentals. If you stay inexpensive you can cash flow and a doctors salary will cover any vacancy easy.

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              • #8
                I'd stay put for a few years and make it work. Too many moving parts for such a short period of time.

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                • #9
                  If the real estate market is hot in your area like it is around here I would consider selling and rent whatever you want. I keep thinking it will eventually be time to pay the bill for all the covid19 expenditures and I am doubtful either the stock or real estate market will continue thriving. I'd make hay while the sun is shining.

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