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Advice needed regarding home purchase vs renting

Home Real Estate Investing Advice needed regarding home purchase vs renting

  •  doc1978 
    Participant
    Status: Physician
    Posts: 23
    Joined: 07/27/2018
    WCICon18

    I have been working as a part-time physician at a small town in NY state as my wife is finishing her fellowship in another area. She will be joining the same practice in July 2019. We have 2 kids with one started middle school. It is tough to find good rentals or new houses to buy. Also, the houses are expensive due to a lot of tourism in the summer months. The typical rent for a 3-4 bedroom home is $2000-2500 per month. Newer similar sized home in the town costs app $400-500K to buy.

    I have been working there for almost 2 years and I like the job. But since it is a small town, I am not sure about my long term plans. I am almost sure to stay here for about 3-4 years and then see how my family likes it. I like to have my own home due to bad experience with the prior landlord. But I am not sure if it makes sense financially. I am looking for advice if I should buy or rent. I also want to get opinions about buying it and then renting after 3-4 years, in case I want to move out. I don’t want to be a landlord, but most of the tenants are likely to be new physicians who come to work in that year for a few years at the start of the career. We are also thinking of FIRE in 4-5 years and then see if we get a part-time job at the same place a few months a year. In that case, we can use the house during those months.

    I’ll really appreciate any help.

    #180179 Reply
    CordMcNally CordMcNally 
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    Status: Physician
    Posts: 1192
    Joined: 01/03/2017

    I would rent in your situation. I also wouldn’t buy the house with the intention of renting it out since you said yourself that you don’t want to be a landlord. If you bought and ended up FIREing and only lived there a few months out of the year, what is your plan for the other months? You won’t be able to get a renter and I’m guessing the area you describe won’t support you being able to list it on VRBO. Rent until you know what your long term plans are.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #180181 Reply
     doc1978 
    Participant
    Status: Physician
    Posts: 23
    Joined: 07/27/2018

    Thanks for the reply. If I ended up FIREing and get a part-time job, we can try to rent it to the locum physicians. I have seen that the hospital is always looking for a place for the locum physicians. There are many houses in the town which are strictly for rent during the winter months as they earn more than enough during the summer tourism time on weekly rentals.

    The issue is that if everything goes acc to the plan and I ended up doing a part-time job a few months in the year, it is very tough to find a rental for a few months. So I am very undecided.

    #180186 Reply
    CordMcNally CordMcNally 
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    Status: Physician
    Posts: 1192
    Joined: 01/03/2017

    If you don’t want to be a landlord then I wouldn’t entertain the idea of being a landlord.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #180188 Reply
     Peds 
    Participant
    Status: Physician
    Posts: 2374
    Joined: 01/08/2016

    The typical rent for a 3-4 bedroom home is $2000-2500 per month

    Click to expand…

    lol.

    thats less than my 2 bdrm condo….

    #180190 Reply
     doc1978 
    Participant
    Status: Physician
    Posts: 23
    Joined: 07/27/2018

    Agree on that point.

    #180191 Reply
     doc1978 
    Participant
    Status: Physician
    Posts: 23
    Joined: 07/27/2018

    The typical rent for a 3-4 bedroom home is $2000-2500 per month

    Click to expand…

    lol.

    thats less than my 2 bdrm condo….

    Click to expand…

    But I guess you must be in a major coastal city. I am in a very small town.

    #180194 Reply
     fasteddie911 
    Participant
    Status: Physician
    Posts: 192
    Joined: 05/31/2016

    I’d rent.  Financially it’s likely not a huge difference, and dealing with a landlord is the risk you take for the added flexibility of unknown plans 3-4yrs down the road.  Personally, I’d have no interest in being a landlord.  I’ve rented for over a decade cumulatively and never had a bad landlord, some I didn’t care for, but not one bad enough to make me rethink renting altogether.  It’s your call as to how much you’re willing to put up with.  I’d be curious as to what made this landlord so bad.

    #180380 Reply
    Drop it into MD Drop it into MD 
    Participant
    Status: Physician
    Posts: 335
    Joined: 09/20/2018

    It depends on the market in your area and what you are looking for.  I am small town NYS and buying and selling is not too bad if you buy modest houses.  I have seen many “Doctor homes” sit on the market for a while because there is such a small market for that in a small town.

    Also I am confused.  You are planning to FIRE soon but your wife is still in training?

    #180557 Reply
    ENT Doc ENT Doc 
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    Status: Physician
    Posts: 2155
    Joined: 01/14/2017

    Don’t assume you’ll be able to rent to Locums. Pretty typical for the hospital to pay for hotel arrangements which are arranged by the Locums company. Anyway, I’d rent. Don’t be a landlord unless you really want to be.

    #180559 Reply
     Tim 
    Participant
    Status: Accountant
    Posts: 809
    Joined: 09/18/2018

    If I understand you “might” need a house. Finishing her fellowship is great. Bring the family together in your rental house. After a year or two, why don’t you both decide?
    The house you buy to live in might be very different than a rental property. Since you don’t want to be a landlord, why would you buy?

    #180586 Reply
    portlandia portlandia 
    Participant
    Status: Physician
    Posts: 274
    Joined: 07/07/2017

    $2-2.5K for rent on a house that to buy would cost 400-500K and not sure you want to be a landlord or stay in the area long term? If this scenario doesn’t scream rent, none does.

    #180587 Reply
    Liked by MPMD
     doc1978 
    Participant
    Status: Physician
    Posts: 23
    Joined: 07/27/2018

    I’d rent.  Financially it’s likely not a huge difference, and dealing with a landlord is the risk you take for the added flexibility of unknown plans 3-4yrs down the road.  Personally, I’d have no interest in being a landlord.  I’ve rented for over a decade cumulatively and never had a bad landlord, some I didn’t care for, but not one bad enough to make me rethink renting altogether.  It’s your call as to how much you’re willing to put up with.  I’d be curious as to what made this landlord so bad.

    Click to expand…

    Thank you and agree with your advise! I never had any issue with my landlords in the past 8 years except the last one. She kept my security worth $5200 and was consistently asking for more. I asked for opinions in this forum with all the details. Armed with the knowledge and advice obtained from this forum, I sent her an email. I never got any reply after that and matter was closed. But it took me almost months to deal with her. So I am afraid to be a tenant as well as the landlord. LOL!

    #180650 Reply
     doc1978 
    Participant
    Status: Physician
    Posts: 23
    Joined: 07/27/2018

    It depends on the market in your area and what you are looking for.  I am small town NYS and buying and selling is not too bad if you buy modest houses.  I have seen many “Doctor homes” sit on the market for a while because there is such a small market for that in a small town.

    Also I am confused.  You are planning to FIRE soon but your wife is still in training?

    Click to expand…

    400-500K is the average home price in that town. I have also seen more expensive homes sitting for a long time.

    My wife will start the job in less than 6 months and I have been working for a few years. We are hoping to save enough money in the next 3-4 years so that we can spend more time with the kids. And we don’t keep up with the Joneses and live like residents. But that is only a plan at this time which might not work and we are flexible.

    #180651 Reply
     doc1978 
    Participant
    Status: Physician
    Posts: 23
    Joined: 07/27/2018

    Don’t assume you’ll be able to rent to Locums. Pretty typical for the hospital to pay for hotel arrangements which are arranged by the Locums company. Anyway, I’d rent. Don’t be a landlord unless you really want to be.

    Click to expand…

    Very good point! Thank you

    #180652 Reply

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