Hey everyone, just a short light-hearted post today for April Fool’s.
Match Day has come and gone and I can imagine that a lot of medical students and others are putting plans in place to move to a new place.
I tend to harp on this a lot, but I recommend that you do not buy a house. Every year people don’t take my advice. Some end up doing very, very well, and others either “break even” or lose money. This early in your career, I don’t think it’s worthwhile to become home-owners when I think it’s more beneficial to stay lean and mean.
There will always be people who will tell you to just buy and rent it out, but if that is something you want to do — you really need a plan in place.
What kind of property is it?
What is the current rental market for it?
How old is the property?
How much would a property manager cost?
What do you estimate the upkeep/maintenance on the property to be?
If you can’t rent it for 3-6 months, how much would it cost you?
There are many, many questions that you need to have considered and answered with strong conviction if you want to buy a house for residency. There will be problems that you, as the home-owner, will need to deal with. You don’t just call your landlord when something is broken — you need to have someone fix it for you. Not exactly the highest thing on your priority list when you’re in Survival Mode for residency.
For those of you who bought houses in residency and made money off of them, that’s great. However, for every person I can name that “did well” I can name at least a few more that didn’t do very well. There are at least two people I know who were really crushed by the housing crash of 2008 and couldn’t sell homes they bought in residency (foreclosure) or had to sell at a significant loss.
Yea, you may hear from recent graduates or other doctors who did very well on their houses they bought in residency. They’ll tell you that they bought their house for X amount and now it’s worth Y amount, and it’s worth Z much more. However, what about the time and effort to maintain it? How much money did they pay into it?
The beginning and the end result don’t matter as much to me as the story. It’s always easier to remember something through rose-colored glasses in retrospect if the end result is good.
In my opinion, if you really want to optimize your money in residency, rent a small apartment, live frugally, and put as much money as you can into the Roth 401k/403b in Residency.
I really don’t want to start people to start out as new attendings with either a foreclosure ruining their credit rating or taking a huge loss on a house sale — and student loan debt already weighing you down as it is. I’ve already seen this happen to a few people and it can really be soul-crushing.
I still recommend not buying a house in residency.
However, if you’re planning to buy a house in residency, please do a lot of your own research and have a good plan in place.
Don’t be an April’s Fool.
Agree? Disagree? Questions, Comments and Suggestions are welcome.
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