Renting vs Buying Forum

[sach1282]

Is it possible to buy a condo or house during your three years at law school? I know somewhere like NYC this would be impossible (for most students anyway) but I'm looking intently at Michigan and Duke, the two lowest COA schools in the T-14. It seems like rent for three years would really add up quick. However, is it feasible to get a mortgage approved as a full time student, even if it would be the same price as rent? What if you could pay like $40,000 up front, would that make it more viable?

I apologize for the poor organization, that's a lot of questions packed into a small space. I'm just looking to start a discussion on the merits and possibilities of buying vs renting during law school.

[concurrent fork]

The vast majority of students couldn't get approved due to virtually no income and large debt obligations. Unless you have wealthy parents willing to buy/cosign the mortgage, it's a moot point.

[littlebit]

Add up the property taxes, insurance, maintenance and cost to sell after 3 years. Probably not worth the risk unless you plan on staying in the area.

[CanadianWolf]

It may be a good time to buy in a depressed market, but is college town real estate depressed ?

[Wholigan]

No way this would be worth it, even if you could get approved for a loan. You will build up next to no equity over 3 years, and by the time you add up mortgage payments, homeowner's insurance, taxes, mortgage insurance, maintenance/repairs, and a 7% commission to the agent when you sell in 3 years, it will probably cost you a lot more than renting, even if the property value appreciates a little bit while you're in school. Also, don't forget that a lot of the benefit of home ownership is that much of the above is tax-deductible, but as a full-time student that isn't going to help you much, since you won't have income to deduct it against.

[bdubs]

No way this would be worth it, even if you could get approved for a loan. You will build up next to no equity over 3 years, and by the time you add up mortgage payments, homeowner's insurance, taxes, mortgage insurance, maintenance/repairs, and a 7% commission to the agent when you sell in 3 years, it will probably cost you a lot more than renting, even if the property value appreciates a little bit while you're in school. Also, don't forget that a lot of the benefit of home ownership is that much of the above is tax-deductible, but as a full-time student that isn't going to help you much, since you won't have income to deduct it against.

+1 - There is no benefit to this. If you have the extra cash lying around after paying for school, it's best invested elsewhere.

[sach1282]

Would the above advice hold true even if you could front all the money? Suppose you have the option of spending $60k on fronting the tuition bill, buying a condo, or leaving it invested. I thought that the condo would be a viable option, seeing as how much rent money you would make back when you sell.

[glitter178]

Would the above advice hold true even if you could front all the money? Suppose you have the option of spending $60k on fronting the tuition bill, buying a condo, or leaving it invested. I thought that the condo would be a viable option, seeing as how much rent money you would make back when you sell.

this is assuming you are able to sell, and not for a huge loss. a few (10?) years ago this would have probably been a good decision. Today, it's not. Plus, you have to factor in closing and other costs associated with buying and selling.

[tdanielle]

Most have suggested that buying is a poor decision, but I beg to differ, at least in certain circumstances. It really depends on the situation. My fiance and I currently manage the SoCal division of a company that purchases, renovates and resells (ie flips) foreclosed homes. We are looking at SFRs and condos that are prices in the 200's now that were in the 500+ range in 2005. If you a.)have money to put down, b.) (will) have an income roughly 3xs what your mortgage payment+tax+insurance will be, and c.)will either be staying in the areas for at least 5 years, or plan to retain the property as a rental, than it makes sense. These are all big ifs, but it is worth it to say that in some cases, purchasing a home is not a bad option.

Everything, I suppose, would also depend on where you are located and how you are paying for school. For example, that money we have saved for a conventional down payment in CA is equivalent to the cost of a pretty decent house in Michigan or Florida and some parts of Washington. If we were to relocate, it would be foolish to pay rent instead of buying a home outright.

[bdubs]

Would the above advice hold true even if you could front all the money? Suppose you have the option of spending $60k on fronting the tuition bill, buying a condo, or leaving it invested. I thought that the condo would be a viable option, seeing as how much rent money you would make back when you sell.

Tuition bill is the best investment of your funds. The prevailing rates on Grad+ loans is 7.9% that is the safest and best investment of your funds. You should only even consider buying a place if you have enough money to pay for tuition and living expenses out of pocket. At that point you need to assess the ROI for a real estate investment relative to other investments.

There are very few markets right now where there is both a housing glut and a top law school.

[vissidarte27]

What if you want to stay in the area after graduation?

If I were to go to URichmond (or Emory), I'd basically be committing to working in Richmond (Atlanta) long-term, and I'm not sure that it would make sense to throw money away with rent as opposed to paying down a mortgage and earning equity and all of that. My partner and I have been thinking about it -- she has the money for a sizable down payment, and I'd be able to contribute to the mortgage with my student loan money (and I currently work a bank that would give me a decent rate discount that would continue even after I leave my job to go to school) -- and we think it may be the best move for us. Unless I end up at W&L, in which case we'd rent because Lexington isn't a feasible place to live post-graduation.

My guess is that it depends on what you want and where you want to be. If it's only for three years, I don't think it'd be smart to buy, but if it's longer than that, maybe.

[duckmoney]

What if you want to stay in the area after graduation?

If I were to go to URichmond (or Emory), I'd basically be committing to working in Richmond (Atlanta) long-term, and I'm not sure that it would make sense to throw money away with rent as opposed to paying down a mortgage and earning equity and all of that. My partner and I have been thinking about it -- she has the money for a sizable down payment, and I'd be able to contribute to the mortgage with my student loan money (and I currently work a bank that would give me a decent rate discount that would continue even after I leave my job to go to school) -- and we think it may be the best move for us. Unless I end up at W&L, in which case we'd rent because Lexington isn't a feasible place to live post-graduation.

My guess is that it depends on what you want and where you want to be. If it's only for three years, I don't think it'd be smart to buy, but if it's longer than that, maybe.

This would make much more sense. A couple of reasons this might still be a bad idea:

-You will see a much higher return on investment by paying off tuition instead of student loans
-If you do not end up in that home market, you will lose money
-You will (hopefully) be making more money as a lawyer than you were as a law student. You'll probably want a house that's nicer than the house that you can afford as a law student. If you sell your place after 3-4 years to move into a bigger and nicer place, you will suffer all the same complications as above.

It's probably better just to rent somewhere cheap as a law student and use the saved money to pay down tuition / build up savings and use that as a down payment after you graduate.

[vamedic03]

Most have suggested that buying is a poor decision, but I beg to differ, at least in certain circumstances. It really depends on the situation. My fiance and I currently manage the SoCal division of a company that purchases, renovates and resells (ie flips) foreclosed homes. We are looking at SFRs and condos that are prices in the 200's now that were in the 500+ range in 2005. If you a.)have money to put down, b.) (will) have an income roughly 3xs what your mortgage payment+tax+insurance will be, and c.)will either be staying in the areas for at least 5 years, or plan to retain the property as a rental, than it makes sense. These are all big ifs, but it is worth it to say that in some cases, purchasing a home is not a bad option.

Everything, I suppose, would also depend on where you are located and how you are paying for school. For example, that money we have saved for a conventional down payment in CA is equivalent to the cost of a pretty decent house in Michigan or Florida and some parts of Washington. If we were to relocate, it would be foolish to pay rent instead of buying a home outright.

There's something odd about your "advice." Your only post on a message board for law school admissions and law school students is promoting the poor financial decision of buying a house during law school.

[D'Angelo]

Most have suggested that buying is a poor decision, but I beg to differ, at least in certain circumstances. It really depends on the situation. My fiance and I currently manage the SoCal division of a company that purchases, renovates and resells (ie flips) foreclosed homes. We are looking at SFRs and condos that are prices in the 200's now that were in the 500+ range in 2005. If you a.)have money to put down, b.) (will) have an income roughly 3xs what your mortgage payment+tax+insurance will be, and c.)will either be staying in the areas for at least 5 years, or plan to retain the property as a rental, than it makes sense. These are all big ifs, but it is worth it to say that in some cases, purchasing a home is not a bad option.

Everything, I suppose, would also depend on where you are located and how you are paying for school. For example, that money we have saved for a conventional down payment in CA is equivalent to the cost of a pretty decent house in Michigan or Florida and some parts of Washington. If we were to relocate, it would be foolish to pay rent instead of buying a home outright.

There's something odd about your "advice." Your only post on a message board for law school admissions and law school students is promoting the poor financial decision of buying a house during law school.

conflict of interest...

[weatherswaysme]

what if you bought a house, then got roommates that would essentially pay your mortgage while in law school? anyone think it would be worth it then?

[D'Angelo]

what if you bought a house, then got roommates that would essentially pay your mortgage while in law school? anyone think it would be worth it then?

why would they do that?

[shoeshine]

You can't get a loan without income. Money from loans is not counted as income for mortgage approval purposes.

[Renzo]

If you a.)have money to put down, b.) (will) have an income roughly 3xs what your mortgage payment+tax+insurance will be, and c.)will either be staying in the areas for at least 5 years, or plan to retain the property as a rental, than it makes sense.

So, in short, no, it would not be a good idea for the OP to buy a house.

[weatherswaysme]

what if you bought a house, then got roommates that would essentially pay your mortgage while in law school? anyone think it would be worth it then?

why would they do that?

they need a place to stay too. Buy a 3 bedroom, rent 2 rooms and make sure the rent money covers your mortgage. You live basically for free except for utilities, which can be split 3 ways, and taxes/insurance/repairs. Or am I way off base?

[09042014]

what if you bought a house, then got roommates that would essentially pay your mortgage while in law school? anyone think it would be worth it then?

why would they do that?

they need a place to stay too. Buy a 3 bedroom, rent 2 rooms and make sure the rent money covers your mortgage. You live basically for free except for utilities, which can be split 3 ways, and taxes/insurance/repairs. Or am I way off base?

Well you don't get to set your price to whatever you want. You gotta be in line with the market.

[weatherswaysme]

what if you bought a house, then got roommates that would essentially pay your mortgage while in law school? anyone think it would be worth it then?

why would they do that?

they need a place to stay too. Buy a 3 bedroom, rent 2 rooms and make sure the rent money covers your mortgage. You live basically for free except for utilities, which can be split 3 ways, and taxes/insurance/repairs. Or am I way off base?

Well you don't get to set your price to whatever you want. You gotta be in line with the market.

yeah, but depending on where you live it seems doable, or at least it would make your "rent" much less than actual rent