Rent or Buy?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Post Reply
Topic Author
Tucker77
Posts: 1
Joined: Thu May 16, 2019 9:56 am

Rent or Buy?

Post by Tucker77 » Thu May 16, 2019 10:15 am

My fiance and I are going to live in Birmingham, AL when we get married this August. I am starting physical therapy school this summer and we are trying to decide whether it would make more sense to rent or buy in Birmingham because we will be there for three years but then do not know where we might want to live once I graduate. My total cost of school will be roughly $125,000 over three years and she works as a nurse right now making close to $50,000. We have about $200,000 liquid cash and $100,000 came from her grandpa to use for our first house but we need advice on whether it's smarter to buy a house or rent an apartment while in school. She was looking at a home for about $320,000 and I found an apartment for $930 with two beds two baths. We would also like advice as to whether we should pay out of pocket for school every semester which is about $13,000 or try investing the money and take out loans and pay it back later. Thank you!

bloom2708
Posts: 6675
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Rent or Buy?

Post by bloom2708 » Thu May 16, 2019 10:37 am

Rent.

3 years is too short to recoup the costs (mostly when you sell).

You have a bunch of forks in the road ahead. Don't get locked in by buying a house.

Focus on school, not yard work and updates and fixes and painting and everything that comes with home ownership.
"We are not here to agree with you; we are here to provoke thoughtfulness." Unknown Boglehead

Rajsx
Posts: 422
Joined: Wed Mar 21, 2007 10:07 pm
Location: Florida

Re: Rent or Buy?

Post by Rajsx » Thu May 16, 2019 11:36 am

Rent young man RENT.

First develop your human capital by going to school & getting a good job, then after that is the time to buy. Not now
We do not stop laughing because we grow old, we grow old because we stop laughing !!

GT99
Posts: 240
Joined: Wed Jun 20, 2018 5:26 pm

Re: Rent or Buy?

Post by GT99 » Thu May 16, 2019 11:45 am

Rent, and it's not close. If you know you're likely moving in 3 years, owning would only be a good decision if the local housing market makes a significant jump in that time, which is a very low probability.

Regarding the student loan, I think the majority here would say don't take out the loan as a blanket statement. I would say it depends on the rate. If I could get a 3% or lower tax deductible interest rate, with a long term (15+ year) investment horizon, I'd take it.

Broken Man 1999
Posts: 3060
Joined: Wed Apr 08, 2015 11:31 am

Re: Rent or Buy?

Post by Broken Man 1999 » Thu May 16, 2019 11:59 am

I'll join the chorus, RENT!

On your other questions about paying for your education vs investing and taking loans, well, that is a tough decision. I have always felt the best time to pay a bill is when you have the money. A lot of things could happen that would make the loans a true burden later on.

But, I am conservative by nature.

BTW, if her grandpa is still alive, I would feel obligated to tell him of your revised plans, if you rent and don't use the money to buy a house immediately. Tell him by postponing until you finish your schooling and being sure of ending up living in Birmingham would be a better idea, and you two didn't want to squander his generous gift by buying, then perhaps moving very soon.

Best of luck to you and your fiancee.

Broken Man 1999
“If I cannot drink Bourbon and smoke cigars in Heaven than I shall not go. " -Mark Twain

Rajsx
Posts: 422
Joined: Wed Mar 21, 2007 10:07 pm
Location: Florida

Re: Rent or Buy?

Post by Rajsx » Thu May 16, 2019 3:58 pm

Apart from not a right decision financially.

Buying, owning & maintaining a home takes time, some elbow grease & commitment.

Going to a all absorbing PT school, when & where are you going to get the time to mess around with things like maintaining a house etc....? you will be exhausted by the time evening rolls around, I would not let other things come in the way of what you have already committed to.

Put that time & effort in reading up your school material. You will be happy you did.
We do not stop laughing because we grow old, we grow old because we stop laughing !!

Marjimmy
Posts: 164
Joined: Tue Nov 13, 2012 11:14 pm

Re: Rent or Buy?

Post by Marjimmy » Fri May 17, 2019 4:20 pm

R
E
N
T
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

User avatar
Watty
Posts: 17060
Joined: Wed Oct 10, 2007 3:55 pm

Re: Rent or Buy?

Post by Watty » Fri May 17, 2019 9:28 pm

Here is a rent vs buy calculator that you can crunch the numbers with if you want to see how bad they are.

https://www.nytimes.com/interactive/201 ... lator.html

An additional complication is that no program has a 100% completion rate. Even if you are up to it academically things can come up like health problems that might prevent you from graduating.

In addition to the finances you need to also need to consider the mechanics of selling a house the day you graduate so that you can move to a new job. You could very will be trying to sell it in a bad housing market that year which can be difficult.
Tucker77 wrote:
Thu May 16, 2019 10:15 am
She was looking at a home for about $320,000 and I found an apartment for $930 with two beds two baths.
You are comparing apples to oranges. Also look at renting a house, or buying a two bedroom condo if you really want to look at the numbers.

272 Sheep
Posts: 151
Joined: Thu Mar 26, 2009 4:14 pm
Location: Hooksett, NH

Re: Rent or Buy?

Post by 272 Sheep » Sat May 18, 2019 8:58 pm

Often it is said a house will be your best investment. While there are pluses there are also minuses.
House, to me, is essentially a liability:
Roof-over, new roof
New furnace
Bad lawn that need fixing
High Property Taxes
Home insurance
Termites
Mice (3 yrs ago chewed thru my furnace elec, wire in middle of winter)
Flood in basement (Live on hill, driveway not to code -water poured in.)
Deck ( Nearly collapsed when family and extended family having cookout -was not flashed properly)
Wife also wanting this or that improvement.
Whew!
I'm nearly exhausted from just recalling past episodes! I'm sure, I missed some!
Again? You want to do what?
Carl W.

Golf maniac
Posts: 292
Joined: Wed Dec 27, 2017 2:02 pm
Location: Florida

Re: Rent or Buy?

Post by Golf maniac » Sat May 18, 2019 9:26 pm

Rent for sure. And do not take out loans for school, pay it from liquid assets.

User avatar
Nate79
Posts: 4904
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Rent or Buy?

Post by Nate79 » Sat May 18, 2019 9:38 pm

Rent and pay cash for school. No need to enter the post school world like the other millions of broke graduates.

Post Reply