Buying a house as a grad student

[Livestrong1188]

I was wondering if there are any other future grad students out there who, in addition to the stress of making academic decisions and waiting for fellowship responses, are seriously considering purchasing a house during or prior to their first year. Right now there is an 8,000 dollar federal tax credit for first time home buyers. I'm moving to California, where there is an additional 10,000 dollar tax credit for first time home buyers. I'm looking at this as a five year investment, where I'm buying while the market is at a low and saving money that would otherwise go down the drain if I were renting. But sometimes I wonder if it is worth it to add all this extra stress at a time that is already supposed to be very stressful... =/

[aginath]

When I put my house in Texas on the market last spring, more than a few of the prospective buyers were individuals or couples who were moving to town to go to grad school. It's certainly not unheard of. If your budget (and credit score) can handle it, do it.

[BionicKris]

I'm definitely considering purchasing a house while in grad school, though I'm going to wait until my second year to do it. It'll give me more time to look around, get used to my environment. Plus, the stress of moving to a new city and starting a new program is enough for my first year. I don't want to add the stress of buying a house on top of that. I am planning, once I get a house or townhome, to rent out the extra rooms. I'm hoping to add that money to my mortgage have the home paid off even faster. Good luck with your decision. It does seem like now is the perfect time to purchase a home given all the tax credits they are shoving our way.

[chemdoc]

I was wondering if there are any other future grad students out there who, in addition to the stress of making academic decisions and waiting for fellowship responses, are seriously considering purchasing a house during or prior to their first year. Right now there is an 8,000 dollar federal tax credit for first time home buyers. I'm moving to California, where there is an additional 10,000 dollar tax credit for first time home buyers. I'm looking at this as a five year investment, where I'm buying while the market is at a low and saving money that would otherwise go down the drain if I were renting. But sometimes I wonder if it is worth it to add all this extra stress at a time that is already supposed to be very stressful... =/

My girlfriend's brother is an MD/PHD student and bought a house last year. He took advantage of the $8,000 dollar tax credit. He alternates months with his fiance in paying the mortgage.

While it is a great investment since he's going to be on campus for another 6 years, it has been a real headache for him. It is fortunate that my girlfriend has a very large number of siblings and they're from a blue collar construction background so he has been able to receive assistance in various renovation projects.

They've had to redo parts of the plumbing in the house, completely redo one of the bathrooms, paint the whole place, shingle the roof, put siding and shingles on the garage that's not connected to the house, re-wire the living room, install ceiling fans and lighting, landscape the yard and put in a fence. I've helped with some of this.

After seeing his experience, I will certainly not be purchasing a home while in graduate school.

[mudlark]

I bought a condo right before my first year started, and it has been AWESOME. Great decision. We've had lots of fun painting and fixing it up, and I love watching our equity slowly creep upwards. We went for a condo over a house for a handful of reasons: they're cheaper, so we could get more square footage; you pay fees instead of doing the maintenance yourself (no snow shoveling! yay!); we can live right in the center of the city instead of out in some suburb with no transit; we both like living in denser areas; and we love our balcony with its amazing view. We were very careful and conservative, and bought at the bottom of our price range with a 36% down payment. If you do your research and get some good advice, I think it can be a great thing to do.

[njw]

I'm definitely considering it. I want to be where I am going to grad school long term. I will see how my partner likes it after a year, then we will probably decide what to do.

[coyabean]

I am seriously thinking about it. I owned a condo once. It wasn't the best decision then because I did it because I could and without any long-term goals. Now that I am more solid in what I want out of my life I am thinking it's a good time to try it again. It doesn't hurt that there are some incredible deals right now in a market I consider a relatively safe bet (Atlanta). My parents have even discussed matching my funds and maybe buying a REO for cash! Even if my career takes me away from ATL after 5 years if I purchase well in the right location I think it could be a great rental and investment. I've seen condos near Emory for under $150k!!!! Jeez. We all said we could put that together. My mother calls it my inheritence. I think, secretly, she's considering it her retirement plan but whatevs. It would let me live rent free for a few years and could be a place to always come back to.

I'm thinking about it.

[juilletmercredi]

LOL, I could never afford to buy anything in New York. If I had done graduate school in Atlanta, where I'm from, yes I definitely would've considered purchasing a house and then renting some of the rooms in it out to other graduate students. The only downside I can really think of is when you get a position afterwards, if it's in a different city, you'll have to unload your house and it may take longer than expected to sell. (But if I had gone into graduate school in Atlanta, I would've stayed there anyway, so it would've been more of a long-term thing.)

[njw]

LOL, I could never afford to buy anything in New York. If I had done graduate school in Atlanta, where I'm from, yes I definitely would've considered purchasing a house and then renting some of the rooms in it out to other graduate students. The only downside I can really think of is when you get a position afterwards, if it's in a different city, you'll have to unload your house and it may take longer than expected to sell. (But if I had gone into graduate school in Atlanta, I would've stayed there anyway, so it would've been more of a long-term thing.)

If its an up and coming market though, you'd have 6-7 years on a 30 year mortgage, then rent over your mortgage once you leave, can pay small administrative fee for a leasing agency to fill tenants.

To OP, there are some very good deals to be had in California right now, but many of those are at the *high* end of the spectrum, i.e. paying 1.5 mil for something that used to be 3...

Where I was in California the average listing price was over 800K so...yeah buying wasn't much of an option lol.

Edited July 29, 2010 by njw