Buying a condo in grad school?

[Rutabaga]

Is anyone else really temped to buy a condo for wherever they end up for grad school? I mean, I figure I'll be there 4 or 5 years, the market is in a good position to buy, and you can pretty much always rent stuff out near campus. Plus I'm moving someplace so much cheaper than I am now! I can get a condo for like 150k!

But... something tells me it's not quite this easy. I mean.. condo fees, and appliances, and my fear of doing really poorly in school or something!

Is anyone else pondering these things? It's just so tempting! Anyone who actually owns a condo have any advice?

[synthla]

I'm considering buying a house if I end up in an area with decent prices (i.e., not coastal California); I will not buy a condo, however. Too much fixed costs outside of your control - condo fees being the obvious one. If you own a house, you can decide to wait until next year to install the new windows, if money is tight. But in a condo, you not only have to make that fixed payment every month, but you could be hit with an unexpected condo assessment if there is a big capital project (like reroofing the entire building) that suddenly needs to be done. I have friends who have bought a condo and been forced to pay literally thousands of dollars in assessments in the first year or two of owning and that is not a place you want to be when living on a fixed, low stipend. Even a house can have its unexpected costs, but again, unless a true emergency, you do have some measure of control.

[Dinali]

Is anyone else really temped to buy a condo for wherever they end up for grad school? I mean, I figure I'll be there 4 or 5 years, the market is in a good position to buy, and you can pretty much always rent stuff out near campus. Plus I'm moving someplace so much cheaper than I am now! I can get a condo for like 150k!

But... something tells me it's not quite this easy. I mean.. condo fees, and appliances, and my fear of doing really poorly in school or something!

Is anyone else pondering these things? It's just so tempting! Anyone who actually owns a condo have any advice?

When I was an undergrad I rented a room from a grad student who had done exactly that. I have a feeling my rent paid more than half of the mortgage. It does seem like a good idea if you're going to be in a place where you know you'll always be able to find a renter.

[Dreams]

I am also looking at buying a house, but only in the case of one of my school choices where the prices would be reasonable. For the reasons already mentioned, I would not consider a condo.

[rising_star]

There's a thread somewhere on here, maybe in Officially Grads, about buying a house in grad school.

[synthla]

Thanks rising_star; for anyone who's interested, the thread is here: http://forum.thegradcafe.com/viewtopic.php?f=1&t=13986

I was just looking at houses in Bloomington. Seems possible to get a decent 3 bed/2 bath for around $120-$140K there! With a decent down payment, that is very affordable. If you get the payment down to $500-$600 per month, you could get a roommate to basically pay most of your mortgage. Coming from California, this seems too good to be true...

[RF237]

I have also been thinking of getting a house. I just wanted to remind people that they'll also need to factor in local property taxes (which can amount to several thousand dollars or more a year) and the rental market (from my research into housing prices vs rental prices, I imagine that for a place like Bloomington, if houses are that cheap then rent is usually also low--typically $300-400 a month for a room in a house or apartment) when deciding how much of a mortgage they can afford. Especially since monthly rent usually includes some portion of utilities, whether heat or electricity or water. You'll probably be able to get other grad students to pay a slight premium to live in a nice house with other grad students, but since we're all living on stipends, it can't be too high a premium.

[synthla]

Right now I'm looking at 3 bed/2 bath houses between $125K and $150K with a 20% down payment. With current mortgage rates that takes the payment down to between $500 and $600, plus taxes/insurance. I'm coming from several years of steady work though, so I've got a significant amount of cash saved up and a SO that will be helping out, so it makes sense for me - I wouldn't be doing this straight out of undergrad. As it is, I just have too much stuff and am used to living on my own in a 2 bedroom apartment, so there's just no way I could go back to 1 room or sharing with unrelated people.

[Rutabaga]

People seem really down on condos in this thread and the other! This isn't the sense I've gotten at all from people who actually own condos. Also if you get a proper assessment of the condo (and building) and read your contract fine print your chances of being slammed with a big fee in the near future are pretty slim. I would much rather worry about that than things like painting, yards, termites, and various other house issues.

I am definitely concerned about the mortgage qualifications though. I have a good paying job right now that I would leave for my PhD, but would it be possible to apply for a loan before I quit? I wonder how they calculate these things!

[synthla]

People seem really down on condos in this thread and the other! This isn't the sense I've gotten at all from people who actually own condos. Also if you get a proper assessment of the condo (and building) and read your contract fine print your chances of being slammed with a big fee in the near future are pretty slim. I would much rather worry about that than things like painting, yards, termites, and various other house issues.

I am definitely concerned about the mortgage qualifications though. I have a good paying job right now that I would leave for my PhD, but would it be possible to apply for a loan before I quit? I wonder how they calculate these things!

If you can swing it for a couple months, buy the new place while you're still employed. Banks typically look for a certain amount of cash reserves after taking out your down payment, closing costs, etc., to get them comfortable about what might happen if you suddenly lost your job. But people have mortgages and lose their jobs (or take significant salary cuts) every day... what matters most is your financial condition when you apply.

Beyond the points I already made about condos, I think I just don't like living in such close proximity to other people if I can avoid it.

[Rutabaga]

Thanks! Yeah that might not be a bad idea to do it before I leave then. Paying rent/mortgage in two places would be hard, but honestly I would have to do that even if I was renting though...

I can see your point about houses in that sense! And there are definitely some nice looking houses for cheap as well. A house just seems like... so much more responsibility! Plus higher utilities and what not.

[synthla]

I can see your point about houses in that sense! And there are definitely some nice looking houses for cheap as well. A house just seems like... so much more responsibility! Plus higher utilities and what not.

I think it's just the tradeoff between responsibilty and cost vs. control; but like you said, if you do your due diligence on a condo you'll be fine. Depending on where it is, just take a very close look at the financials for the building and HOA, as well as occupancy levels if its a newer development. Some areas experienced a tremendous over-development of condos during the bubble and so prices have noe dropped and gotten very attractive, but foreclosures have taken a toll on some buildings as HOAs have run out of cash when banks don't pay the fees on the condos they've repossessed. I also have a friend who bought into a new condo development a couple years ago in the first phase, so the development is still not finished but the developers just handed the keys to the bank on the rest of the project that wasn't yet sold so she has NO idea what's going to happen. But as long as you are careful and find someplace with an established history, you should be fine.