Rent versus Buying.
We should all rent???
Is Mr. Money Mustache Right??
Dave breaks it down to talk about how Mr. Money Mustache got it right…. and how he got it wrong- specifically for physicians.
He rants for a few minutes on the top decisions physicians need to make in considering when to buy their first place.
What about you?
Are you renting a home? Did you buy a home? Why?
Do you regret your decision?
What advice would you give to a medical student or a resident/fellow?
(Note: I outsource transcription efforts, please forgive in advance any grammatical errors. I just simply don’t have time to review it all)
Welcome to the freedom formula for physicians podcast with all about slashing your debt and taxes and creating a liberated lifestyle. And now, your host, with the love of fantasy books and funk and the hatred of running more than three miles; Dave Denniston.
Hey everyone this is Dave Denniston and welcome back to the Freedom Formula for Physicians Podcast. Well I have recently been reading an article that really caused me some really interesting thoughts on mrmoneymuctache.com. There is a really good article on rent versus buy. And he said if you have to ask you should probably rent. We were talking about living in the city of Toronto and how it cost so much money.
About living in the burbs vs living inside the main city. And is like million dollars, 700 000 dollars, million dollar homes within the city and ?? said hey, screw that, am going to rent rather than buy. And then there is a number of good points he had on there when you are dealing with having 80 000 dollar type salary then totally rent makes sense.
But I think there is a few points that he is missing out on. When you rent number one; you are subject to your rent going up every single year. Guess what people own that property and they want to make money out of it. and when you are having a good rebounding economy like we`ve been having in title labour market, people getting hired and taking away from places, then rent gets pushed up. And then your budget may not accommodate it in the future and in the end, market tender tend to come to equilibrium on these things even though for a couple of years things may swing one direction or the other.
The other major point that I will make with this as a resident, as a fellow, often I see people trying to buy a home. And one of the things that we are going to talk about here in the podcast, future podcast is this rent versus buy decisions. Most residents and fellows if you want to rent a place you better have a bunch of cash put down on it because you do not want to go cash flow negative. Cash flow is keen so you have to focus on that cash flow you guys to make sure that you are not having the… to get hit hard and in case the place was empty for a couple of months. We want to have great cash flow.
The third thing that I want to point out from this is if you are an attending physician, you are looking to buy your first home. I do think that the appreciation factor as you can see in this rather case here can be a huge part of your retirement. So I still believe buying a home is the right thing to do but perhaps the main point he is making, hey if you buy a huge make mansion then you might have huge mortgage payments if you want to put down a lot of cash.
You`re taking a big risk. However in certain areas like let`s say where I live here in Bloomington Minnesota you can get a great home for 400 000 dollars with 5000 square feet. So for a physician that’s not a big deal. So think about your situation if you are a resident, if you are a fellow, really ask yourself strongly; do I want to buy it here, am I going to be here for the rest of my career?
If you are not sure you shouldn’t buy because then you might have issues with trying to rent the place later, cash flow can suck. And we want you to have great cash flow you guys. So I`d like to know your thoughts; are you renting? Are you buying? What would you say to a resident or fellow with advice? Am I on point? Am I way off here? Is there a reason that they should buy that I have missed? I`d love to know your thoughts for the freedom formula for physicians podcast this is Dave Denniston make sure you subscribe, get you two free articles at doctorfreedompodcast.com. Thank you so much for listening, check back and again soon. Have a good one.