Finance a Second mortgage as vacation home vs rental home?

[beardsweater]

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[SwordGuy]

Have you considered a camper until you locate a home that suits you? (Assuming the weather is ok for it.)

[beardsweater]

That's a good suggestion, but probably wouldn't consider camper at this point, we could always wait and see what is available later, but will most likely do a home or short term apartment to start out with as we plan on being out there for a while. There is Also same issue with the oil boom and finding a place to park a camper.

[waltworks]

Looming oil boom?

Ok. I live right by a big chunk of oil patch and houses are practically free there right now. Nobody is drilling, so the only jobs are maintenance and driving big rigs.

Just rent for a year and see where things are at. Home prices do not always go up and you do not need to panic that you're going to be priced out.

-W

[beardsweater]

http://www.npr.org/sections/thetwo-way/2016/11/16/502337471/usgs-announces-its-largest-oil-and-gas-discovery-ever

[waltworks]

Sure, there's a ton of great gas/oil waiting to be drilled.

But oil is at $45 a barrel and a lot of the wells that are already drilled are losing money.

Nobody is drilling right now. That's not about to change barring a worldwide economic boom/demand increase.

No need to panic, go rent a house.

-W

[beardsweater]

Thanks for the advice!

[Dicey]

In the depth of the housing bust, an acquaintance did this. Her in-laws took out a second on their home so the kids could make an all-cash offer on a foreclosure. Place was a dump. They worked their assess off to fix it up. Eventually they got a mortgage and repaid the parents. House has at least tripled in value since then. I don't advise this, but it worked for them.

My concern with the parental route is that it might preclude you from participating in the physician loan program, which sounds like a great deal, on the face of it. My advice is to slow down and wait for that option to kick in. Finding the right house takes time. Also, you might find a proparty that the sellers don't want to move out of right away. I'm not talking about buy/rent-back. For example, we're kind of ready to do another house flip. Our realtor knows of something that meats our parameters, but the owners don't want to sell until February. Win-win.

[clarkfan1979]

It would be better to answer this question if we had specifics on rents and the cost of a house. However, it doesn't seem like you need to get your parents involved, especially if you will be on a physician's salary.

[cchrissyy]

Don't overcomplicate or rush yourself!
The physicians loan program is a good deal, just buy that way when you get close enough time-wise to qualify.

[Eco_eco]

I wouldn't rush. I understand the deep desire to own the house over your head but your plan is not without cost. Your parents are taking a big risk and putting their financial security on the line (at least a little). You would feel awful if something happened and you weren't able to pay them back. There are some real benefits to saving up a deposit and clearing your current debt out to the point where you can get a loan on your own. Have you got a long term plan that factors in the option about buying into where you want to be in 10 years time? Is this location somewhere that you see yourself living in a few years time?

Don't forget there are many people like millennial-revolution (http://www.millennial-revolution.com) who would advocate never owning a house. There is always another great investment around the corner and over your investment life there will be some investments that make huge returns and others that are just average. I'd be careful about buying to take advantage of hypothetical future gains in the property market.

[Abe]

I hear you about the physician loan requirements being unnecessarily annoying, but I think waiting to qualify is a good idea. Rent if you need to, because it's better to buy a house in a place you're familiar with (including the real estate market). I did this in med school and in residency, and have no regrets. The small amount prices may go up in a few months is pennies to the annoyance of living someplace you'll regret afterwards. My parents gave us money for a down payment. If your parents are unable to afford that easily, I think it'll be unnecessary stress on them just to save a few thousand.

P.S. let me know if they need a surgeon over there!

[former player]

The very clear advice on both White Coat Investor and Student Doctor Network is: Don't buy a house in the first year out of medical school.   Buying a house gives your employer a big hold over you because of your financial commitment to the area (especially if you are working in an area with a limited number of employers) and puts a hold on you moving if your first job doesn't work out as expected or a better opportunity comes up elsewhere sooner than you expected.

Also, you are married or about to be, and if you are finishing medical training you are at least in your late 20s.  Why would you want to mooch off your parents - they would be risking their own home, perhaps paying a deposit, and paying the mortgage costs until the second half of next year?

Suck it up and rent somewhere modest for the first year.  Get your finances in order, work at your new job and on your new life together with your other half.  Get to know the place you have moved to.  If everything stacks up, buy after you've been there a year, using your own money and credit.

[beardsweater]

Thanks for the advice everyone. I think maybe we were just freaking out a little bit prematurely about this situation based on the media and what our friends have been telling us about the market.  The main reason for wanting to rent as opposed to buying are that rent for a 2 bedroom apartment or home would be >2k/month (we have looked at prices) and a similar mortgage would be significantly less (~1400/month), which could makes sense if we plan to stay for 5-10 years. I also see the flip side of renting being a nice way to go, but the rental market has potential to be pretty volatile and the thought of rent going up 1k/month sounds terrible when that money could be going to VTSAX instead. I agree completely about not getting my parents involved with this situation and will deal with it on my own, that is advice i needed to hear from some objective points of view. We will either buy a modest home trough the physician loan program (with the wh idea being a more stable situation) or rent if there is an available option that will work for us. I know well that buying often does not make sense and have read JL Collins and Madfientist on that, but I think where we are going has a unique situation which makes it a little more complicated.

[cchrissyy]

even if you are "overpaying" for housing in the time period you are renting, that rent money is buying something very valuable - the opportunity to live in the town before picking your long term home!

[Goldielocks]

Thanks for the advice everyone. I think maybe we were just freaking out a little bit prematurely about this situation based on the media and what our friends have been telling us about the market.  The main reason for wanting to rent as opposed to buying are that rent for a 2 bedroom apartment or home would be >2k/month (we have looked at prices) and a similar mortgage would be significantly less (~1400/month), which could makes sense if we plan to stay for 5-10 years. I also see the flip side of renting being a nice way to go, but the rental market has potential to be pretty volatile and the thought of rent going up 1k/month sounds terrible when that money could be going to VTSAX instead. I agree completely about not getting my parents involved with this situation and will deal with it on my own, that is advice i needed to hear from some objective points of view. We will either buy a modest home trough the physician loan program (with the wh idea being a more stable situation) or rent if there is an available option that will work for us. I know well that buying often does not make sense and have read JL Collins and Madfientist on that, but I think where we are going has a unique situation which makes it a little more complicated.

Maybe instead, look for a property investment that meets the 1% rule, then.  Optimize it as a rental income property, that you live in for the first year or two, but would manage remotely if you wanted to move.

The choice of property probably won't look like a home you would choose for yourselves to buy...  but could work in the long term if rents rates are a lot higher than carrying costs.