Noone’s analysis demonstrates that even accounting for opportunity cost buying and renting are fairly evenly balanced. Normally, I would think that this would make a strong case for buying. However, the 200K purchase would not buy the kind of place that rents for 1333 per month (80K over 5 years), so the comparison is not exactly comparing the same kind of unit. That would imply a gross return of 8% on rental property. I am not seeing anything close to that in San Diego.
Anyway, I think it rarely makes sense for a student (even in grad school) to purchase versus rent. There are simply too many variables in your future. Will you complete the program. Will you after 2-3 years and a Master’s degree have made some contacts and decide to pursue PhD somewhere else. Will you come to a self-realization mid-way through the program that what you’d really rather do is to join the Peace Corps ?
Anyway, if it was me, here’s what I would do:
Run the numbers on 3-4 bedroom single-family homes in the North Clairemont or similar area. (Not too far for the commute, not too expensive) See if it’s feasible to purchase with 25% down, lease out a couple of bedrooms to other students and get effectively cheap rent.
Example:
350K purchase
25% down
262,500 loan @ 6.25%
P&I: 1616 per month
Prop Tax: 330
Insurance: 54
Monthly PITI: $2000
Charge 800 each for 2 roommates, so your monthly nut is about $400. Your remaining 110K or so from your 200K should net you about $350 per month and/or could provide a cushion for repairs/vacancies.
After a few years of this you will probably be sick of college students as roommates, but you would have figured out how to market and lease the property to college students and actually making a monthly profit on the place, when you are ready to move into nicer digs. This is even better if you have some decent income while going to school (e.g. if you have a TA or RA and can make enough to actually have taxes to pay.
