Should I buy or rent? New graduate student at UCSD

[SK in CV]

The cost of student housing nostradamus….

for a grad student at UCSD for a 2br apartment ranges from just under $1,000 to over $1,200 a month, so either your friends are sharing that apartment with someone else or they’re paying much more than they’re saying.

The rent for comparable apartments and condos in the area range from $1,300 to over $1,800 a month for the nicer condo complexes.

But renting is still by far the best option, at least in the immediate vicinity of UCSD. Prices are still dropping and will probably continue for the forseeable future.

The condos and apartments in the penasquitos and scripps ranch area are more affordable and seem to have hit a plateau over the last couple months, probably closer to the bottom. And there might even be something available in the $200K range that is more than a converted apartment.

[(former)FormerSanDiegan]

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.

Anyway, I would at least run the numbers.

[(former)FormerSanDiegan]

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.

Anyway, I would at least run the numbers.

[(former)FormerSanDiegan]

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.

Anyway, I would at least run the numbers.

[(former)FormerSanDiegan]

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.

Anyway, I would at least run the numbers.

[(former)FormerSanDiegan]

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.

Anyway, I would at least run the numbers.

[Anonymous]

You do not have the time to worry about homeowners issues, and you want to be mobile at graduation. It’s good to have the freedom. Also, advisors move, and grants expire. Having $200k in cash instead of none and a mortgage is a big advantage while you’re preparing for candidacy.

Financially, the best thing is either to get UCSD subsidized housing (if you get married you can get a bonus and skip up in line). Or rent a 3-4 bd house with other grad students/postdocs.

Also if you go to the UCSD housing office you may find good deals, e.g. long-time professors who have a nice place, maybe a guest house in the back that they want to rent. grad students are generally viewed as more responsible than the undergrads, and are preferred. These deals will probably be below market rate.

I don’t think you’ll be able to charge $800 a month for a room on a $350k place.

$200k at 4% interest is $8k a year, right? Consider that too when you consider your housing costs.

in my opinion, i’d never buy in this circumstance.

[Anonymous]

You do not have the time to worry about homeowners issues, and you want to be mobile at graduation. It’s good to have the freedom. Also, advisors move, and grants expire. Having $200k in cash instead of none and a mortgage is a big advantage while you’re preparing for candidacy.

Financially, the best thing is either to get UCSD subsidized housing (if you get married you can get a bonus and skip up in line). Or rent a 3-4 bd house with other grad students/postdocs.

Also if you go to the UCSD housing office you may find good deals, e.g. long-time professors who have a nice place, maybe a guest house in the back that they want to rent. grad students are generally viewed as more responsible than the undergrads, and are preferred. These deals will probably be below market rate.

I don’t think you’ll be able to charge $800 a month for a room on a $350k place.

$200k at 4% interest is $8k a year, right? Consider that too when you consider your housing costs.

in my opinion, i’d never buy in this circumstance.

[Anonymous]

You do not have the time to worry about homeowners issues, and you want to be mobile at graduation. It’s good to have the freedom. Also, advisors move, and grants expire. Having $200k in cash instead of none and a mortgage is a big advantage while you’re preparing for candidacy.

Financially, the best thing is either to get UCSD subsidized housing (if you get married you can get a bonus and skip up in line). Or rent a 3-4 bd house with other grad students/postdocs.

Also if you go to the UCSD housing office you may find good deals, e.g. long-time professors who have a nice place, maybe a guest house in the back that they want to rent. grad students are generally viewed as more responsible than the undergrads, and are preferred. These deals will probably be below market rate.

I don’t think you’ll be able to charge $800 a month for a room on a $350k place.

$200k at 4% interest is $8k a year, right? Consider that too when you consider your housing costs.

in my opinion, i’d never buy in this circumstance.

[Anonymous]

You do not have the time to worry about homeowners issues, and you want to be mobile at graduation. It’s good to have the freedom. Also, advisors move, and grants expire. Having $200k in cash instead of none and a mortgage is a big advantage while you’re preparing for candidacy.

Financially, the best thing is either to get UCSD subsidized housing (if you get married you can get a bonus and skip up in line). Or rent a 3-4 bd house with other grad students/postdocs.

Also if you go to the UCSD housing office you may find good deals, e.g. long-time professors who have a nice place, maybe a guest house in the back that they want to rent. grad students are generally viewed as more responsible than the undergrads, and are preferred. These deals will probably be below market rate.

I don’t think you’ll be able to charge $800 a month for a room on a $350k place.

$200k at 4% interest is $8k a year, right? Consider that too when you consider your housing costs.

in my opinion, i’d never buy in this circumstance.

[Anonymous]

You do not have the time to worry about homeowners issues, and you want to be mobile at graduation. It’s good to have the freedom. Also, advisors move, and grants expire. Having $200k in cash instead of none and a mortgage is a big advantage while you’re preparing for candidacy.

Financially, the best thing is either to get UCSD subsidized housing (if you get married you can get a bonus and skip up in line). Or rent a 3-4 bd house with other grad students/postdocs.

Also if you go to the UCSD housing office you may find good deals, e.g. long-time professors who have a nice place, maybe a guest house in the back that they want to rent. grad students are generally viewed as more responsible than the undergrads, and are preferred. These deals will probably be below market rate.

I don’t think you’ll be able to charge $800 a month for a room on a $350k place.

$200k at 4% interest is $8k a year, right? Consider that too when you consider your housing costs.

in my opinion, i’d never buy in this circumstance.

[Raybyrnes]

One consideration with respect to the financing is the fact that it changes your eligibility for federal financial aid. By being house rich and saving poor you are eligible for far greater assistance in the form of grants and Sbsidized Federal Stuent Loans. Under the federa Loan Program you are eligible for up to 8500 in subsidized funding each year of school and up to 12000 om unsubsidized. The larger your saving are the less you would be eligible for.

Additionally you could simultaneously open up a HELOC on the home so that you still ahve access o the capital if needed.

If you are considering an entrpreneurial path the ability of borring 20500 dollars now with extremely easy terms and conditions might give you well need capital for when you graduate.

Just a consideration.

[Raybyrnes]

One consideration with respect to the financing is the fact that it changes your eligibility for federal financial aid. By being house rich and saving poor you are eligible for far greater assistance in the form of grants and Sbsidized Federal Stuent Loans. Under the federa Loan Program you are eligible for up to 8500 in subsidized funding each year of school and up to 12000 om unsubsidized. The larger your saving are the less you would be eligible for.

Additionally you could simultaneously open up a HELOC on the home so that you still ahve access o the capital if needed.

If you are considering an entrpreneurial path the ability of borring 20500 dollars now with extremely easy terms and conditions might give you well need capital for when you graduate.

Just a consideration.

[Raybyrnes]

One consideration with respect to the financing is the fact that it changes your eligibility for federal financial aid. By being house rich and saving poor you are eligible for far greater assistance in the form of grants and Sbsidized Federal Stuent Loans. Under the federa Loan Program you are eligible for up to 8500 in subsidized funding each year of school and up to 12000 om unsubsidized. The larger your saving are the less you would be eligible for.

Additionally you could simultaneously open up a HELOC on the home so that you still ahve access o the capital if needed.

If you are considering an entrpreneurial path the ability of borring 20500 dollars now with extremely easy terms and conditions might give you well need capital for when you graduate.

Just a consideration.

[Raybyrnes]

One consideration with respect to the financing is the fact that it changes your eligibility for federal financial aid. By being house rich and saving poor you are eligible for far greater assistance in the form of grants and Sbsidized Federal Stuent Loans. Under the federa Loan Program you are eligible for up to 8500 in subsidized funding each year of school and up to 12000 om unsubsidized. The larger your saving are the less you would be eligible for.

Additionally you could simultaneously open up a HELOC on the home so that you still ahve access o the capital if needed.

If you are considering an entrpreneurial path the ability of borring 20500 dollars now with extremely easy terms and conditions might give you well need capital for when you graduate.

Just a consideration.

[Author]

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