Invest now or after medical school?

Invest now or after medical school?

Carlos Cevallos

Midlothian, VA · Member since 2017 · 21 posts · 6 votes

Hello Everybody,

I am new to RE, and as of late it has become one of my passions. While I really want to get into it, I am wondering if it is the best course of action for me at this point in my life. I have recently graduated college and am in a job where I will make around 27K this year, however I plan on starting medical school next fall (Assuming that I get accepted). My ideal plan would be to house hack a house near my future school and live for free for four years. However, while my credit score is 700+ I don't know if I will have enough money or if I will be able to qualify for even an FHA loan due to only working for one year.

Does anyone have any advice or recommendation on whether I should try and invest during this gap year, possibility of qualifying for an FHA loan, or save during the next four years and invest once I am out of school?

Thank you.

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Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes

@Carlos Cevallos Okay, I'll go ahead and be the person that says DON'T DO IT! Why? At the outset you haven't said if you're going to apply locally or apply to 20 schools across the U.S. Assuming you want to be a doctor it's not like you have a ton of free time while you're going to medical school. Are you really going to want to get calls from tenants or property managers when you're doing your residency and sleeping on a cot in the hospital during a rotation? Focus on getting your M.D., get a great job, and you'll have plenty of excess income to invest at that point.

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Jeremy HartPro Member
Residential Real Estate Broker · Blacksburg, VA · Member since 2016 · 155 posts · 67 votes
9y
I've had friends who've gone through the VCOM program here in Blacksburg, and it's definitely intense, @Carlos Cevallos. They're also some of the best folks I've ever met, as well.
Personally, I'd rent. Tempting as it may be to buy and house hack, you're on clinicals (I don't know the exact term) in year 3 and traveling from hospital to hospital, then doing internships (again, not an exact term) in year 4 - you won't be there for two years, meaning you've got to find a roommate for that time period, and ideally someone in the two classes behind you. The price range you'd be looking at with the numbers you've provided IS financeable, particularly with some local lenders who have portfolio loans for just that sort of thing. But the tipping point for me is that our market doesn't have the peaks of appreciation you'd need to sell it four years later - meaning you're an absentee landlord. If you're willing to hold it longer than four years then maybe it makes sense, but if you can't see beyond your time here in Blacksburg, I'd suggest renting and focusing on investing once you've entered residency.
Glad to talk more, but good luck with whatever you do!
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Carlos Cevallos
OP
Midlothian, VA · Member since 2017 · 21 posts · 6 votes
9y
Great analysis @Matt Katsaris. This helps put everything in perspective.
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Bill Goodland
Rental Property Investor · Allentown PA, United States · Member since 2016 · 567 posts · 442 votes
9y
I am currently beginning PA school and thought about doing the same. The issue I came across was even though I had good income, credit and savings during my gap year, I was attending school out of state and lenders told me that in order to buy in another state I would need to show that income in the state I'm moving to for school(and will have very limited time to work some per diem stuff). Rent where I am is pretty cheap and not many small multi unit house hack options so for me, given that we're at the top of the market right now and my program is only 2 years; I decided that it made the most sense to continue learning REI, but focus on school and wait to invest once I have the time, money and flexibility to really devote a lot of effort to without the risk of cash tied up in a property near school that I probably wouldn't normally buy as a buy and hold cash flow property. Best of luck whichever route you choose!
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Chris K.
Attorney · Nashville, TN · Member since 2015 · 1k+ posts · 1k+ votes
9y
@Carlos Cevallos
So I have many friends that went through your situation. And basically half my family members are either doctors or dentists.
It will take you at least seven years for you to make any significant amount of money as a doctor. That period could last for ten years if you want to do a fellowship. And I can tell you that while many doctors make decent money, some doctors struggle to crack six figures on a regular basis. And some of these folks come from great medical schools.
With the above in mind, I would say is that you should probably not invest in real-estate unless you have other family members (e.g. your parents) or very good friends that are interested in doing this with you.
A friend of mine ended up doing something similar with the friends they met during medical/dental school. They basically found a nice three-story triplex, lived in one of the units as roommates, and rent the other two out. Between them and their significant others (that they eventually married), they were able to deal with most property management issues. I don't think it was crazy profitable, but they did fine.
I do think family support is crucial. If your family has enough wealth to help you during rough, financial times, then it might make sense.
Disclaimer: While I’m an attorney licensed to practice in PA, I’m not your attorney. What I wrote above does not create an attorney/client relationship between us. I wrote the above for informational purposes. Do not rely on it as legal advice. Always consult with your attorney before you rely on the above information.
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