Resident physicians are often faced with the question of whether or not to purchase a home during their residency training. This decision represents a significant financial commitment with several potential pros and cons attached. Let’s take a look at four factors residents should consider before making their decision.
Length of Residency Program
One of the primary considerations is the length of the residency program, or how long the physician plans to stay in the area. When it comes to real estate, time is your friend, as values traditionally appreciate over time. The costs of buying and selling in a short timeframe can quickly eat into the potential to turn a profit and even result in a financial loss.
Purchasing Power
Another important factor is the resident’s financial picture. More often than not, residents are working on a limited income and carrying some amount of student loan debt. These factors must be evaluated along with the availability of funds for a down payment, credit score, closing costs, moving costs, etc. to determine what a resident can afford in their market. A qualified lender will be capable of helping a resident understand this process as well as what special lending programs are available to physicians. It is advisable to speak with a lender at least six months before one intends to make a purchase.
Timing and Direction of Market
They say timing is everything and it certainly counts for a lot in real estate. Just like the stock market, real estate experiences trends of growth and decline. There are macro trends across an entire country and there are trends that are much more micro, even down to the neighborhood and specific type of home. A realtor can help residents evaluate current and projected trends in the market(s) they’re considering.
Overall Real Estate Goals
Real estate serves many purposes and it’s not the same for everyone. It even changes for many of us over time. Residents should ask themselves the purpose of a potential home purchase during this phase of their career. Is it to fulfill a basic, short-term need or is the start of a longer term, more investment-focused strategy? The answer may help reveal whether it’s time to start now or wait for that first purchase.
*The views expressed in this article are those of Erik Thornton, independent licensee, and not necessarily representative of eXp Realty.
Erik Thornton is a TN licensed REALTOR serving the Greater Nashville, TN area. Brokered by eXp Realty, Erik has a vast, in-house, agent referral network spanning all 50 states and multiple countries. If you're looking to buy or sell a personal residence, investment property, second home or commercial property, Erik and his team can help or connect you with the right individuals who can.