Entering medical school this fall: Rent apt or buy house?
It costs around $450/month + utilities to rent a room or share a 2-bedroom apartment. I will be needing housing in the area for at least four years and possibly up to seven years.
A 3-bedroom, 2-bath house can be had for around $70K-$90K. As a student, I qualify for an FHA loan that only requires 3.5% down, no PMI, and a fixed interest rate of 4% for 15 years.
Here's why I think I should buy:
-Purchasing $80K house would result in monthly payment of ~$550/month
-I can rent out two rooms to fellow students for $400-$450/month + utilities
-Their rent will at least let me break even on monthly mortgage/insurance/tax. Any extra can be put into savings for potential home maintenance.
-I would essentially live there for free
-So not only would I not need to spend ~$5,400 per year on rent, I also receive at least $9,600 per year towards paying the house. My net gain after four years is at least $60,000.
-I can easily rent to incoming medical students if I have to leave after four years. They are on loans so they will always pay rent.
-Eventually I can keep the place as vacation home, give to parents, or sell. No matter how much the market tanks, since most of mortgage was paid by rent money, I come out ahead.
-Not much rain (and no snow at all) in the area so probably won't have major issues to deal with like leaking roofs.
What are the cons?
-Have to find tenants (not hard, since 200+ students come in yearly)
-Unknown cost of repairs. What if fridge dies? I'd shell out the equivalent of almost 2 months of rent to replace it.
-Four years of rent will basically cover the interest I'd be paying on the house
-Lots of sunk costs (interest to bank, homeowners insurance, property tax, closing costs that might or might not be paid by seller, maybe HOA fees)
-No tax benefits since I will have no income
What should I do?