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I am a third year medical student, I'm married, and we have our first child coming in the next few weeks, with a second planned in the next couple of years. I want to move to Chicago after I finish residency, which is at least five years in the future. My wife is supportive of this decision, she loves the city almost as much as I do, although the list of cities she could live in is much larger than my own. I did my undergraduate at DePaul University. I lived on, or very near, campus for the entire experience. I fell in love with Chicago, and have wanted to return since the day I left. So, we both want to move to Chicago, eventually. The trouble is can we afford it?
I'll graduate as a DO (a physician, similar to an MD). She will graduate with a PhD in Art History. I would love to go into family practice. She would love to teach at a university. Our combined student loan debt will be just over $300,000. We expect to net between $150k and $200k combined each year.
We are tired of apartments and condos. By this time we will both be about 35 years old. We need our own house. But can we afford to raise two children (probably 5 and 3 years old), own one car, one house and pay off our student loan debt?
The trick is that houses in the city are very expensive. We've looked at some very nice townhomes, and it looks like our range is $600-800k, if we go down that path. Otherwise, a place in a walkable, safe neighborhood inside the city with decent access to work and schools (such as Lincoln Park) is going to run at least $1,000,000.
Is it possible to do this, or am I dreaming? Will I have to specialize to make this happen?
Assuming prices are basically at their current level in 5 years, there are a number of safe, walkable neighborhoods with SFH in the $600-800 range. It just probably won't be Lincoln Park.
With those kinds of earnings you should be able to take home $10k/mo. or more. Say you buy a home with a loan amount of 450k at 5.5%; that would put your monthly payments, with allowance for taxes and PMI, around $3500, possibly less depending on your exact situation. Most of the "experts" think that 35% of gross is a reasonable amount to spend on housing, so 35% of take-home is great.
You could spend more, but you can find single family homes in Chicago for less in areas like Roger's Park, Albany Park, Edgewater, and others - but not in Lincoln Park.
I know that sounds like a lot of money coming in, but when you do the math on everything, you'll be surprised how little a 10k / month income (after tax) can go in this city when you have a family to support, student loans to pay off, and want to own a "large" home.
For a 600-800k house, assuming you won't have enough for a massive down payment right after you finish your residency, I think it's reasonable to expect to pay well over 4k/month (first mortgage of 417 plus a second mortgage of 200k - roughly estimating a 700k home with 10% down, PMI, HOA fees, taxes). Add a car payment, 401(k) / IRA savings, going out to eat 1-2 times a week, and in your case a massive student loan payment, and there won't be that much left. Then you also have to figure that you will probably need to pay for daycare for 2 kids, since you both plan on working. That can easily run you another 1k per child per month. If you add all of that up, I think you'll find that you have probably already exceed what you can afford on a 10k/month income.
I think it's definitely doable to raise a family comfortably in the city at your projected income level, but given your student loans and if you want to afford daycare or private schools, you may want to reconsider how much you want to spend on a house. Unless you can bring a lot of $$ to the party for a huge downpayment, I'm not sure if a 600-800k house is in the cards. And unfortunately, you'd need AT LEAST that much for a decent SFH in LP or some other highly desireable hood.
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Quote:
Originally Posted by dmp_do
We expect to net between $150k and $200k combined each year.
The answer is no--at least not in the "Chicago" you fell in love with while at DePaul. My wife and I netted that salary for years, and did not feel we could afford one of the $800,000 (low end) homes in Lincoln Square along with private school tuition and childcare (generally at least $1300/month for ONE kid). Single-family homes in neighborhoods with good school districts (i.e. parts of Lake View and Lincoln Park) will be well out of range for you. You could buy a house on the Northwest Side in a decent school district (Norwood Park for instance), but this is probably not the Chicago you had in mind. Or maybe it is.
I think you're still looking at condos with the income you're talking about. You could get a jumbo three-bedroom, perhaps even a duplex down. But a single-family house in a prime-time neighborhood is probably out of reach unless you get a serious fixer-upper or teardown.
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Quote:
Originally Posted by OrangeAndBlue
Then you also have to figure that you will probably need to pay for daycare for 2 kids, since you both plan on working. That can easily run you another 1k per child per month.
Figure $1200 being the lowest you'll find on the North Side in a semi-reputable place. That was the lowest we saw, and prices have gone up since we first shopped daycares two years ago.
A decent townhome with modern amenities starts in the 700k range even in the most western part of Lincoln Park. In east lincoln park, a 2 bedroom condo around 1100 sf in Lincoln Park 2520 starts in the mid 700s. A decent SFH in east lincoln park starts in the 2.7 million range (some of the homes on Schubert between Halsted and Clark come to mind), and in west lincoln park starts in the 1.5 million range (homes that are past ashland). Obviously shacks can always be had for less if u r the fixer-upper type.
That was really my impression as well. We are almost on the border of being able to afford what we want, but not we're not quite there. It sounds like we will be making a lot of money, but once you factor in expenses like a reasonable home, education, previous loans and a pretty basic lifestyle, you start running out of cash quickly. Plus, we won't start making any money until we are both 35 years old.
We are assuming I can even find a job as an FP worth having within the city, and that she can secure employment in her field. Needless to say, where we actually end up is more dependent on her ability to find a job than my own.
I guess I don't really know the city as well as I thought I did. I know the DePaul area really well, but I don't know much about the neighborhoods outside of that. What I like about Lincoln Park is that it is safe, it's a perfect central location, it's close to the lake, supposedly has decent public schools and it's beautiful. Plus, we won't need more than one vehicle, but that's a factor of the city not just LP. I didn't have a car the entire five years I lived in Chicago, and I didn't need one. There were times when it would have been very handy to have one, but I didn't need one.
So are there a lot of neighborhoods that resemble LP?
We spent a weekend in Chicago last winter, and we looked at a home for sale in LP that was the #1 and G of a four story brownstone. It was ok, but it was just barely too small, hwas 800k and it needed work. We also looked at a condo development on I think Kenmore and Belmont, or close to there that was about 500k, and way too small. We also saw a Townhome development in Avondale, online, that was 700k and frickin gorgeous and perfect, but we haven't seen it in person.
What if we bought a three story brownstone lived in 2&3, and rented 1&G, or something along those lines. Then a few years down the line, convert the whole thing to a SFH?
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At the income level you are discussing, I would just look elsewhere. There are many great family-friendly neighborhoods in the city that are packed with ammenities--and that are much cheaper than Lincoln Park. The neighborhoods along the Brown Line are generally quite family-friendly between Lincoln Park and Ravenswood Manor. You may be able to buy a two-flat in one of those neighborhoods and rent out the second unit to build equity, then convert to a SFH.
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