Will it be better economically to rent or buy a condo in our situation? (Chicago: fit in)

[montana16niner]

My wife and I plan on moving to Chicago late next year to finish our undergraduate degrees. The problem is that we both plan on attending graduate schools after completion of our respective degrees. She plans on going to Dental School; I am hoping to attend Law School. We are aware there is a chance that we may have to attend graduate school(s) outside of our residence, which is the reason we are wary of purchasing a condo. If we plan on buying a condo we plan on putting 20-30K down initially (10-20% of total cost). What course of action do you recommend in preparing for our situation? Would it be wiser to rent, and keep our money in the market (which is declining by the second), or to just rent?

[wardniner]

Personally, I would rent.
Nothing sucks worse than being stuck with real estate you can't unload.

There are some great rentals in Chicago.

[Drover]

I don't see any reason to buy. You're not going to get anywhere near enough appreciation to make it worth your while to sell when you leave.

Meanwhile, if your money is declining in the market, move it into an investment vehicle that isn't declining, or move to a mostly cash position. Short of tax considerations (which may be cheaper in the long run than declining values anyway), why would you just sit there and watch your investments shrink?

[bluejaye]

RENT! Or look for a lease to own option so if you decide to stay you could have option to buy and some of your rent would have been used towards purchase.

[montana16niner]

Thank you for the replies thus far.

[YoMikey617]

Originally Posted by montana16niner

My wife and I plan on moving to Chicago late next year to finish our undergraduate degrees. The problem is that we both plan on attending graduate schools after completion of our respective degrees. She plans on going to Dental School; I am hoping to attend Law School. We are aware there is a chance that we may have to attend graduate school(s) outside of our residence, which is the reason we are wary of purchasing a condo. If we plan on buying a condo we plan on putting 20-30K down initially (10-20% of total cost). What course of action do you recommend in preparing for our situation? Would it be wiser to rent, and keep our money in the market (which is declining by the second), or to just rent?

Renting is the best route if you're not 100% sure you're going to stay put for more than 5-10 years, especially with the current major market correction.

Remember that every time you sell, you're paying a broker fee. So any gains you might realize (but probably won't) will likely be leveled off with the broker fee.

When you own a condo, you're paying:
* taxes.
* condo fees.
* assessments.
* REPAIRS.

When you rent, you pay the rent, and when you need to move you're all set. So rent from one of the many desperate condo sellers, and take that $30K and invest it in the market somewhere.

[chet everett]

Rent. No brainer. Unless you have some kind of giant pile of income there is really no benefit in owning in your situation. Even when I'd see articles about parents buying a condo for the four years their kid would be in college, the only way that made any sense was when runaway appreciation was more than offsetting the costs of ownership and then it only made sense because the parents probably were comparing the outlay at a dorm (which is way high for what you get) to the potential total return on a condo in a college town...

Your $30K "investment" could easily be wiped out given the massive overbuilding in most of the area of Chicago near popular colleges. This is not a "college town" with a relatively constrained real estate picture. Too many areas are going to be very hard to predict prices over the long term and it is all but impossible to predict prices over the shorter time frame you'd be looking at. Much wiser to but that money into a purely liquid investment where you could watch it grow or tap it if needed.

BTW, if I read your message correctly, you have not yet finished undergraduate degree(s). That is going to cost some money. Chicago is home to only one dental school, now that Northwestern and Loyola have shuttered their school, leaving only UIC. Makes for very very stiff competition. Although there are more options for law school, the competition for the best schools is intense and some are terribly expensive. Neither of you need to worry about how the real estate market may effect your further education.

[montana16niner]

Originally Posted by chet everett

Rent. No brainer. Unless you have some kind of giant pile of income there is really no benefit in owning in your situation. Even when I'd see articles about parents buying a condo for the four years their kid would be in college, the only way that made any sense was when runaway appreciation was more than offsetting the costs of ownership and then it only made sense because the parents probably were comparing the outlay at a dorm (which is way high for what you get) to the potential total return on a condo in a college town...

Your $30K "investment" could easily be wiped out given the massive overbuilding in most of the area of Chicago near popular colleges. This is not a "college town" with a relatively constrained real estate picture. Too many areas are going to be very hard to predict prices over the long term and it is all but impossible to predict prices over the shorter time frame you'd be looking at. Much wiser to but that money into a purely liquid investment where you could watch it grow or tap it if needed.

BTW, if I read your message correctly, you have not yet finished undergraduate degree(s). That is going to cost some money. Chicago is home to only one dental school, now that Northwestern and Loyola have shuttered their school, leaving only UIC. Makes for very very stiff competition. Although there are more options for law school, the competition for the best schools is intense and some are terribly expensive. Neither of you need to worry about how the real estate market may effect your further education.

Thanks for the imput, I have done my homework regarding graduate schools in the Chicago area. My wife and I are preparing for worst case scenarios regarding graduate school acceptances, and I am willing to substitute a top law school for a lower tier school elsewhere in the U.S. in the case my wife must attend Dental School in another location. We are both prior military (8 years myself; 4 years wife), and while the Montgomery G.I. bill will not cover a fraction of potential college tuition, it is a help. Not too mention that we plan on tapping into student loan funds. Nevertheless, I appreciate your concern on the subject and once again thank you for the advice which I will surely take.