Attention, young veterinarians: These financial secrets will change your life - DVM
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Attention, young veterinarians: These financial secrets will change your life
Are you a penniless new veterinary grad? These two strategies can make a huge impact on your bank account and debt load.


1. Invest in a duplex

The route to long-term financial prosperity involves both thinking outside the box and a willingness to take on some degree of reasonable risk, even when others are unwilling to do so. The traditional "safe" route followed by most professional school graduates is to take a job, rent an apartment and pay the bills as they show up in the mailbox. And there's nothing terribly wrong with this strategy—for one thing, it lets you file the "EZ" version of your income tax forms in April.

The downside? Well, every month you spend following this well-beaten path, you delay contributing to your future financial well-being. Rather than maximizing your savings, you immediately begin paying interest to lenders. Rather than contributing to your personal wealth, you begin paying rent to a landlord. All the money you're bringing in goes back out and into the bank account of "the Man" (yes, I grew up in the '70s)—and "the Man" probably never broke a sweat over organic chemistry or spent long days keeping pet owners satisfied.

So how is it that an early foray into the residential real estate market can help the fledgling veterinarian? Consider the financial benefits of a strategy that many immigrants to the United States have used to obtain their piece of the American dream: the owner-occupied two-family home.

While the concept might seem foreign or complicated to a neophyte property investor, the process is actually elegantly simple. In an economic period such as now, when mortgage rates are very low, purchasing a small house can actually pencil out to be as cheap as renting—sometimes even cheaper. Extrapolating that reality forward a bit, it's quite possible for a single person or couple just starting out to acquire a modest two-family house.

The young owner rents out the unoccupied half of the building, which allows him or her to make the mortgage payments almost entirely out of rental income. The owner then makes extra payments toward mortgage principal from his or her own income, which builds up equity in the property quickly. That equity can later be borrowed against to retire student loans ahead of schedule.

You don't have to be a lawyer or investment whiz to do this. And there has never been a time like the present. Here are just a few reasons why the purchase of an owner-occupied two-family duplex can work out well in today's wacky world of failing banks, incomprehensible derivatives and credit default swaps:

> Take interest in property. Interest rates on residential properties are extremely low on a historical basis. (I bought my first house after graduating from veterinary school in the '80s and got a conventional mortgage at about a 10 percent rate—and we had to pay points to get a rate that low!)

> Get great rates. Interest rates on rental property mortgages can be significantly higher for mere "investors." But owner-occupied duplexes often qualify for rates far closer to those for single-family personal residences.

> Not so risky business. Banks see veterinarians, even those with significant student debt, as very good credit risks. This is especially true if you walk into a bank with a clear and well-thought-out business plan on how you intend to use your duplex to reduce your monthly expenses relative to renting. Banks are now desperate to make good loans to high-quality borrowers.

> Take advantage of the perks. There are a number of tax advantages to owning a two-family home compared to owning a single-family house—especially compared to renting a house or apartment.

> Enjoy short-term gratification. Even if you're not sure you plan to live in a specific region of the country for a long time, a duplex purchased at the right price can generate significant income even in the short term. Then you can sell it later. You can use the profit to pay down that pesky student loan.


Source: DVM360 MAGAZINE,
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