In this episode, Emily interviews Courtney Beringer, a second-year PhD student in civil engineering at Oregon State. Courtney joined the Personal Finance for PhDs Community near the start of grad school; the Community taught and encouraged her to create an emergency fund, open and fund a Roth IRA, file an accurate tax return, and calculate and pay her quarterly estimated tax on her NSF GRFP income. When Courtney started grad school, she was curious about the possibility of buying a home, and over time decided to purchase a house with a fellow grad student. By renting out two of the bedrooms in their house, Courtney and her friend have nearly completely eliminated their housing expense, even in a market where it wasn’t possible to buy on a single grad student income. Listen through the end of the episode for short bonus interview with Sam Hogan, a mortgage originator specializing in graduate students and PhDs, for his take on Courtney’s co-borrowing strategy.
Links Mentioned in the Episode
- PF for PhDs Community
- PF for PhDs: Home-buying Call Sign-Up (Free Live Q&A)
- First-Time Home Buyer: The Complete Playbook to Avoiding Rookie Mistakes (Book by Scott Trench and Mindy Jensen)
- PF for PhDs: First-Time Home Buyer Book Club Sign-Up
- PF for PhDs: The Wealthy PhD
- PF for PhDs: Open Your First IRA
- The House Hacking Strategy (Book by Craig Curelop)
- PF for PhDs S3E3: This Grad Student Defrayed His Housing Costs By Renting Rooms to His Peers (Money Story with Dr. Matt Hotze)
- PF for PhDs S2E5: Purchasing a Home as a Graduate Student with Fellowship Income (Money Story with Jonathan Sun)
- PF for PhDs S8E18: How Two PhDs Bought Their First Home in a HCOL Area in 2021 (Money Story with Dr. Emily Roberts)
- PF for PhDs Interviews with Sam Hogan (Mortgage Originator/Emily’s Brother)
- S5E17: How to Qualify for a Mortgage as a Graduate Student or PhD, Even with Non-W-2 Fellowship Income (Expert Interview with Sam Hogan)
- S8E4: Turn Your Largest Liability into Your Largest Asset with House Hacking (Expert Interview with Sam Hogan)
- Sam Hogan’s E-mail Address
- Sam Hogan’s Cell #: (540) 478-5803
- Sam Hogan’s Email: firstname.lastname@example.org
- PF for PhDs: How to Complete Your Grad Student Tax Return (and Understand It, Too!)
- PF for PhDs: Quarterly Estimated Tax for Fellowship Recipients
- Personal Finance for PhDs (YouTube Channel)
- PF for PhDs: Podcast Hub
- PF for PhDs: Subscribe to Mailing List
00:00 Courtney: I know some people might be wondering, like, why would I buy a house in somewhere where I’m only going to live for four or five years? But like, I’m not paying rent or a mortgage right now. And I also get to hopefully sell my house in three to four or five years and make money off of its appreciation. And maybe I don’t sell in four to five years and I could actually move away and I can hire a management company to manage tenants. So there are possibilities beyond just the time where you’re physically in that city to use your house hack.
00:40 Emily: Welcome to the Personal Finance for PhDs Podcast: A Higher Education in Personal Finance. I’m your host, Dr. Emily Roberts. This is Season 10, Episode 18, and today my guest is Courtney Beringer, a second-year PhD student in civil engineering at Oregon State. Courtney joined the Personal Finance for PhDs Community near the start of grad school; the Community taught and encouraged her to create an emergency fund, open and fund a Roth IRA, file an accurate tax return, and calculate and pay her quarterly estimated tax on her NSF GRFP income. When Courtney started grad school, she was curious about the possibility of buying a home, and over time decided to purchase a house with a fellow grad student. By renting out two of the bedrooms in their house, Courtney and her friend have nearly completely eliminated their housing expense, even in a market where it wasn’t possible to buy on a single grad student income. Listen through the end of the episode for a short bonus interview with Sam Hogan, a mortgage originator specializing in graduate students and PhDs, for his take on Courtney’s co-borrowing strategy. You’ll be able to hear in the course of this interview just how excited I am to bring Courtney’s story to you. I am quite bullish on house hacking for graduate students, and I believe Courtney’s strategy can make it accessible to far more graduate students.
02:01 Emily: If you get excited about home ownership during this episode, whether as part of a house hack or not, I have two special upcoming events to invite you to. First, on December 16, 2021, Sam Hogan and I will hold a free live Q&A call where we answer any and all questions pertaining to becoming a first-time homebuyer. This is a perfect event to attend if you’re getting your finances prepared to purchase a home next spring or summer. Go to PFforPhDs.com/mortgage/ to sign up for the call. Second, I am hosting a live Book Club conversation in January 2022 on First-Time Home Buyer: The Complete Playbook to Avoiding Rookie Mistakes by Scott Trench and Mindy Jensen inside the Personal Finance for PhDs Community. I’ll even buy you a copy of the book after you join the Community. Fill out the short form at PFforPhDs.com/bookclub/ to indicate your interest in the conversation and I’ll be in touch about scheduling! Without further ado, here’s my interview with Courtney Beringer.
Will You Please Introduce Yourself Further?
03:13 Emily: I am very pleased to have joining me on the podcast today, Courtney Beringer. She is a second-year graduate student at Oregon State in civil engineering, and she is a founding member of the Personal Finance for PhDs Community, which you can find at pfforphds.community. So, what we’re going to discuss in today’s episode is how the Community has helped helped advanced, help shape Courtney’s finances in this first year of graduate school. And in particular, we’re going to focus a lot on Courtney’s house hack, which I’m really, really excited to learn more about and tell you more about. So, Courtney, thank you so much for joining me on the podcast. And will you please tell the audience a little bit more about yourself?
03:53 Courtney: Yeah, thanks for having me, Emily. I’m happy to be here. Yeah. As she said, my name is Courtney. I’m from Iowa, but moved to Oregon for grad school. I have an undergraduate degree in mechanical engineering and I’m here for civil engineering. And yeah, in my second year of my PhD, I have a few more left, looking to do a postdoc after that and become a faculty member.
Finances Before Grad School
04:16 Emily: Awesome. Well, take us back to like when you were not yet enrolled in graduate school, but thinking about graduate school. What were your finances like at that time? And also what was your outlook about finances in graduate school?
04:31 Courtney: Yeah. Overall, I felt comfortable in my finances. I’d worked a lot of jobs in undergrad, and I actually took a year and a half break between undergrad and grad school and worked a full-time engineering job, which paid pretty well. I already had a really decent savings and I had mutual funds, but I basically knew nothing about retirement or buying a house or perhaps how I knew I was going to go to a lower income going to graduate stipend and how that might affect my change in lifestyle as well.
Finding and Joining the PF for PhDs Community
05:07 Emily: And so tell us about how you, I guess, came to find me and Personal Finance for PhDs and why you joined the community.
05:15 Courtney: Yeah, so about two years ago now, I applied for grad school and started getting offer letters coming in and wanting to understand how to compare them. And I was applying for a lot of different fellowships and wondering how that could be leveraged in my offer letters. And then I found Personal Finance for PhDs, I believe on just by Google searching and finding the website and then finding Emily’s resources and reaching out for that like 15-minute call. And feeling like this Community, it was really somewhere where I needed to be in order to grow and understand my finances as a PhD student.
05:57 Emily: Yeah. So it sounds like you had some solid basis in terms of like a little bit of savings in place and so forth, but really needed more like of that grad school-specific, what is going on with fellowships what’s going on in academia, like kinds of questions, which is exactly what I try to offer. Okay. So we have a picture of, of where you are financially when you started graduate school, what was one of the first like actions that you took within your finances having joined the Community?
Open a High-Yield Savings Account
06:24 Courtney: Yeah. So going through your like step-by-step framework, I had savings, but I didn’t necessarily have a specific amount set aside that I should have in savings, or I hadn’t thought about it in a more critical way. So the first thing I did was look at putting a chunk of money that supports me over X amount of months in a high-yield savings account, because the one that I had always used was not that high. So I went through the videos, I chose my savings account, and based on the Community, I was able to keep myself accountable and was able to put in, like I chose the savings account and I just transferred my money in, and here’s an accountability step where I can tell other people that I did that. And yeah, now I get to check my savings out and see it grow more than it was before.
07:20 Emily: Awesome. I’m so glad to hear that. So, the framework that you mentioned is this eight-step financial framework that I teach in a few different places around the Community. I have kind of a series called The Wealthy PhD, which is both an e-book and now a video series, although that didn’t exist when you first joined. So I’m curious, is your emergency fund, that sounds like a step six emergency fund, is that right?
07:43 Courtney: Yes. Yes.
07:47 Emily: And so, did you also work through the steps prior to that point? Or was it just like, I have some cash, so I need to define this as emergency savings and put it in a more optimal place as you did? Like, did you go through all the other steps as well?
07:59 Courtney: I think, based on where I was at in my finances, a lot of the other steps had been covered, so I’d already paid off all my school debt, I didn’t have any credit card debt. I worked through a lot of that. So that was really like the next step that I had not tried to do yet, or even thought about.
Invest in an IRA
08:20 Emily: So step four in the framework is starting to invest. And you mentioned earlier, you didn’t really know anything about retirement accounts. So, did you also start investing, or have you been focusing on other financial goals?
08:30 Courtney: Yeah, kind of around the same time as making that emergency savings, I also looked into the IRA investing and watched those videos. And then in a similar manner, was held accountable by the Community and started my IRA, which I contributed fully to in 2021 and then already contributing to as well again. So yeah, that was around the same time where I was like, I have a decent savings, and I need to be doing something with it.
09:03 Emily: It sounds fantastic. Obviously you are an exemplary member of the Community in terms of like actually following through on the stuff that you learn inside there. We’ve run this a couple of times in the Community, maybe we’ll run it again soon, this challenge that I call like open your first IRA which people can learn more about that at pfforphds.com/openIRA. But basically- I just lay out like the seven step process for, okay, these are decisions you have to make, you know, to get from where you are to having your IRA open and funded. These decisions, these are the steps you have to follow through on. And I believe you went through that challenge. Is that right?
09:38 Courtney: Yeah, I did. Honestly those videos are so helpful. It helps you understand the verbiage and all the language that goes along with it. And I felt like I was making my own decision, but it was a very informed decision on it.
09:52 Emily: I’m glad it reached that tone with you because that’s exactly how I want it to be. It’s like, you know, I can’t tell people what to do. Like legally, I’m not like licensed to tell you what to do with your investments. But I can kind of give you the lay of the land, and then within that you figure out like what’s best for you. So I’m really glad it struck you that way.
Evolution of Courtney’s House Hacking Strategy
10:09 Emily: Well, I’m excited to talk about your house hack. So when did buying a house and even the potential of house hacking kind of come onto your radar?
10:19 Courtney: I feel like there were some conversations in the Community, actually, before I moved to grad school, I feel like maybe there were conversations in the Community, or I was talking to people outside of this Community as well about home-buying. And I was really excited to buy a home in Oregon before I moved here, but that was very hard to do during the pandemic and virtually and not knowing the area. So, I ended up moving here and renting for the first year. But then yeah, with the help of the Community amd reading through our book club, I felt like I started to learn a lot more about the house-hacking strategy and wanting to pursue that.
11:05 Emily: Yeah. So when you first thought about buying a house, were you thinking of it as you would live by yourself? Or were you thinking that you would be renting to roommates? Which I haven’t defined it yet, that’s what house hacking is, owning a house and renting at least one room out to somebody else.
11:18 Courtney: Yeah, actually at first I was like, oh, I’m in grad school. I want to live alone. I’m like becoming more of an adult. But then when I looked more at just the cost of living in this area, it was not as feasible as I thought it might be. And my first year living with roommates went really well. And I was like, I think this could continue. And I’m okay with roommates in grad school. So, then my mindset transitioned to more of the house hacking rather than living alone.
The House Hacking Strategy
11:53 Emily: And so, I did time our reading in our book club of The House Hacking Strategy for when people would be thinking about, you know, there’s a seasonality to buying a home. So we were reading that in like maybe Februaryish, 2021. So anyway, the book is The House Hacking Strategy by Craig Curelop. I learned a lot from reading that book. Apparently, you did as well. How did that book influence the decisions that you made after that point?
12:20 Courtney: It lays out a lot of different house hacking strategies based on your level of comfort. And so I found the one that I was looking for, which was, you know, I buy a house and I rent out maybe one, two, or three of the rooms, and I have my own room, and my tenants could maybe be my friends or maybe not. And that was my level of comfort. It also influenced me to talk to my other good friend in grad school about buying a house, and we were both looking at buying separately. But then we compared our finances and realized that we actually wanted to buy a house together.
13:02 Emily: Yeah, this was, I mean, to be frank, I was a little concerned when you first brought this up inside the Community, like can this be done in a safe and responsible manner that is buying a house with someone else who frankly, you know, you’re not legally married to, which is the kind of easiest scenario under which to buy a house. Of course, many people do this with a romantic partner without being married, but then you’re taking that a step further and buying it with a friend. And so it’s very unusual, and you have to be careful about it. So I really want to understand better about how you did that. But like, I mean, you’ll explain it to us, but if other people are thinking that this might be, you know, feasible for them to buy with a friend and still be able to house hack and rent out additional rooms so it’s still a source of income for you. Like, I mean, that is a complete game changer in being able to buy in many, many more housing markets than a single graduate student stipend would support, you know, right now. So tell us more about that, like partnership that you formed.
14:00 Courtney: Yeah. So there was another first-year grad student in my program and we became friends pretty quickly. And then when we started talking about buying a house, I was basically able to convince her that it’s a pretty good idea to buy a house. And then looking at the market in Oregon, it’s just, especially if we wanted to be even within a half an hour drive of our university, it was not doable with the down-payment and with just our overall debt-to-income ratio alone. And so then, one day a realtor mentioned like, “Oh yeah, I actually just showed a house to like someone your age. And there were these two women that were looking to buy it together.” And I was like, “Dang, okay. I cannot afford really anything here by myself. But I can perhaps talk to my friend about this.” And so we had a lot of long conversations about our finances and getting to know each other and really putting it all out on the table. We made a lot of documents together, a lot of like signed contracts between ourselves because we wanted that in writing.
Co-Owning a 4-Bedroom
15:17 Emily: So this is amazing that this idea came from your realtor and, you know, you had a person kind of in mind as a candidate, and then you’re able to work out all the things you need to work out. It’s actually not that unusual in the real estate investing space to have a partner. But like you have done with the person that you bought with, like, you guys have to have some legal kind of protections and some things planned out and worked out in advance to make this work. But that’s amazing. So, would you feel comfortable telling us about the house that you bought? Like some of the numbers around it?
15:51 Courtney: Yeah. So we were actually looking at three-bedroom houses, but ended up with a nice four-bedroom that is only like a five-minute drive from the university. We, I think, got a pretty good deal on it. These sellers wanted to move out really quickly. And the house I think was asking for like 250,000, but we offered nearly 270,000 because that’s where the market was at now. And then additionally, we offered more percent down, and that’s what finally sealed the deal for us to get our offer accepted. Yeah. So now we are able to rent out two of our rooms. So of course, if you did this alone, you’d be able to rent out more rooms rather than having a co-owner, but it actually works out really nicely to have a co-owner for a lot of reasons.
16:50 Courtney: We were able to split the down payment, which was very nice. Our two renters actually pay our mortgage basically fully. So we don’t pay any portion of the mortgage. We really only pay a fourth of the utilities for our home. And then we are able to put more money towards improvement of the home and sweat equity and yeah, it’s worked out really well. Another reason that having a co-owner has been awesome is that if one of us leaves, one of us is still there to manage everything. And we actually split a lot of tasks. And there are so many tasks to do as a homeowner, right? And having someone to split them with is really nice.
17:32 Emily: Yeah. I think that there is a degree of work involved with being a landlord. And I think especially as like a first-time landlord, having a partner there with you to help you like figure out like, what’s the right course of action? Like, how should we be screening tenants? Like, what kinds of house rules should we set up? Especially for you, like your case, living in the same living space with your tenants, there’s much more kind of like roommate interpersonal stuff going on as well as the layer of like the legal stuff. So I think that’d be actually really helpful to have someone going through that journey alongside you.
Setting Up a Joint Bank Account
18:04 Emily: So those numbers sound amazing that the mortgage is pretty much paid by those the rental income. Of course you still have some additional costs, like you had just mentioned home improvements, and so forth. Do you have any like structure in terms of like each of you like maybe saves a certain amount of money or contributes to a common fund that you’re buying from? Or are you kind of like winging it as you go forward?
18:25 Courtney: Yeah, we actually set up a joint bank account, which is like yeah, a whole other thing to do with a friend, but it was super easy. We have both of our names on our home insurance. And out of our joint bank account is basically where we process all of our rental income and where we process all of our home purchases. Because one thing we haven’t done yet is talk to a tax consultant about what home expenses could mean for tax write-offs. And so we want to have that all in one place. And then we actually both contribute to our joint account every month, a few hundred dollars to basically invest our home, to put towards emergency home repairs, and just make up the differences of utilities and such like that.
19:19 Emily: Yeah. Thanks for clarifying that. If anybody is interested in hearing other grad students and PhDs talk about this like house hacking strategy, I’ve actually done two previous sort of in-depth interviews on house hacking. One with Dr. Matt Hotze, and one with Jonathan Sun. Well, the one with Jonathan Sun is actually more about getting a mortgage when you have fellowship income, which is another wrinkle in that whole thing. But we’ll link those two episodes in the show notes. And another episode that may be of interest to the listeners is that I purchased my first home around the same time you did this past spring in 2021. And so I tell the story of how we made that happen. And a lot of the sort of technical things that go into this, like the down payment and like the interest rate on your loan and verifying your income and all these kinds of things. So we’ll link that from the show notes as well.
Navigating a Home Loan with Grad Student Stipends
20:06 Emily: Did you run into any like hiccups with getting the loan or getting to closing like that were related to either, you know, the partnership aspect of this or the fact that you are graduate students?
20:20 Courtney: Yes. There are a lot of confusing things with income, and know that the title company is going to be kind of confused by grad student income. And like our loan officer, like she helped us a lot, but there still was confusion about like, how are you funded this summer versus the fall? Why is it changing? Like submit all the documentation for, you know, both types of income that are coming in. And then there’s just, you know, a whole other person that has to submit all their bank information and all their financial information. So that just means like more room for, you know, missing a document here, there things being delayed. It wasn’t a huge deal, it’s just more paperwork and more people to coordinate.
21:12 Emily: Yeah. I noticed with my own journey to homeownership that like, there’s so much attention paid to the, getting to an accepted offer part of the process. And it’s very dramatic and all of that, especially this past spring, it was yeah, a very dramatic time to be buying a home. But then all the stuff that happens after, you know, you go under contract. All that paperwork, all those details, it’s not sexy at all, but there’s a lot of work that happens in that period of time. A lot of work by your real estate agent, a lot of work by you and all the other professionals involved in this process. So I was kind of impressed in a new way with the whole industry and how it works and just, yeah, how much work there is that goes into that stage.
Sam Hogan, Mortgage Originator
21:50 Emily: I will say for anyone listening, you did not use my brother, Sam Hogan as your loan originator. But other people may be interested and we will link all the episodes that Sam has been on the podcast in the show notes as well. But basically, through our relationship, like I’ve been referring business to my brother Sam Hogan, because he is now very, very intimately familiar with all the weird kinds of income that graduate students and postdocs may have, and how to present a case to the underwriters that work with his company, that you are a great person to lend to. I mean, he’s not a miracle worker. So in some cases, funding is structured in such a way that it’s not going to go forward, but basically he knows like how far he can like push it to get things accepted that may be not familiar, not accepted by other mortgage originators. So I’m glad yours went through, okay. But if anybody’s having trouble or just wants to have a smooth like process from the beginning, please contact Sam. You can find his contact information in the show notes for this episode.
22:50 Courtney: I think, another thing I’ll add is that a lot of times when people buy houses together, they’re perhaps married or have a different end goal for the house. So, there were a lot of assumptions in just documentation, like by the title company and in our loan that, you know, if one of me and my friend, if one of us were to die, like what happens to the house? And a lot of that assumes that it will just totally go to the other person, or there are a few different ways that you can co-borrow alone. And those are things that you definitely need to talk through. We actually ended up buying like a $15 legal help guide basically for co-borrowers of houses. And that was so helpful and helped us make our contracts with each other.
23:39 Emily: Yeah. That’s awesome. What kind of loan did you get by the way? Was it conventional or a different type?
23:45 Courtney: We did end up doing conventional, yeah.
23:46 Emily: Okay. And do you each have a 50% stake in this, or is there some kind of other equity arrangement?
23:52 Courtney: We both have 50%.
23:55 Emily: Amazing. Anything else you want to say about how this is working out now that you’ve been in the house for a few months, and you’ve had your tenants for a few months?
24:03 Courtney: We’ve been in it for three months. We started with two tenants who are friends who only needed a month somewhere to live, which was really great to practice with people who are a little bit lenient and understand your situation. And now we have our two tenants that are going to be in here for a year, and it’s going really well. And we’re already making updates and improvements on the house. Yeah, overall, it’s working out really nicely.
24:35 Emily: Emily here for a brief interlude! Are you a graduate student, postdoc, or early-career PhD considering buying your first home in the foreseeable future? If so, I invite you to join the Personal Finance for PhDs Community for a Book Club discussion of First-Time Home Buyer: The Complete Playbook to Avoiding Rookie Mistakes by Scott Trench and Mindy Jensen of BiggerPockets. I and all the Book Club participants will read the book and come together for a one-time live discussion in January 2022. This is perfect timing for anyone with an eye on the spring or summer 2022 peak buying season. Since it might be hard to find this book in a public library, I will give you a copy of the book after you join the Community. If you want to join the Book Club for First-Time Home Buyer, please fill out the survey, including your availability for the discussion, at PFforPhDs.com/BookClub/. That’s P F f o r P h D s dot com slash B o o k C l u b. Now back to our interview.
Considering a Second Home for More House Hacking
25:39 Emily: Recently, when we spoke at one of our, by the way, inside the Community, we have monthly live calls where people can just show up and ask questions and talk about whatever people want to talk about with me and whoever else wants to come. You brought up the possibility of buying another home. What are your thoughts around that?
26:00 Courtney: I did yeah, me and my friend had been talking about it because once you do it once, it’s really tempting to house hack again, which is actually what the book recommends. And now that we have this house, I mean, I still need to do a lot of learning in what a home equity line of credit is, and maybe what a second house could mean. But essentially, if we bought a second house, then we could rent out all four bedrooms in our current one, and that would actually cover both mortgages and perhaps even rent out another room in a second house. So as you can see, it could just start stacking up and and improve our financial situation even more.
26:48 Emily: That’s what’s really amazing to me about these like big levers that you can pull in your finances, even as a graduate student. I’m not suggesting that this is possible in every housing market in the U.S. Definitely a graduate student stipend would not even be within striking distance in many areas. But if you happen to find yourself where you happened to choose one of these areas, owning your own place, especially when it’s combined with house hacking is one of these big levers you can pull to massively change your financial situation. And I would say actually that investing is another one. That’s the one that I focused on when I was in graduate school. I wish I knew about house hacking, I wish I had read The House Hacking Strategy if it had been published back at that time, because Durham was another place where that was possible for two graduate student stipends to do that.
27:31 Emily: But instead, I focused more on investing and that’s been a huge lever, not to immediately realize cashflow the way that you can with real estate, but in terms of like growing my net worth over the decade or so since I started graduate school, it’s been incredible. And so, if you can just get like a toehold into real estate or investing, or one of these other levers that we’ve talked about on the podcast, it can really dramatically change your finances over a relatively short period of time. And it’s just amazing. That’s part of the reason why this podcast exists is that I just want people to know the possibilities, even if you don’t want to follow through that’s okay. But just know the possibilities that are out there. Even for someone like a graduate student. So I’m so happy to have you on here because especially this new wrinkle to your story of buying with a partner, instead of on your own or with someone you’re married to or et cetera, of buying with a friend like this is an amazing solution that never would’ve occurred to me. And I’m so glad that, you know, you introduced me to it.
Final Thoughts on Real Estate
28:26 Emily: Is there anything more that you want to say about real estate or the house hack?
28:31 Courtney: Now that I’ve had more conversations about real estate and been listening to more podcasts in general about real estate, I’m realizing how good of an investment it is. And I know some people might be wondering, like why would I buy a house in somewhere where I’m only going to live for four or five years? But like, I’m not paying rent or a mortgage right now. And I also get to hopefully sell my house in three to four or five years and make money off of its appreciation. And maybe I don’t sell in four to five years and I could actually move away and I can hire a management company to manage tenants at this place that I I don’t even live in Oregon maybe anymore. So there’s possibilities beyond just the time where you’re physically in that city to use your house hack.
The Community and Quarterly Estimated Taxes
29:24 Emily: I think that’s an excellent point because that’s definitely something that I got hung up with. I talked about this in my episode on making our first home purchase that I have a bit of like regret that we didn’t buy earlier, because one of the things that was holding me up about it was thinking I’m only planning on being in this city for three, four, five more years. Does it make sense to buy? And that’s a very valid question to be asking, but you have to know again about these other possibilities of one, house hacking, which completely changes the math of, you know, the break even point of renting versus buying. And two, the possibility of holding onto that property longer, if you still think that it’s a good investment at the time that you leave the city. So I’m really glad that you brought those points up. Something else that I know that you’ve used the Community for is your tax return slash your quarterly estimated taxes. So can you just let us know how that resource has helped you?
30:16 Courtney: Yeah. My parents had always sort of handled my taxes and sent it off to some tax person and I was just sending W2s places. And the tax workshop through the Community helped me understand what’s actually going on, what numbers matter, and how I could do them on my own based on getting a graduate assistantship sort of stipend. And now that I have a fellowship that just started one month ago, I’ll be making quarterly estimated taxes on that. And so, additionally, that workshop is so helpful in understanding how to go through that process as well. So I feel way more informed about taxes and how to do them on my own. And I think I ended up filing my taxes for free this past year. So that was really awesome.
Emily’s Tax Workshops
31:08 Emily: That is awesome. Yeah. Specifically, the two workshops you’re referencing are, I have one during tax season for graduate students called How to Complete Your Grad Student Tax Return (and Understand It, Too!). If you’re interested in learning about just that workshop, you can find it at pfforphds.com/taxworkshop. So, that’s during tax season for your annual tax return. And like you said, it explains a lot around like how the types of income that graduate students have, and graduate students tend to have more income types than they think they do, how that all fits in with like the IRS language. And my goal is really to kind of teach you enough so that you can either prepare your taxes on your own, which sounds like probably is what you did, or interface with tax software or a professional tax preparer in such a way that they understand what you’re talking about and your sources of income and expenses and what’s relevant, and what’s not. Yes, you can speak their language. And so you can get an accurate tax return prepared that minimizes, ideally, your tax liability.
32:02 Emily: And then the other one is for fellowship income, and by that, I mean, non-W2 income at the postbac, grad student, or postdoc levels. And that’s at PFforPhds.com/QETax, QE for quarterly estimated. And yeah, all the things that we’ve mentioned so far are available inside the Community PFforPhDs.community for just a monthly subscription fee. That’s actually pretty much equivalent to, if you bought one tax workshop, you may as well be in the Community for a month. If you buy the other one, may as well be in the Community for a month. So that’s kind of how the pricing works. Anything else you’d like to add about the tax journey that you’ve been on? Actually, I’ll add something first, if you don’t mind. I love that you figured out the grad student part of your tax return in 2020, or rather for your 2020 taxes, because now your 2021 is going to be a lot more complicated with the real estate stuff. And so at least at this point, I’m assuming you’ll use a professional tax preparer, but you already have a good understanding of this aspect of your situation. You can rely on that person to do the real estate part, right? And come together and have an accurate tax return together.
33:04 Courtney: Yeah, definitely going to have a different tax situation this year, but certainly go through that quarterly estimated tax workshop. And I feel like I can talk to a tax preparer in a lot more informed ways and say exactly what my situation is and what I need. So that’s been really helpful.
33:22 Emily: Yeah. Any closing comments about being part of the Community or anything else that you’ve gained from it?
33:29 Courtney: I would say the conversations with other PhD students and what they’ve tried and what they liked and what they didn’t, just even talking to people like what tax preparing software did you use? What did you like about it? What didn’t you? You know, like how has preparing your quarterly estimated taxes been? How much time does that take you, or how much time should it even take me? All those sort of questions are really nice to be able to talk to other grad students about, and that’s what I get from being in the Community.
Best Financial Advice for Another Early-Career PhD
33:55 Emily: Yeah. Thank you so much. It’s been absolutely wonderful to have you in the Community. And we’ve really gotten to know each other through these, as I said, monthly live calls, especially. Okay. Last question that I end, all my interviews on is what is your best financial advice for another early-career PhD? It could be something that we’ve touched on in the interview, or it could be something completely new.
34:17 Courtney: I would say, for me at least starting out earlier was, or even pre-PhD, was applying to a lot of fellowships. And if you’re someone who’s applying for their PhD programs, having a fellowship as a leveraging tool is a great way to get into the school you want to get into, work with the professor you want to work with. And also I mean at Oregon State, at least, my graduate research assistantship is a decent amount, but my fellowship definitely is more than that and helps support my personal finances better. I am a recipient of the National Science Foundation Graduate Research Fellowship, and that’s been an awesome tool to get into the places I want to get into and make more money as a grad student.
35:15 Emily: Yeah. So the advice is apply, apply, apply, and apply well. And I would say, you know, that’s awesome advice for people entering graduate school. It’s great advice for people still in graduate school and so forth. There are a lot of fellowships available for first year, second years. Less so a little bit later on, but they’re still there and you can still keep applying. Especially if you already have the feather in your cap of having the NSFGRP, for example, that’s going to go on your CV, it’s going to make it, you know, you’ll be that much more of a standout candidate for whatever awards you apply for after this point. So that’s amazing, Courtney, thank you so much for volunteering to be on this episode. It’s been lovely to have you!
35:51 Courtney: Yeah, thanks, Emily!
Addendum with Sam Hogan
35:59 Emily: Welcome to the addendum to the Courtney Beringer episode. Thanks for sticking around. I have with me Sam Hogan, who is a mortgage originator with Prime Lending (Note: Sam now works at Movement Mortgage). He is an advertiser with Personal Finance for PhDs and my brother. And Sam has been on the podcast multiple times before. The chief episodes to listen to are season eight, episode four, where we discussed house hacking in great detail. So if you like the strategy that Courtney used, check that one out. There’s also season five, episode 17, where we specifically discussed qualifying for a mortgage with fellowship income. Although there have been updates since then. So if you want some updates, I actually have some on my YouTube channel from some previous Q&As that we did with Sam. So Personal Finance for PhDs is the name of my YouTube channel. Anyway, long-winded intro, Sam, please reintroduce yourself to the audience.
36:48 Sam: Thank you for having me Emily. Yes. I’m Sam Hogan and I work with Prime Lending (Note: Sam now works at Movement Mortgage). We’re a national lender. My NMLS ID is 1 4 9 1 7 8 6.
Sam Hogan’s Contact Info
36:59 Emily: How can people get in touch with you if they want to learn more about getting a mortgage for themselves?
37:05 Sam: The best way to reach me is definitely by text. My cell phone is (540) 478-5803. Standard data message rates apply. And if that doesn’t work, my email is email@example.com.
37:24 Emily: Perfect. And I should also mention that Sam, because of our sibling relationship, Sam has been actually kind of specializing in graduate students and postdocs and early-career PhDs within the mortgage industry for the past several years. He has lots of experience in this area. So, Sam, you know, I kind of briefed you on what this interview with Courtney was about. And her, to me, very unusual and very interesting strategy of buying a home with a friend. I never talked to anyone who did that before, but it definitely seems to me that if you’re careful about it, this could be a really game-changing strategy for people who could not otherwise, you know, buy a home on their own in their own housing markets. So I wanted to know from you, strictly from a lender’s perspective, now we’re not talking about from a legal perspective about whether this is a good idea or not, but strictly from a lender’s perspective, are there any issues that are posed by putting two, like unmarried or otherwise unrelated, people together on a mortgage?
Lender’s Perspective on (Unrelated) Co-Borrowers
38:19 Sam: There’s not. It’s the same simple steps as having another co-borrower even if you’re related to them. So, normal process, like Courtney touched on, you know, just double the paperwork. And there’s no shame in bringing on a co-borrower even if you’re unrelated or a friend, to jump on a mortgage and then, you know, as long as everyone can stay responsible and consistent, then it’s very little risk.
38:47 Emily: Is it pretty common for there to be co-borrowers on a mortgage? Let’s say, aside from a married couple, is it pretty common to have a parent or another relative or a sibling or a friend or something like that going on?
38:59 Sam: I would say about 50% of the loans we originate have co-borrowers on them.
Exit Strategies for Co-Borrowers
39:07 Emily: Can you just kind of at a high level go over what are the exit strategies? Not for Courtney, specifically, but let’s say we had another person listening who’s like, “Oh wow, my best friend and I would love to buy together, but of course we don’t want to be in a house together indefinitely.” So how, if you enter into this kind of relationship, how can you later on dissolve it?
39:27 Sam: Refinancing off is one. You can obviously sell the property and pay off the mortgage. You could turn the property into a rental. That would allow you to cover the mortgage, maybe some extra income. But that would actually keep both borrowers on the loan. If one borrower wanted to move away, recoup what they’ve gained from home ownership and moved on to their next goal. The borrower that’s still living in the property could take a key lock, a home equity line of credit against the home, which is not refinancing. It’s just basically a line of credit given to you in cash for however much you need. Obviously you’d have to meet the regulations and rules for loan to value, but you can’t take 100% of the value of your home out, for example. But they would take a line of credit.
40:23 Sam: You would be able to pay out your original co-borrower that got you into the loan. Say, “Hey, this is 50% of the equity we’ve gained over the last X amount of years.” And just on top of that money being sent, just have something in writing. I’m not an attorney or anything, but just disclosing that, “Hey, we, we made an agreement. You know, I’m going to have full ownership and take you off the title and have a put claim deed filed. So you’re off the title, then we’re going to pay you some equity from the home.” That would be the easiest way to do it. Yeah. It’s not as complicated as people would think. Like you’re not signing your life away forever. You’re just signing to get into it. And if you want it to, you know, change your living scenario year later, it’s definitely possible.
41:07 Emily: Okay. Yeah. Thank you for that insight. So I just want to say again, the message that I want to get across here from Sam is like that this is not that unusual, not that complicated. You can get out of it in a variety of ways once you want to. But of course, we’re talking with a mortgage originator. We’re not talking with a lawyer. So like there’s other perhaps documents and like official contracts and things that have to be filed that’s sort of beyond the scope of our conversation, but from your perspective, this is not really a big deal from a lending perspective.
41:39 Sam: No, I mean, title companies even have ways to state this that are common, right? That is, two tenants having 50% ownership of this property. So it’s not abnormal. I wish it would become a little bit more mainstream with some of our, you know, younger renters, people who want to be in home ownership but just either don’t know or don’t know how, or are just a little nervous to execute.
Live Q&A with Emily and Sam
42:07 Emily: We have something else exciting to announce, which is that Sam and I are doing another live Q&A call. So we’ve done, we did a couple of these earlier in 2021 during the, you know, peak of the buying season. We’re doing another one on December 16th, 2021 at 5:00 PM Pacific. So basically with this kind of session, you sign up, you can sign up at PFforPhDs.com/mortgage, and just show up with your questions. And Sam, or I might be able to contribute something as well. Mostly Sam, will answer those questions to the best of his ability. And yeah, this is a great way to kind of get prepped. If you are thinking about buying in spring 2022, or maybe shortly after that, this is a great time to be like, sort of getting your ducks in a row and Sam can help you figure out the steps that you need to take to do that. So again, if you want to sign up, PFforPhDs.com/mortgage for the event on December 16th at 5:00 PM. Sam and I will both be in attendance and happy to answer your questions. So thanks so much Sam, for giving this additional insight into Courtney’s fantastic idea.
43:10 Sam: Yes. Thank you for having me! And as always, let me know if you have any questions.
43:19 Emily: Listeners, thank you for joining me for this episode! pfforphds.com/podcast/ is the hub for the Personal Finance for PhDs podcast. On that page are links to all the episodes’ show notes, which include full transcripts and videos of the interviews. There is also a form to volunteer to be interviewed on the podcast. I’d love for you to check it out and get more involved! If you’ve been enjoying the podcast, here are 4 ways you can help it grow: 1. Subscribe to the podcast and rate and review it on Apple Podcasts, Stitcher, or whatever platform you use. 2. Share an episode you found particularly valuable on social media, with an email list-serv, or as a link from your website. 3. Recommend me as a speaker to your university or association. My seminars cover the personal finance topics PhDs are most interested in, like investing, debt repayment, and effective budgeting. I also license pre-recorded workshops on taxes. 4. Subscribe to my mailing list at PFforPhDs.com/subscribe/. Through that list, you’ll keep up with all the new content and special opportunities for Personal Finance for PhDs. See you in the next episode, and remember: You don’t have to have a PhD to succeed with personal finance… but it helps! The music is “Stages of Awakening” by Podington Bear from the Free Music Archive and is shared under CC by NC. Podcast editing by Lourdes Bobbio and show notes creation by Meryem Ok.