Renting vs Buying a Plainview, NY House Intro: Rent vs Buying in Plainview, N.Y. Should I buy or should I rent? Both buying and renting have their pros and cons.
Transcript of Video
Buying vs renting your next
Plainview, NY property, that's the topic of my next video
Buying vs Renting in
Plainview New York, that's the topic of this video. Hello everybody
My name is Mark
Schreier, and I'm a licensed sales associate with century 21 American Homes
right here in Syosset, Long Island
I'm gonna share with you
a 5 point checklist
5 points to help you
make that decision because at the end of the day the decision is yours governed
by the banks
Unfortunately, unless
you have a lot of cash in your pocket, and then that still can be a particular
problem
So renting one of the
pros of renting is mobility
If you rent a property
and you look for one that has a month-to-month lease you can pack up and move
at any time
It's quick and it's not
an issue
You can do that until
you find a place where you'd like to live long term
But that's totally up to
you
Number 2 the landlord
pays all the maintenance and isn't that great because there's a homeowner for
20-something years
I can tell you it can
become an expensive proposition
Call up the landlord
say my bathroom toilet
broke or it's not working or the sinks leaking they have to come and
Usually in the timely
fashion and fix those problems
number
Three does it require
expensive closing costs? That's right
When you buy a property
you have to have a significant amount to put down
although there are some
first-time home buyer buyer programs that don't require as much but usually
require more than
What you need up front
for rent?
Number four no
fluctuations in your monthly expenses
What do I mean by that
if you locked into the rent if you're doing month-to-month, it can go up and
down
But if you lock into the
years lease
That's what it is for
that year
If you're in rent
control
Like some of the cities
have the larger the larger apartment complexes and that's even governed a
little more and the next one
Allows you to test drive
like I mentioned before a lot of different properties in different towns are in
the same town in different locations
So you get to test the
waters?
Which I always recommend
you should never jump in and buy something without knowing
particularly
those people who are
relocating from other dates for jobs or this or that you don't want to just go
and buy a property and
Then you're not happy
and now you're locked in and you got to go through the sales process and
everything
Like that the five cons
of renting you don't build any equity all that money your pain
Goes to the landlord to
help him pay or her pay off her house
and then you have
nothing at the end of the day other than the
Flexibility, so there is
a price you pay for that flexibility. We interrupt my video for a special
Housekeeping
announcement if you're new to my channel, thanks for stopping by
Please remember to
subscribe and click the bell for notifications. Joy - please give me a thumbs
up now back to our video
Number two, you're
limited in what you can do to customize it
You might be able to do
some painting but everything is governed by the landlord. So that's for
somebody who likes to customize a house
Maybe you know your
family's growing and you want to add on a bedroom that is not going to be done
that easily
Because you don't own
the property next rent could go up over time
yes over timing like I
mentioned before month-to-month lease the rents can increase every month or
Yearly if you have a
yearly lease so you may not know
What's coming next you
thought it was controlled than it is to some point
but the landlord can
decide on an on rent control property that he or she wants to raise to rent
significantly and
that's between you and
then the next thing you
Are not a homeowner if
that's something that does involve you then it's definitely not a con but you
don't own the property
You don't have the sense
of home ownership
It's hard to explain
what that feels like, but once you end up buying the property, you'll
definitely understand what that means
The landlord might
decide to stop selling or he might decide to stop renting and you're totally at
his mercy
I said say once the
lease is expired he could decide to move it would be nice if he gave you some
notice
But that's a problem.
You could have loved this house and decide or this apartment
You want to stay there
and all of a sudden they decide they're no longer renting that property and now
I'm gonna share with you
Five pros of buying
equity most real estate that you purchase builds equity over time
I said most it doesn't
happen all the time and you have to make sure that you know the market you're
buying in and you
Know the climate of the
the current climate when you buy if you buy very overpriced like people did in
an oh wait
Oh seven. Oh eight when
we had the real-estate bubble that burst
then that was a time
when a lot of people lost a lot of equity in the house definitely wasn't a good
time in the
Real-estate world, but
after that people particularly investors were able to buy houses at very low
property
property values and then
they were able to
gain overtime because
the real estate market did rebound a lot of equity if you are savvy enough and
you do your homework you
Might be able to find
something a little below the market value
So you have instant
equity in the house when you buy the next thing is your home value?
Definitely can increase
or may increase over time again, some home values can go down
So understand that just
like if you play the stock market if you put money in the market
It's not guaranteed to
go up, but it's a risk reward situation
One other thing to
understand is you are doing what we call OPM other people's money
so if you invest in and
we're getting a little into investing there, but if you put
20% down on a house
Then you are actually
just putting 20% down on that property and you're getting all the equity
building up. Let's say it's a
$500,000 house - the 20%
you're getting the equity on the
$500,000 price so you're
using other people's money in this case the bank to
Build the equity in your
house in a way that you might not have ever been able to do so
That's a big plus
But again, it's a risk
reward situation is definitely tax benefits to real estate and they do change
you go to check with your financial
advisor for that and the
next thing is a sense of
Freedom to customize
your house the way you want it you
Want to build up you
want to build out as long as you meet the town codes and you get the proper
permits
Then you're allowed to
do that
That's something you
cannot do when you rent so you can buy a small house in a certain area and then
check
moving
you know be proactive
and make sure when you buy that house if you have a goal of
Putting a roof or what I
said
we call a top on it a
Second-story that you're
allowed to do that and then in 10-15 years when you decide or your family
starts growing
You can then put a top
on that property and stay in the same neighborhood
Keep the same schools,
and it makes everybody in the family happy
So those are the five
pros that I gave. I hope I gave five the five cons of buying
Yes for every pro. We do
have a con again
Like I mentioned earlier
you're gonna have to basically think about all the pros and cons and decide
which way you want to go
It's not a you know
You don't have to do and
say this is I'm gonna be a renter for the rest of my life. Naturally you can
change
When your situation
changes so let's get into those cons number one closing costs
Yeah
Closing costs can be
very expensive the goal that I tell all my clients is to try to get at least
20% down by 20%
And that that's because
you want to avoid something called PMI private mortgage insurance
Private mortgage
insurance is an expense. You really don't need if you have enough money to
cover
The 20% down once it's
less than 20% The bank says hmmm
I'm taking a little more
of a risk than they would like to take and they want you to get separate
Insurance and that's
called the private mortgage insurance
So if you're able to get
to that 20% down
That will save you a lot
of money in the long run if you can only get 10% down that works
But as well and you'll
pay until you get your principal amount
Principal paid up to the
20% and then the private mortgage insurance will go away
For those first-time
home buyers that are looking for very low down payments. There are very there
are a lot of
Mortgage vehicles out
there mortgage products I should say that will give you you know
The 3% down and things
like that as well so you can contact me I can set you up with a couple of
mortgage
Professionals or you can
contact your own mortgage professional to find out which program works best for
you
I don't want you to get
scared away because I'm saying 20% down
I'm just giving you
financially that is the best sand to save yourself some money over the long run
Closing costs we
mentioned now when you get into who's responsible for the maintenance. Well
guess again. It's the landlord. However in this case
You are the landlord
So if you're the
landlord you have to pay all those costs if you got to put a roof on you can
pen
Spend anywhere from six
to ten thousand plus dollars just to replace your roof
It can become very
expensive. If in fact you something breaks in the house you have to pay for it
Now you could put it off
but once it becomes a problem well
You need to live like a
roof if you don't replace your roof
and it's leaky and that
can cause
Significant damage for
the rest of the house and you don't want to go there so understand you become
the landlord of your own house
You're responsible for
all those bills and repair is moving forward
Less flexibility would
be another thing we mentioned before you had more flexibility as a renter
Now you have less some
houses sell very quickly, but the process can still take three months even if
you get a buyer
Within the first open
house, you know seven to twelve days and accept that offer. You still have to
go through the process
And yes, there are many
hiccups that can go along with it that can slow it down
another thing you need
to know about is your home value and they decrease and I mentioned the bubble
before the real estate bubble about
Seven, oh eight if the
home value in of your property goes down, that could be a problem particularly
if you bought the property
For top dollar right at
what it appraised for?
There's really no equity
in the house
all of a sudden the
market takes a dive and you took out the maximum mortgage you can take
Now if you try to sell
your house, it's actually worth less than what you owe on your mortgage
And that's what we call
your in the red. That's not a good place to be if you stay in the house longer
Hopefully the market
will correct itself and it usually does in most areas not all the time
You have to make sure
again that you do your due diligence
You do your homework and
find out an area that you think is going to be moving up
in a positive fashion
for home values
and another thing that
tax law is like I mentioned earlier the tax laws could hamper the tax benefits
of
Your property. So if in
fact you have great tax laws
You can write everything
less before when all of a sudden things change
You need to know that
and you could speak to your accountant or your attorney about those particular
things. Okay?
Now I gave you five pros
and cons of both buying and renting and I hope you have a better
Understanding of what
you want to do and when you should do it
But understand even if
you went through this and you utilize it as a checklist
And you decided that you
wanted to go out and be a renter or a buyer?
there's one very
important topic that I didn't cover and I'm gonna cover it now and that's your
credit if you
Have very poor credit
and I'm gonna include a link to another video I made
from credit advisors
about
improving your credit
and what is a good credit score if
You don't have credit at
all
and a lot of first-time
homebuyers might not have ever have had a credit card and
might not have ever paid
for anything on credit that could be problematic for both buying and renting
now if you're looking to
Ranked in somebody's
private house and that probably isn't gonna be as much of an issue
Particularly if maybe
you have a relationship with the homeowner you can talk to them
Tell them you have a job
and things of that nature, but if you deal with any large
apartment complexes that
have management comp
management
companies running and
the renting process it's gonna be or could be very
Problematic because you
have no credit your credit score is very bad
Same thing goes for
getting a mortgage
If you have a poor
credit score, you're gonna be paying much higher rates for the interest and
that's not a good thing
So what you should do
before you even start thinking oh, you know, I want to move
Think about it two years
back if you check your credit and you should be checking your credit at
Least once a year by all
three of the services that you can do free credit checks online
They don't cost anything
and what we call soft checks. They don't affect your credit
Make sure you check your
credit and you want to get it as high as possible
The reason why I said
two years back is because it can take at least
eighteen months if you
have some glitches or problems in your credit to try to improve those scores
and
Definitely get the help
of a profession because you might think you're improving it by just maybe close
in on a count or two
But there's a lot of
tricks to it. It's not as easy as you think and I'll give you one scenario
I was listening to a
radio broadcast of a financial expert
I'm not gonna mention
the name of the person but a young lady called in and said to them I want to
rent an apartment
But I don't I don't have
any credit cards. I don't like credit
I don't want to get in
the red with my debt and everything else like a lot of her friends were and
She was afraid that if
she applied for an apartment, she was not going to be able to get
Cleared for the
apartment because she has no credit. So she was in a dilemma. So she asked the
person what should I do?
And the answer was basically
your hundred percent, correct?
If you don't have credit
you can't rent because they're gonna be doing these credit checks and see zero
credit
Not not even negative
but zero
I never had a credit
card never did anything and that became problematic and the person's answer or
the financial experts answer was this I
Can go and try to rent
an apartment and they will not allow me to rent because I have zero credit not
terrible credit
but zero
I don't have any credit
cards and I'm believing credit cards and I can go in and I could buy the
complex
but this is the
financial expert on the radio saying they have
Millions and millions
not thousands and thousand but they have millions and millions of dollars
They can buy the whole
complex
But if they wanted to
rent the apartment, they wouldn't allow them to do it because they don't have
credit. Does it make sense?
Definitely not to me,
but unfortunately, that's how things work in the credit world
So I hope this was
helpful first thing you need to do before you even thinking about buying or
renting is get your credit
Checked and make sure it
is good again. Watch that length of the video that I have about improving your
credit score and
--> This is Mark Schreier from century 21 American Homes. Thanks for watching
