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

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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