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Renting vs. Buying a Home: An Obvious Choice in 2023?

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Renting vs. buying a home, forty-year mortgages, HELOCs, and relationships vs. real estate. There’s something for everyone on this episode of Seeing Greene, as David tackles questions that go far beyond just basic investing. And as the housing market continues to get even more confusing, homebuyers, landlords, and sellers are stuck with some serious debates that only an expert agent, mortgage broker, and investor like David can answer!
When choosing to rent vs. buy a home, David uses some geographic-specific data to decide which markets make more sense to own. Then, we have a question on how an interest-only mortgage works, and whether not paying into principal is a waste of time or a better option for cash-flow-strapped landlords. If you’re thinking of buying a property in all cash, David has some advice as to why now may not be the time to use loan-free dollars to get a better deal. Finally, David takes a more personal question from a listener, asking when to put real estate over relationships and why dating feels like a “waste of time” when trying to build wealth.
Want to ask David a question? If so, submit your question here (www.biggerpock...) so David can answer it on the next episode of Seeing Greene. Hop on the BiggerPockets forums and ask other investors their take, or follow David on Instagram to see when he’s going live so you can hop on a live Q&A and get your question answered on the spot!
00:00 Intro
02:01 Quick Tip
02:50 Renting vs. Buying
06:43 Should I Tap into My HELOC?
09:43 Rentals vs. Businesses
15:45 Questions from the Comment Section
18:48 The "Rent-Back" Agreement
24:37 The Math Behind a 40-Year Mortgage
29:54 Should I Keep Buying in Cash?
32:47 Relationships vs. Real Estate
38:49 Ask David Your Question!
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Renting vs. Buying a House: Which Makes More Sense in 2022?
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The Pros and Cons of a Lease Forward (or Lease Back):
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Should You Pay Cash for a House? Maybe Not-Here’s Why:
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Episode 702
Show notes at: www.biggerpock...
#biggerpockets #realestatepodcast #biggerpockets702

Опубликовано:

16 авг 2024

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Комментарии : 50

@lanthenat Год назад

During the Depression, my grandparents refinanced to a 60 years loan.

@Carhug2012 Год назад

Excellent episode @David! Love all the answers this week. It's a good time to get creative on renting and buying/selling.

@TwoGuysTakeonRealEstate Год назад

Great insights as always. Thank you. Also still waiting for that invite to come on the show 🙂☺️

@TJ-th9hw Год назад

David- This was an episode with a lot of GEMS on either side both questions and answers. I really appreciate it and I love seeing “Greene”episodes. Thanks for sharing your experience with the community. 👍👍

@jayavatar1577 Год назад

David, you're the man, thank you for the education. Whoever and wherever we are located, we always one thing or 2 related to our ourselves. My question is long, bear with me: I'm in Vancouver, Canada which is the 2nd most expensive City in Canada after Toronto. I bought my first fixer upper out of Province (we don't have States here!), site unseen, in October 2021 hoping to BRRRR. However, when I sent the contractor in there, he said the house in not in the best neighborhood and there were train tracks behind the house. That being said, aftee renos, I tried to find tenants but they did not like the train tracks, then I decided to flip it. I sold it for 395k (I had paid 230k for it, and put 40k in renos). After selling it, the Bank of Canada raised interest rates, and the buyer could not close. I immediately relisted the house back on the MLS, and it stayed there for 5 months, and ended up selling for loss at 265k. I'm now sueing the previous buyer for the difference (which over 130k). My lawyer said we might certainly win the case, but if the buyer has no equity or cash to ran after, that might be an issue. Now I'm stuck with no down payment to continue imvesting in RE, and feel like that buyer stalled my investing journey. Any thoughts on how I can restart? Any advice? Maybe some biggerpockets members have ran into this kind of issue, any advice would be appreciated. Thanks Uncle Dave (the real Dave, I mean!)

@ashishsurendranath3609 Год назад

you bought for 270k and sold for 265K...along with all the mental tension and distress. Dollar wise not much of a loss. also you need to consider your Return on Time...do you want to spend more time on this issue or move on? maybe find another good deal and do a BRRRR method or another strategy. Hope this helps! you will make mistakes but just learn from them and move on !!

@atlas9172 Год назад

Minute 25:00 (40 year loan) Home loans used to be 5 years, max. Generally speaking, those who trade time for money tend not to be able to afford a home, so banks made it possible to stretch that loan out. The 40 year loan is simply the next step. Some might use this to argue that home prices should come down, but they are wrong. Consider home prices in... Germany, England, China, Australia, etc.

@justingallagher1072 Год назад

love the content you guys put out it has really change my life for the better thank you Bigger Pockets i look forward to all your videos

@makeyourmark00 Год назад

On the last question, I think Wyatt's instinct and bias on being productive now is spot on. The compounding effect of more work today will pay off big in his 30s, and he shouldn't beat himself up as most men in their 20s are just starting or still figuring out their path in life. He is way ahead of the curve.

@goodfeeln5791 Год назад

Curious about the personality tests you mentioned at 34:05. My self worth is HEAVILY tied to my sense of progress based on where I'm putting my energy. Thought it was just a personal quirk. Nice to know there are others.

@bradygraham_realestate Год назад

Hi there, Bigger Pockets Pro member and Boston based REALTOR here. I'm a few days late from the post but Boston is unique in that is has many small multifamily opportunities. IN THE CITY, these are pricey but depending on your work/commute situation there are great opportunities within the greater metro area that might be a good jumping off point to get you into more valuable small-multi in the city itself.

@homewithmiglad987 Год назад

As a fellow agent, I love the question about the Seller covering the Buyer's lease after the sale. What a great idea for clients stuck in a lease. I wouldn't have previously thought to do that and am glad I heard this.

@bexo34 Год назад

40 years is just another way to prop up the market. Sell that house based on the payment not what you get for the money...don't fall for it.

@melvinbarnes6652 Год назад

Agreed. I had a forty year mortgage 15 years ago. Worst decision ever.

@joe-zj8js Год назад

All it will do is drive up prices. People that otherwise couldnt qualify for a 30 year fixed will qualify for a 40 year mortgage. This will shift the demand curve to the right with higher demand

@skliros9235 Год назад

40 year loans? Wow. All my deals are 15 year loans.

@aliciamarana Год назад

December of 2022 here, Excellent episode David! Thank you so much.

@wakeboarder86 Год назад

I would agree about your thoughts on 40 year options. Dangerous if that's the only way you can get approved. What was more dangerous was the past 3 years. Rates brought so low by the gov, that people who truly can afford 300k were getting approved 450k, and people who didn't want to get into the rental market were buying str homes with second home loans. So with that, there is a reason that I think the report said for fha buyers 25% of all purchases over the last year are now negative equity and 80% with less then 10%... I think it said out of normal loans, 8% of all loans are little underwater, where 40% of all loans are under 10% equity. So with that, so long as your buying wisely and not over paying and heck getting under value offers, 40 year can be good to get you buy until you refi for a better rate.

@shumatsuopost Год назад

Love hearing your thoughts in this podcast!

@michaellatta Год назад

Is his rent lower after tax compared to buying? Really? Yes at tests interest rates it might be, but rarely.

@laprepper Год назад

Here’s a fun video idea; How will unfolding homes built in a factory and easily delivered affect the rental and ownership market moving forward? Will cities adopt this new structure or will red tape and policy again keep the financial dreams of Americans at bay

@rabiesman888 Год назад

The problem with these, or hyped 3d printed houses for example. Is that often you need to run all the plumbing/electric still. For the prefab/tiny homes I can look online and find 600sf one bedroom tiny home for 40k, but I will still need to have a foundation built, connect a sewerline or septic, run any other additional electric/plumbing they don't include and also pay for the general assembly of the unit. At the end of it your looking at 80-100k for a one bedroom house- but this does not include the land which will be super expense in major cities. In addition a tiny house isn't good for most people's needs- family's ect. Now for 3D printed housing what they don't tell you is they basically just print the frame- no foundation, no roof, no electric, no plumbing, so you basically save a marginal amount of money on the framing of the house while all the other labor costs are the same or extra because you have to cut through concrete to install windows ect. Although you do save on some time building the frame that is a true benefit

@celesteandrade8893 Год назад

Hi David, I’m looking to buy a cabin at Big Bear Lake for STR using CSCR loan. Are you work or have people working in that area?

@brucebanksshow Год назад

That cash fallacy David mentioned was gold

@Andys_Auto Год назад

Love the advice

@showspotter Год назад

other option: BUILD. renting is basically throwing away cash. buying will cost you an arm and a leg unless you live out in BFE or LCOL midwest. so either head those those places where you can still get a 3/1 for $70k, live in it for a year and then re rent, or use a possible VA construction loan, find waterfront property and build. instant equity of 200-300k. oops, just revealed my plans.

@kenancatrules Год назад

On the relationship subject, your SO is open minded, listening more than talking, and is humble and adaptable, is much much more important than who that person currently is. Marriage is a journey that require both parties to walk the path and grow together. Also this is more in man than woman, be very concern if your SO has any kind of addiction. This includes but not limited to video games and social media, or cell phones in general. If there’s none of the above red flags and you two like each other, it’s worth to pursue it.

@aaaaaaaaaaaaaaa897 Год назад

More Henry Washington please. And fix and flip stuff would be cool. But love Henry more than anything

@BossRoss045 Год назад

on the 40 year loan, can you make payments to the principle in addition the the regular payments?

@snipinmonsta Год назад

Hey BP, I’m currently looking for my first investment property, however, I’m worried I don’t make enough to get financed for a duplex at the least. Duplex around my area are around 350k and I only make 50k a year. Should I be looking in a cheaper area or will what I am making be enough ?

@PoppiesOfBlood Год назад

Im in a similar situation, what I did instead is buy a house close to a university and rent out the rooms to students

@ivonnepinedo Год назад

Have you read David’s Long Distance Investing book? That might be a good starting point. If you are considering Florida reach out to complete your core-4 team.

@jayflaggs Год назад

It's just "omg" 👍

@laprepper Год назад

The first guy just needs a roommate for a few years. Wish I went that route but I’ve been doing work on the house for years 😢

@biskit7 Год назад

If you are keeping the home for 10 or more years, then owning is better, but who keeps homes for more tgan 10 yrs? The average is 7, and do you want to lock yourself into a place... answer those questions first.

@willskaggs15 Год назад

Why is it better to own only if keeping for 10 years? You can move over equity into your next home without paying taxes, possibly lower your living expenses in the process, and I'm locked in only as long as I need. Yeah, agent and origination fees exist, but I'm not seeing your math on 10 years. Your return would also be calculated by the total amount versus the interest rate on the loan. A loan made in the 90s with an 8% interest rate? Probably.