Buying vs Renting: MYTHBUSTING

Let’s be honest..if you have been renting in the Philly area at any point over the last few years and are not living the commitment-free, alcohol-laden dream that is college, chances are you have thought at some point about the idea of buying a place. Those thoughts may have started and ended with “I’m not buying anything–I can’t afford it”. Or maybe “I don’t know where I’m going to be in 5-10 years so I don’t want to make that commitment”. Or “ I don’t know enough about all that intense stuff..I don’t know any lawyers or mortgage bankers and I watch HGTV and some of those real estate agents look like real scumbags”.

I’m here to tell you that buying a property in this city is NOT as scary or as difficult as you may think, and, on top of that, it may actually be CHEAPER than renting.

Here’s why.

With most rentals in the city, you as the tenant are expected to submit first month, last month, and security deposit at lease signing. Basically three times the monthly rent. Depending on what you are paying in rent, that can be a large chunk of change to put down all at once. On top of that, in case you haven’t been paying attention, rents in Philly are going up. It’s tough to pay less that $1200/month for any 1 bedroom in the general Center City neighborhoods and surrounding areas, with rent prices going much much higher than that. Finally, all that rent that you pay every month? It doesn’t go anywhere. Not at least as far as your concerned. It leaves your account and goes to the owner, and that is that.

Now let’s look at buying a property.

I’m going to simplify this just for the sake of brevity, but as always I am happy to discuss any of this in much more detail with anyone. Just shoot me a text/email/call/fb message/letter and we can talk.

You’re going to pay closing costs. Closing costs are going to be part of any purchase for a buyer, and they usually end up being somewhere around 4-5% (of the purchase price). They generally include your portion of transfer tax, title costs, mortgage fees, and other nominal costs.

In addition, you have your down payment. As a owner occupant purchaser, you have several options as far as how much you can put down. Turns out that you DON’T have to put hundreds of thousands of dollars down to buy a property. Depending on the mortgage you get you can put down as little as 5% (or 3% or 1%…ask me about these) down. There are also other things (like Seller’s Assists) which can all help you achieve the goal of not putting a lot down if that is your main priority.

Once you get past the money down portion of buying a property, you are then left with your monthly payment. Generally speaking, it is difficult, even with a low down payment, to end up with a total monthly payment that is higher than the rent you would pay for the same exact property. It may not always be much much cheaper, but it will be cheaper often, and the worst case scenario would be that you would pay more or less what you would rent the place for.

But oh yea, all of that money that you are paying monthly isn’t getting flushed down the toilet like it would be if you were renting. Instead that money is going towards helping you build equity in YOUR OWN PROPERTY. Another way to say it is the money is largely going right back into your own pocket.

On top of all of that, all of the professionals that you need to speak with to purchase a property..realtors, lenders, etc…ARE ALL FREE TO SPEAK WITH. Most lenders will offer a 100% free and no commitment pre-approval which can be your beacon of sorts to help navigate the waters of what you can afford etc. Realtors don’t cost a thing to speak with, and it turns out that we may actually be able to help you a tiny bit more than HGTV, your list of Zestimates, and your plumber that bought a house once 20 years ago but who knows “everything” about real estate, all combined.

And a quick thought about the whole “I don’t know where I’m going to be in the future” line of thinking. The truth is ultimately no one has a crystal ball. None of us really know where we are going to be 5-10 years into the future. Some of us may have better ideas than others, but life has a way of getting in the way of those plans sometimes. But if you have been living in Philly for years and years already, chances are you might still be here 3, 4, 5 years from now. And if not, guess what, the Philadelphia real estate market is only appreciating. Rent prices are appreciating, Sale prices are appreciating. You could buy a property, and that property could be the 1st piece of an investment portfolio, or it could be something you sell down the road and turn a profit. All in all, don’t let the threat of a unknown future that may or may not occur keep you from taking full advantage of your present.

The point is, buying a property a much more feasible possibility than you might expect. And with the way the Philly market has been booming lately, and the interest rates staying relatively low, this just might be the perfect time to explore that possibility.

SO LET’S EXPLORE THAT TOGETHER. HERE’S MY NUMBER (and every other piece of contact info)..LET’S CHAT:

Terence M. Cesarine

https://www.facebook.com/215TMC/