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Buying vs Renting a Home in Florida?

This is the Treu Real Estate 911 podcast with Lisa Treu. Lisa will share up to date real estate information with you that you need to know.

To listen to the show, click here. 

Brian Mudd:       

Welcome to Treu Real Estate 911. It is Brian Mudd along with your local real estate pro, Lisa Treu, full of good information that can help save you money and give you a better life. I mean to go on, save money and give you a better life, and get a better than that. And we're going to walk through the value proposition of real estate right now throughout the Palm Beaches. But first, if you're not already there, go to treurealestate911.com, it's treurealestate911.com. Once you're there, it'll all make perfect sense to you.

You will understand with clarity why it is the best local real estate resource for you, like the ability to search the MLS in real time, just like a real estate pro. Treu makes that available for you. All of the instructive videos with the latest information and local real estate for you to be more informed to help make a buying decision, selling decision. Again even if you're just a real estate voyeur and you're curious about what's going on in your neighborhood, it's all there treurealestate911.com.

All right, Lisa, we continue to see mixed bag kind of information when it comes to local real estate. What is the condition on the ground right now?

Lisa Treu:

Wow. It is making our jobs super fun right now because we have markets where there are still multiple offers and then we have properties that are just priced perfectly that are sitting on the market and so you have to understand what is coming and understand the data at a very high level if you really want to get your home sold.

Brian Mudd:

I was thinking about you. We recently had the most expensive sale in the Palm Beaches, the $110 million sales on Palm Beach. You had been talking about how there are different lanes like even within luxury that luxury up to a point was not doing well, but then the super high-end luxury like would that type of property that was moving okay. It all matters what you're looking at, where you're looking at it, how things are priced, how it is positioned. So, it sounds like Lisa, if people are getting everything right, there's an opportunity for those that are missing a little bit. They got problems.

Lisa Treu:

If anything is off just a little bit, you are going to miss it. It's important to understand seasonality and what's going on and we're here to help you really understand the marketplace.

Brian Mudd:

Now when we're taking a look at next steps for real estate on today's show, we're going to talk about the value proposition of buying. A lot of times people will think, "Oh, I've got to have this big mass of plan if I'm going to be buying a new home." But when it comes to somebody in particular who might be renting, for example, that might not necessarily be the case, what you're going to present as a value proposition where literally in almost all instances it's easier and cheaper to own your own home than it is to rent to continue to pay the landlord.

Lisa Treu:

It is really amazing to me how people think it's harder and that they can't afford to buy. And I have to tell you that for one out of four renters, that is the absolute falsehood in the marketplace. If you are renting, you could be one of the ones that not only could but should be going ahead and buying a home because many times it is more affordable to go ahead and not only that, it's gotten easier to qualify if you have the income and reasonable credit. You don't have to perfect credit, just reasonable credit out there.

Brian Mudd:

Lisa, when you're talking about the opportunity, the last time we spoke, talk at about the lowest mortgage rates in two years. Well, we just hit the lowest mortgage rates in over three years now. Where we're talking about 30 year fixed rate mortgages that have been originated of late, anywhere from three and a half to about three and a quarter percent. I mean, we're talking about near record low mortgage price again.

Lisa Treu:

It is the perfect storm right now. We have more choices, lower interest rates, and we've been able, even Brian, people are shocked at this in some cases, getting some terms that we have not even dreamed of for quite some time, like closing costs. So it really is the time to take a look at it and revisit it. Especially if you tried to buy last year or the year before and you just said, either I can't afford it or I can't find anything that I like. I'm just going to go ahead and be a long-term renter. This is that time that you're going to look back and say, "You know what? I should have looked into it." So don't look back, let's just evaluate it, see what makes sense and see if you can become a homeowner instead of a wealth builder for your landlord.

Brian Mudd:

Lisa, when you talk about the perfect storm, that affordability on the mortgage rate side is part of it. Another big part of it is the increase that we continue to see with rent rates. Tell us about that.

Lisa Treu:

So one of the interesting things that we're seeing right now is rents are going up, and I saw a recent study that the average income for people that are renting at $75,000 and they keep paying more and more and more and rents are becoming taking over a larger percentage of their annual income. There are many people that are paying 30%, 40% over 50% of their income to rent. It just to me, does not make sense. I don't see the trend going the other way. So it's one of those things that to build long-term wealth, the first step is to own your own home especially in places where honestly the numbers make sense when you compare it to rent.

Brian Mudd:

Well, no question about it. The bottom line is in an average real estate market if you're going to be in place three years or more, history says you should be buying. But when you're talking about this perfect storm, so now we've talked about two elements of the perfect storm, but the other you're talking about even a year ago. Well, we've seen what? About half of the Palm Beaches, half of the South Florida real estate market that is actually flat to lower priced than this time of year ago plus some of the more favorable terms that you're discussing. So now we're talking about much better mortgage rates and in some cases, lower prices at the same time.

Lisa Treu:

Yeah, it's a very interesting time and a lot of sellers have not realized this and they're making huge mistakes when it comes to pricing. The reality is that many of the people listening right now are in at least a neutral or a buyer's market and they either don't know it or they don't want to know it.

It's one of the things about having information and then positioning yourself to win. That is our goal because there's always an opportunity in the market, but if you put your head in the sand and just act like it doesn't matter that I can do whatever I want, that doesn't matter on market conditions, you're going to be one of the ones that just are sitting and not selling. 

Brian Mudd:

Lisa, the final component to this perfect storm is if we're talking about near record low mortgage rates, generally that's because the economy is not doing so well. Generally, because there's a need to try to stimulate activity. Here we are in a good economy where the average Floridian is now earning 5.1% more money than this time last year. So this is the historical situation. We've seen some of the other factors that we're talking about prior, but I've never seen what we have going on in a good economy where people are making more money. That is the other part of it, that Lisa you talk about opportunity time in striking when the opportunity is there. All signs right now point in that direction that if you do not own, you should be doing everything you can to try and take advantage of the market that's in front of us.

Lisa Treu:

Yeah, Brian, people talk about, well, when the market crashed prices were so cheap and they were, however, you could not get a loan unless you had 20% down. You probably didn't have a lot of confidence in your job just because of what was going on and affecting everybody in the economy. So who cared if it was a great deal if you didn't have the cash sitting in the bank? Now we have great prices or better prices. We have amazing interest rates, more opportunity to negotiate terms and great jobs. I mean it is really, in my opinion, the best market for buying that we've seen for a very long time. 

Brian Mudd:

Agreed. Yeah, we spoke recently just from a pure, put the numbers down and analyze this stuff. It's the best since January or February of 2012, the best opportunity. But again, relative in a good economy, never seen anything like this. So Lisa, if someone is hearing this and going, "All right, well, maybe it's interesting, maybe I shouldn't rent." How quickly can you take a look at helping somebody make that kind of a lifestyle change?

Lisa Treu:

It's actually a very simple process and people are surprised by that. We get you in touch with our lender, assuming you're going to be getting a mortgage and most of us do. You work through the numbers, then we sit down and do a proper consultation with you.

After the consultation, we get to work and we start looking for your dream home that fits what you must have in order to make a purchase. Then we find it, show it to you, help you buy it and then handle the details. So you could be in I'd say average time for us is 30 days from the day you start, it can happen faster depending on is the home vacant? It can happen a little slower if maybe you need, let's say you need 45 days closing, but it can happen very simply, very easily and one out of four renters right now should be buying. How do you find out if you're one out of the four? It's really easy. Just call me. 

Brian Mudd:

561-972-8326 that's it. 561-972-8326. Lisa, the most common excuse I hear from renters is still, "I don't have enough money to put down." If you've got first license security with loans going out at just 3% down, essentially you're going to have the money you need to put down

Lisa Treu:

Yes. There are some programs out there with actually 0% down. First, last and security, you probably have enough. So let's not guess. Let's find out. Let's explore and see if you should be buying.

Brian Mudd:

Now that's all very compelling information, but the final step is, "But I'm comfortable. I don't want to move." You've talked before about wealth and how much wealth is tied to home ownership. Refresh people in case they've not heard it before.

Lisa Treu:

83% of our wealth when they study people at retirement comes from real estate. It gets even worse in my opinion because the wealth really is impacted by what? Age. The sooner you buy, the sooner you start that appreciation, just like any compounding effect, the more wealth you will have. And so if you own a home, but you know a friend who's renting a child, a grandchild, it is time if they have a job and if they're once again going to be there for the next three to five years, it is time to get information. That's all we're talking about. There's three out of four that should not be buying, but there's one out of four that should, and in Palm Beach County, that's 110,000 people. One out of four doesn't sound like a lot. Right?

Brian Mudd:

That's incredible. I'm a numbers guys, so it kind of does, but yeah, I mean that's a huge number any way you look at it, 110,000 people.  Lisa, the other thing that comes to mind hearing your talk about the time and value proposition, everything else. My first role of retirement is a mortgage is not a retirement plan and the reason is except for the exceptionally wealthy that might try to use a mortgage as some type of a financial instrument at that point rather than something they're concerned about financially. If you are paying a landlord, if you have something you have to account for that's meaningful every month just to keep the roof over your head, wherever that happens to be, you may never be able to retire or at best you're going to have more stress and a less relaxing retirement than you otherwise would because you have that pressure of having to pay somebody else for your roof over your head every month. So it's all part of a longer-term strategy to be able to get the most out of your life.

Lisa Treu:

You mentioned something that was really interesting a couple of minutes ago. You said, "But I'm comfortable. I don't want to move." I have to tell you that's the number one reason that I get calls from people that say, "Maybe I should buy." Is because they get a call from their landlord that says, "You know what? I don't want to be a landlord anymore. I'm going to sell." And then you have to move. So why not go ahead and make the move one time where you know that you're building wealth for yourself and that you decide if you want to move or not, not have the decision made for you.

Brian Mudd:

Great information and an excellent point. And for more great information and excellent points, the Treus they're ready to help you right now. Reach out to them at 561-972-8326. That's 561-972-8326 if you're not already there, go to treurealestate911.com and take advantage of the information and the resources that are made available to you. I'm Brian Mudd with Lisa Treu we'll see you next time.

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