Are you not quite sure whether you should buy or rent a home?
In this video, I breakdown, what I believe are the 3 most important components on whether or not you should buy or rent a home…
Well well well welcome back to another episode of building wealth with yours truly Tyler ‘wealth’ Bossetti now what we’re going to go over today is a very controversial topic this can help you either make tons of money or potentially avoid losing hundreds if not millions of dollars over your lifetime especially if you’re looking to buy a home or you’re looking to start and scale a business but specifically today’s topic is going to go over three pros and cons of renting versus buying and if you’ve been living underneath the sun over the last 12 months.
You’ve seen that we’ve been in one of the most competitive if not the most competitive market that we’ll ever see when it comes to buying real estate all right now when you buy a home or you’re buying investment properties it could be one of the biggest financial decisions that you’ll ever make in your lifetime.
So again this video can help you either make hundreds of thousands of dollars or potentially help you save hundreds if not millions of dollars over your lifetime okay so we’re going to go over a few key things today in this video so you want to make sure that you watch all the way through check out the resources below and consider attending some of our real estate workshops where I teach you exactly how to start and scale a real estate portfolio using other people’s money.
Now let’s go ahead and dive right in on the pros and cons of renting versus buying because look at the end of the day I would rather own this back here and and rent where I’m sitting at right now today okay so the number one thing that you want to consider when it comes to renting or buying a property to live in is what are your values and beliefs I think everything in life comes down to your values and beliefs and for me what I value is flexibility.
Flexibility of my time my energy and ultimately building a very successful company with zero percent and also being able to say hey tomorrow I’m actually going to catch a plane and go fly down to Miami to meet up with my business partner and continue to build the business right or be able to leave and go and do what I want to do when I want to do it and if the hot water heater breaks when I’m gone.
No worries I log in on my phone and say hey property management company because I pay you rent you need to come fix x y and z and it’s not taking away my number one asset which is my time and most importantly my energy and my sanity right.
So having the ability to have the flexibility and to be able to move and check out different spots do you want to live in a condo do you want to live in a house do you want to live in a duplex it gives you the options it gives you the ability to focus your time and energy on what you actually want to focus on in retrospect.
Some people may want to go buy a home because they have a dog they have children they want to be able to say I bought this house at 123 main street I was able to raise my family there and there’s a sense of pride there’s a sense of being able to walk out butt ass naked in your backyard and water your little horrible flowers and say hey little Johnny boy you can go in the backyard.
If you want and they have a sense of pride right for me I could care less about that I would rather have a penthouse condo right and own the buildings back here and those buildings and my investment properties will pay for me to live in the penthouse condo here where I can tell the property management team go fix x y and z because I’ll break a nail fixing anything in this place right.
So number one is understanding your values and beliefs when it comes to renting or buying and the second component is the financials there’s actually numbers that we can put together and I’m gonna pull out my phone because I’m illiterate and can’t memorize this and give you guys a real life example.
Five weeks ago I was considering to buy a property renovate it live there and have the ability to walk around in my backyard butt ass naked and water my flowers instead I turned that property into an investment okay so I bought the property for 525,000 okay.
I put 75 000 of work into the property so I’m all in at 600k right well now the property is valued at 750,000 I just got an appraisal done and the bank is going to give me 75 of the after repair value 75 of 750 grand and how much is that let’s do some math real quick because I’m not a math wizard that is five hundred and sixty two thousand five hundred dollars right.
So I have four forty thousand dollars of my cash still in the deal but I’m going to turn it into a rental specifically a short term Airbnb that’s going to net me after all expenses paying for cleaners paying for the management team paying for all those miscellaneous expenses that you should you know keep in mind.
I’m going to be making net 4,000 a month so after 10 months right I’m gonna get all my forty thousand dollars that I have left in the deal right and plus I have nearly two hundred thousand dollars of equity in that property so guess what after the tenth month.
I am living in a penthouse condo in Columbus Ohio with this beautiful view I can run around naked out here if I wish which I do by the way and I’m going to start living here for free so not only do I have 200,000 of equity tax write-offs another property that is leverageable in the future right but that property is paying for me to live for free okay.
And now in retrospect to that is most people will say well Tyler you’re throwing away rent right you’re throwing away money right out the door you’re flushing four thousand dollars it’s actually about five grand to live here but anyways I’m throwing away money to live here well yes you may or may not be true and and that is the the pro and con right.
If I lived there I could be potentially paying the loan down faster building equity the property’s appreciating and time so in my opinion you should be focused on number one your beliefs and values what are you actually looking to do and then number two I can be leverageable.
I can go get a 525,000 loan go raise money from a private money lender to cover the construction cost of 75k my property is worth 750 grand the bank has given me 562,000 I’m sitting on all the equity and the cash flow from the short-term Airbnb right is paying for the mortgage it’s paying for all the expenses at the property.
It’s appreciated in value and boom that extra four grand a month is paying for me to live here for free so that’s the second reason is the financials what are the pro and cons whereas if you owned it and I actually live there I may be able to pay down the loan a little bit faster.
You have the ability to get the appreciation but I’m still getting that as I’m renting here as well and then the third component when it comes to renting versus buying is kind of piggyback off the financials and being able to have an investment property pay for me to live here rent free or the hidden expenses of home ownership.
I had a friend call me up the other day and he needed a plumber referral because he and his wife were about to go out of town and the the faucet underneath his sink was leaking and it led to him having to not go on a trip out of town he had to pay for a plumber to come out fix that lovely faucet and ultimately there’s a lot of other hidden expenses with property taxes with pest control.
Let’s say that there is a bird that’s building a nest up in your attic and you’re not aware about it or there’s a thunderstorm that comes through and it tears up your roof and your homeowners insurance may not be covering that which by the way rentals insurance is typically significantly less than homeowners insurance and you still have all the benefits if something was damaged and your rental right.
So there’s all these hidden expenses that can add up over time and you’re not even aware about it property taxes homeowners insurance really your peace of mind of if something breaks and when something breaks in your property and last but not least the amenities here at this property.
I have access to a pool I have access to a gym and that is an extra two three four hundred dollars that I would be paying otherwise if I lived in a home that I owned versus buying that distressed property renovating it turning it into a short-term or a long-term cash flowing asset.
I can get all the tax advantages and the people that are living there and or I’m doing a short-term Airbnb is still paying down my loan the property is still appreciating over time right and I’m able to go to the bank get 75 of my after repair value and boom I got all my money back sometimes even more if not a big chunk of my money back and the net cash flow is going to pay for itself within the first 12 months.
So to recap there’s really three pros and cons of renting which as you can clearly see I’m a big fan of renting where you’re at versus where you own and number one are your values and beliefs number two are the financials can that property actually produce more cash flow that pays for your lifestyle over here and last but not least is the hidden expenses and those things can really add up over time.
If you got value from this check out below the video there’s a workshop where I teach you guys exactly how to start and scale your real estate portfolio using other people’s money so if you got value go ahead and send this to somebody that is looking to start and scale their real estate portfolio also somebody that is considering to to buy potentially the biggest expense.
They’ll ever have in their lifetime which is a property right a home to live in if they are considering what they should do I think you should share this video with them and also check out the other video I did on comparing and contrasting renting versus buying subscribe to the channel if you haven’t already let’s build some well check out this next video and comment any questions you guys have below see you in this next video.