Buying Versus Renting: Which Is Right For You

Buying Versus Renting: Which Is Right For You

08.07.2019 | by Rob Sulava | 0Comments

Buying Versus Renting

It is not as simple as mortgage costs versus renting costs.

I am a real estate agent. Obviously, I am biased towards selling you a house opposed to searching the world over only to see the best rental option for you could be no commission for me. That sucks but in some cases there are very good reasons to rent, but there’s also ways to go about buying that can help you reach your financial goals and maybe even save you money. I went through this last year. As an agent, it was painful to have to resort to looking at rentals but there are options available that you really should be evaluated before coming to a decision.

Why Rent?

Flexibility

It is not the same commitment as buying. If you are unsure about an area whether it be you like it, the economics of it, its safety, or other variables, sometimes renting really is the way to go. It guarantees you the flexibility of being able to reevaluate every year or so depending on your agreement. The guarantee of having the escape option can be worth it. You are spending the money on housing either way so the flexibility of renting for a year can help you make a well thought out decision of where you want to be, what your living expenses look like, and your expectations going forward. This cannot be argued, it is a pro of renting. If the flexibility of renting is your top priority, rent. If you are not in an area you plan on being for at least two to three years minimum, you have to make a very savvy decision with real estate to even make it worth your time to not rent. It is not as simple as renting or building equity, the first few years of a mortgage are less principal and more interest so while you are building equity, I say it has to be savvy because to actually make money on your home purchase, it has to grow in value faster than the average US home (more on this in the Buy section).

Price Stability

People like the comfort of not having to worry about variable costs. There are two sides to this. One, some rentals have all the utilities included, not having to think about that and the burden that comes with not thinking about if your electric bill is late is worth to some people. Two, if there is a major issue, you probably are not liable to replace it. You do not have to have a few thousand dollars set aside if the furnace goes. Not having to keep that in mind with your money can be worth it alone to some people.

Why Buy?

Building Equity

Yes, instead of your money going to the landlord, it goes towards the interest with a little bit trickling down to start building equity. It is a start though. You are building equity and if you are savvy, you buy in an area that will be on the upswing. If you are in a position of thinking about renting versus buying, you probably do not have a lot of previous equity built up and you are not looking for your “forever home”.

You are not going to build that much equity within the first couple years of a mortgage so that should not the deciding factor but you can really help your future self out by buying a house in a neighborhood that is on an upswing. It can put you in a great position going forward. If you are content living in the same place for at least a few years, the equity on a good mortgage rate can start to be worth it by itself. If it is your first house, buying in a growing, developing neighborhood you like can turn out to be a great decision (a worthwhile agent can really help here, wink wink).

It is YOURS

You can make changes, improvements, etc. as you see fit because it is yours. I am not even necessarily talking about the “pride” of homeownership, although that can be fulfilling, I am talking more about turning your place of residence into your home. While most rentals can be painted, sometimes that simply is not enough to make it yours. When you live there and you own it, you can mold it to fit your lifestyle.

What should you do?

So now I have basically stated what makes people choose what they already do but nothing too insightful to actually help. So here is what my advice would be; be prepared for headaches, risks, and find a neighborhood that works for your lifestyle while the statistics show that it has room to grow, then buy a house that is sitting on the market. That goes against conventional wisdom but there are deals to be had and often times if a property has been sitting, people are ready to negotiate. It is super helpful if you can point to exactly why it has been sitting, then the solution is easy. Those reasons can be anything from a bad layout (very common) to an expensive issue people do not want to deal with like a bad roof or furnace. I get into this more in Nine Tips Before You Flip but similar rules apply. It does not have to a full fledge flip (say that five times), but there has to be an opportunity to add value at a cheaper cost than the value it brings, then it is worth exploring. There are loans that are specifically built to help you add value through renovations, I will explore a little more next but I want to do a full post on 203k loans soon.

Is there a secret?

Now the next obvious barrier in this is, “if I am deciding between renting or buying, I probably do not have the thousands of dollars laying around ready to bankroll a flip”. Which is completely understood but there are ways to go about this to really make it work to your advantage. If you want to email me I can really get into this more but I do not want to go the whole way down the rabbit hole of rehab loans in this blog. I include them because they can be the “ace in the hole” and really sway your decision between buy versus rent. I was scared of them for a long time, mainly that they are a little bit higher of an interest rate. My view of them changed when I realized that with many variations of rehab loans, a reassessment when the work is done is part of the process. Which, in normal terms, means if you find the right property and do the right work, there is a great opportunity to immediately build equity in your house. I have worked with clients that have ended up going from an FHA loan with a 3.5% down payment to doing a conventional loan 20% down payment with the value added based on the rehab done before the reassessment. That can set you up great financially plus in a lot of ways you get to make your home how you want. I will get into these details more in a future blog post specifically about the types of loans and how to best utilize them but for now, I will leave them at that. If you are in a position to put 3.5% down on an FHA loan, it is definitely worth exploring. Best case scenario is adding that 16.5% through the renovations to turn into a long-term conventional loan that comes with fewer fees and generally a lower rate.

BUT WAIT, WHAT IF SOMETHING BREAKS!? On average I have seen maintenance costs can be around 5% a year and some years can be worse. With my own house, I went into it knowing that the furnace was old and the outdoor AC Unit was working hard- but they worked. A good home warranty can cost around $30 a month and can give you peace of mind with appliances and mechanicals. All home warranties are not created equal though so do your research (or email me, I’d love to put you in touch with good ones). You still should be putting money aside monthly to cover emergencies not covered by a home warranty (or instead of a home warranty) and major expenses like a new roof if need be but in the end, if you do your research and look what your desired area has to offer, you might just make a great financial decision and be happy with your living situation.

In conclusion,

there are benefits to either route. Buying versus renting comes down to what you want. It depends on the market in a particular area, some areas could be in a bubble and not being invested in real estate long term can be the smartest financial option. Simply understanding how taxes and insurance affect your monthly costs, you go into this decision with so much more information and in the end, you might actually save money on a monthly basis while still building equity if you buy a house. In other regions, you might dodge an economic bullet by not being invested in real estate.

If you’re thinking about this question, email me, seriously, I would love to help. If you are in Pennsylvania I can help you directly and if you are not, I can still help with your particular situation over the internet.

Rob Sulava is a licensed real estate agent with Broker 1 Realty based in Pittsburgh, PA.

 

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Featured Listing: 141 Majestic Drive, Mars PA 16046

Featured Listing: 141 Majestic Drive, Mars PA 16046

09.05.2019 | by Barb Sulava | 0Comments

Featured: 141 Majestic Drive, Mars PA 16046- $1 Million

Check out the listing here!

Amazing Koch Custom built blend of French Country meets Rustic/Modern-Family Friendly-open floor plan. So many of the high-end homes hitting the market lack the warm comfort and “coziness” this home has. With 4+ Bedrooms and 4 full baths, Hickory mixed-width hardwood floor thru-out entire open concept main level, 9 Ft Ceilings, 8 Ft Doors, & loads of windows bringing natural light-this home has Top Line Amenities AND coziness. A delightful  Gourmet Kitchen features custom “cream and espresso glazed” cabinetry, a large black antique island, a hammered copper farmhouse sink, stainless Jenn Air appliances, a walk-in Pantry, and double doors covering a granite countered “Butler’s pantry” that can double duty for appliance storage, a baking center, or a coffee/tea bar. Just adjacent is the breakfast room with French doors to the covered patio featuring a stone gas fireplace & indirect ceiling lights with fan.  A  bar area and wine cooler between the kitchen and dining room add more interest. All of these features make for “kitchen guru happiness”. Kitchen open to enormous family room with gas stone fireplace. Office den has custom built-in bookshelves, excellent natural light, double glass doors, and wainscoting. The large formal dining room is off of the Grand Entry. The powder room is close by as well as a Large entry closet.

A Mudroom bench, hooks, storage,  additional big closet & barn door for family entry are located at the laundry door.

The bedrooms consist of a Master suite including a fireplace, pocket door, 2 vanities, seamless glass shower, jacuzzi tub, huge walk-in closet & storage. A Junior suite has its own double closet, full bath and linen closet. Two additional bedrooms share a “jack n jill bath” with a double granite sink and cabinetry conveniently separated from the Bath and toilet room. Bedrooms all have vaulted or cathedral ceiling details.

The Finished basement consists of a playroom, additional room (could be a guest bedroom), full bath, storage, & walkout to an additional patio with loads of natural light. Large yard backs to woods. Huge driveway and a 3 car garage mean plenty of vehicle space. Sidewalk neighborhood and pond to enjoy. Area amenities with a country private feel. Possibly the best of all is that while all of this is “Home”, work can be a Quick commute to Downtown Pgh area.

Great Butler county tax rates and Acclaimed Seneca Valley schools!

If you are interested, shoot us an email ~ We would love to set up an appointment

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Before You Flip a House: Nine Tips

Before You Flip a House: Nine Tips

02.05.2019 | by | 1Comments

Being Licensed in the real estate business, one of the most common topics people want to talk about with us is flipping houses. For the right people, it can be the best option for a first house. For other people, it can be a great investment. Either way, it can be a great opportunity to improve your financial situation. Or it could be a massive headache that digs a financial hole. Hopefully, these nine tips can help you experience the former and avoid the perils of the latter. Here are nine tips to put into action before you flip a house.

  • Know the market

This was the number one thing that came to my mind when putting together the list, it is the first priority to think about before you flip a house. This step should not take the most time but make sure you understand the effect every characteristic of a house and how it rolls into the value of the home. How does the school district affect it? What kind of lot does it have? Early on, in doing your research, be careful of “rose-colored comps” or comparable properties that are simply not in the same category. For example, while they both might have the same bed count and similar lot sizes- there are so many variables that can tweak a price, just because if the house is in the same zip code and has three beds, do not automatically assume that the house you are flipping will get an offer just like that when you are done. The market can change and move up and down but go through all the potential comps you can find so you can have a price range which then dictates everything from color to budget going forward. A good Agent comes in handy here.

  • Bigger is not always better

This tip is HUGE and possibly could be considered an “insider” tip because it does not necessarily seem like the case until you experience it. While that super cheap three or four bedroom house has dreamy comps compared the little two bedroom cape that has middling comps, it never is as simple as “flipping this house will costs this much to buy, will cost this much to fix up and will sell for this much”. The main element is that these are all estimates and the bigger these fix-ups get, the bigger the range of outcomes is. The bigger the range of outcomes, the bigger the risk. It still is not only just risk though, but risk-averse people also do not normally decide they should flip a house, it is naturally a risky endeavor. There is no “one-size-fits-all” formula to follow. The main focus of this tip is that I have encountered and worked with different individuals but two extreme examples stand out;

BIG Example
One individual wanted to flip a house and found a nice but dilapidated three bedroom, two bath home on a double lot. It was in rough shape but for the area, it was a great deal for under $40k. The property was a fairly large house and the flippers worked on that one for almost a full year and it turned out great. I will get into some of the issues they ran into on this particular flip in a later tip but in the end, they had the house for over a year which is not ideal and they ended up making good money on the place. Coming out in the black on a flip is always a win so that turned out good for them.
small Example
On the other side of the coin, another home flipper wanted to flip a house in a similar area to the first example but they found a sub-1000 square foot home with two bedrooms and one bath. They paid almost double the first example at $60k, but with less square footage came less work and they were done in two months. These two flips I’m using as examples seem like they don’t have a lot in common. Overall, they do not, besides from the flippers’ own words, they made about the same amount of money in the end. The first example took over a year and a lot more of an investment, the second one took two months and they ended off fairly even in the end. When you are in the black on a flip, it is a success but especially early on, it is worth a lot more to your time to be savvy when you flip a house than to do the biggest house with the biggest price tag, sometimes you have to get granular with your time and realize that your time is worth more on a smaller, seemingly safer flip. Now, granted, this is not always the case- I have tried to do very ambitious flips and there are some opportunities that you come across on bigger houses that are too good to pass up but especially to less experienced people that are looking to flip a house, less square footage to sand, paint, run wires through and buy cabinets for is the way to go.
  • Understand your costs

This tip is fairly self-explanatory and you can find it said in various ways through the rest of these tips but it needs its own section to stress its importance. No matter how experienced you get flipping houses, always build a buffer because IT WILL NOT GO EXACTLY AS PLANNED. Yes, naturally you build a little buffer and you should honestly add 15% onto everything just to make sure you don’t spend more than you expected but no amount of prep work can prepare you for everything- one flip, they got it under contract, everything looked great, the flippers were ready to move on from it and the deal fell through. The sewage drain pipe seemed clogged, it was crushed underground and was not even making it to the road. This was after they thought the house was sold and there was mature grass already growing. THEN they had a several thousand dollar excavations and replacement project. That is an extreme example but plenty of flips have their own issues that cannot be prepared for, it is just part of the process that you have to be capable of handling.

  • Guts matter

This tip does not mean only do houses that are a “clean it, paint it, and replace the toilet” type flips. Those are out there and can make you some money, there are some other ones where the foundations are falling apart. If you know what you are doing and can be prepared for it, understand the value of good guts. There’s nothing like being able to keep great, sturdy parts of an old house when flipping. It looks great, it can even help sell it to some people. Overall, this tip put another way basically just says, good guts mean you have to spend less money.

  • Prepare for the worst.

This is very general advice but it is so true to think about before you flip a house. Be prepared for it not to go well. This is not doom and gloom point of view but as stated in previous points, things go wrong dealing with houses and structures. That is why it is not for everyone. An individual that wants to do multiple flips will have to be prepared to get through tough issues that you can’t expect. When you run into these issues, you have to be able to resolve it and move forward.

  • Okay, now what happens if it’s worse than that?

So taking from Tip #3, prepare for the worst and you think you finally have your project sold and it falls through because of a crushed sewage line in the back yard. The house sat on the market for another month after that, are you prepared for that to happen? That was after it went over schedule and sat for a winter. It’s difficult to predict what will happen in the real estate business but being prepared will help you deal with the issues that arise along the way. Because they do.

  • Be handy or build a team that is.

Being handy can be extremely helpful in this business, there’s sometimes where it is not worth it to go and hire out to get a project done, sometimes it needs an afternoon from someone handy. If that can be you, it can save a lot of headaches. Another advantage that is not exactly being handy per se, when you do hire out, you can check work and understand the difference between good and sub-par work. That difference with minor things can build up over time and really help sell a place if you have an eye for quality when you do a flip.

  • Talk to people with experience.

I do not know where to start without talking to some experienced people in this business. Not just contractors or realtors, and definitely not just watching HGTV, but talking to people within reach that can give you pointers and tips that can save you money and time (and maybe years on your life) with their experience. Shoot me an email if you want to, I am young and fairly fresh but I have some experience doing a few flips and I enjoy talking about it with other interested people.

  • Have an agent that is ready to work with you and understand flips.

This can be huge. I have done flips and I am also an agent, this is not an uncommon combination but having someone that understands that cheap houses do not always equal flip opportunities is very valuable. On the other side, an agent that understands the potential in a dilapidated property can be a make or break aspect to your team. I would love to help you get into the business whether helping from a distance somewhere else. If you are in Western Pennsylvania, I can work directly with you as an agent and advise on the flip.

One time, a guy came into my office wanting to get into flipping. It was a natural progression from the current business he was in so he wanted to talk about finding some flips. We talked but eventually, he was scared off because I also did flips. He thought I would take all the good opportunities and let me tell you, I would never do that for a client. Not just because that would not be putting the client first but because there are plenty of flips to be had, and if you want one, I am more than happy to be the agent that helps you buy it and later sell it. If that is my role in a flip, I will always be good with that!

Rob Sulava is a licensed real estate agent that has experience researching, managing, and laboring with flips. You can get in contact directly here.

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A Little Bit About Us

A Little Bit About Us

02.05.2019 | by | 2Comments

Out of necessity…

Back in the early 1980’s, two people fell in love. He was a roofer and she was a teacher. They were blessed with a son and she wanted to be a stay-at-home mom while he grew a contracting business and started building homes. By the time they were having a second son, he was building, she was keeping the books and watching the new development they were living in and building around them.

After moving four times that year, an agent brought an offer for a spec Mike, Barb, and their boys were living in. She had been slightly difficult during the process, (let’s be real here, she was sub-par) but when she arrived at closing, the closing agent said, “we are almost done here” and she responded, “Good! Show me the money!” At that moment, Mike bumped Barb and said, “Please go get your license!”

Mike got his license first then Barb got hers. They opened Broker 1 Realty, Inc. and sold Longview Townhouses from an on-site trailer, and so it began.

As that project finished, Barb had acquired the time, experience, and additional course work necessary to pass her Broker exam and then the first office was opened at 1986 Lincoln Way in White Oak. In 2005, they opened an office in the newly renovated Lighthouse building. Now we are here in North Huntingdon with 20 plus years of experience and we are ready to help Guide You Home!

 

Right away, when building this website, we were excited to take advantage of the opportunity to rethink and rebuild this page. We wanted to even rethink the title because beyond a doubt, that it is most definitely NOT “About Us”! Sure, we want to get to know you and we certainly have some experience, history, knowledge of the business and even a few idiosyncrasies- but the point of our business- the reason we hit the ground running- is because it is about YOU! How can we help “Guide You Home”?

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Featured Listing: 120 Nowalk, Plum Boro

Featured Listing: 120 Nowalk, Plum Boro

09.04.2019 | by | 0Comments

Featured: 120 Nowalk, Plum Boro 15239- $269,900

Check out the listing here!

120 Nowalk is a beautiful four bedroom three and a half bath home in Plum Boro. This home has a HUGE fully fenced yard and deck plus a spacious driveway and ample 2 car garage- plenty of room for everyone and everything! Built in 2006, this immaculate home on a private road in front of Larry Mills Park. Fabulous hand scraped floors with crown molding and french doors. Kitchen has stainless steel appliances with undercabinet lighting and mosaic glass backsplash.

Main floor living space is an open concept with loads of natural light. Tasteful updates in baths and kitchen make it truly “move in ready”! Laundry room in the second level but also has hookups Walk to the park, play in the yard, snuggle in tranquility- it is everything you are looking for! Plum School District and close to Murrysville and Monroeville for convenience.

If you are interested, shoot us an email and would love to set up an appointment

 

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