RE: Real Estate Podcast

Clint C. Galliano, REALTOR® (00:31)
Welcome to another episode of the R.E. Real Estate Podcast. I'm one of your hosts, Clint Galliano, along with Ben Harang the other host. How you doing, Ben?

Ben Harang, REALTOR® (00:43)
Good afternoon. I'm doing terrific, We got a little rain this afternoon. It's drying up a little bit. We'll see if we get any more. Keep the temperature down in almost the middle of July. Life is good. I'm doing terrific. How you doing?

Clint C. Galliano, REALTOR® (00:58)
I'm doing wonderful, Other than all kinds of crazy stuff going on outside of the podcast, life is peachy.

Ben Harang, REALTOR® (01:08)
You know, when we started doing this, we thought long and hard about when we would do this because Clint and I are in two different locations. And we have a standing appointment, same time, same week. I mean, same time, same day, same time. And we have to juggle it around every now and then, but we're pretty good about doing it at the same time every week. So here we are on a Wednesday afternoon.

What we talking about, today Clint?

Clint C. Galliano, REALTOR® (01:34)
All right, so we've covered, you know, what's involved with purchasing a home as a buyer, what's involved with selling your home as a seller. We've covered a couple of other topics. Today we're going to tackle some of the real costs of home ownership. So these are things that you can expect to pay on top of paying your mortgage.

Ben Harang, REALTOR® (01:50)
you

Clint C. Galliano, REALTOR® (01:57)
you know, basically cause that you need to budget for and be prepared for so that your home maintains its value.

Ben Harang, REALTOR® (02:04)
So when you rent a place and you have a leaky faucet or a toilet that runs or dishwasher breaks, you call 1-800-LANDLORD, right? When you own the house, you can call the fellow you're looking at in there. So it's up to you to get it fixed. the more prepared you are for that, the better off you're going to be and the better experience home ownership will be for you.

So some of the things we talked about, the escrow, some people like it, some people don't, but the escrow is to pay your annual insurance and property taxes. So whether you pay it directly to the insurance companies and to the sheriff for your taxes, you're still paying it. And a lot of people like the convenience of just prepaying it monthly. And at the end of the year, they don't have to come up with a lump.

Clint C. Galliano, REALTOR® (02:32)
That's for sure.

Ben Harang, REALTOR® (02:57)
sum of money. And the lender likes to do it that way. So they don't have to chase people around. They forgot to pay their property taxes and forgot to renew their insurance. And it just causes all kinds of grief. When I first started in the business and escrow was not a thing. You paid your own property taxes, paid your own insurance, and it got to the point to where people didn't have the cash to pay it or they forgot to pay it or

It went up and didn't have enough money or whatever it was. So part of the Fannie Mae process to be able to sell mortgages on the secondary market, the escrow became a thing so people don't have to be concerned about the property taxes and insurance being paid.

The pest control is something that Clint and I talked about. Termites are real in South Louisiana. We're a wet environment. And they just, if you give them moisture, they're going to find some wood to chew on. And you don't want it to be your wood. So, and then the HVAC servicing gets you air conditioning and heating system in.

under service contract if you can. I have somebody come up and clean it a couple of times a year in the spring and the fall before it gets too hot and before it gets too cold. Flush your water heater out and clean your roof if it needs to. Which is something I need to do with my tank list right now. I keep saying I'm gonna do it, I haven't done it yet but I need to. So the good thing about the tank list, you don't have the tank for the sediment to build up but it does build up.

Clint C. Galliano, REALTOR® (04:16)
whether it's a tank or a tankless.

Ben Harang, REALTOR® (04:32)
in the lines. then lawn and landscaping. You want to keep the exterior of your house in good shape. It's easier to cut the grass once a week than it is to cut twice a week. Probably takes you more time to cut it twice a week than if you cut it once a week. And it just, it makes for being a good neighbor too.

Clint C. Galliano, REALTOR® (04:50)
And one of the things on there, tree trimming, that ties back to your homeowner's insurance. You want to make sure that no tree limbs are touching the home because that will give your insurance and not every carrier, but a lot of carriers, if you've got a tree limb touching your home, they're going to tell you to either get it trimmed or they're going to drop you.

Ben Harang, REALTOR® (05:09)
You

I was at a a luncheon yesterday with the state senator where he was given a legislative update and one of the Insurance changes they made this year in Louisiana is if an insurance company Cancels your insurance your homeowners insurance They have to give you now have to give you 60 instead of 30 days Notice to give you time to replace it and they also have to tell you why they're canceling it in writing They can't just send you notice saying we canceling the insurance

So they're trying to make insurance more affordable. So we'll see that among other things, actual cash value policies. We might wanna do something about insurance later on Clint, but I'm gonna leave that alone.

Clint C. Galliano, REALTOR® (05:54)
Yeah, we'll dig into that in a later episode.

Ben Harang, REALTOR® (05:58)
Yeah. Okay. hidden costs. Here's some things that you're really out of sight, out of mind until it happens. The HOA dues are becoming more of a thing in our local market in the new subdivisions. They haven't gotten very expensive. They're $500 or $600 a year, so about $50 a month.

and that maintains whatever pumps they have in a retention pond or the sign at the beginning of the subdivision or the flowers planted around the sign to make it more appealing. Things like that. Appliances. You don't really think about it, but you have your HVAC system, your water heater, your stove, your refrigerator, your oven. All those things have a finite life expectancy.

You know older appliances Used to last a long time when now it's everything's getting like the the flat-screen TVs If you if you have a problem with the scrap flat-screen TV There's no 1-800 TV repairman you can call anymore because there are no repairman for those things can't be fixed You put it in

Clint C. Galliano, REALTOR® (07:08)
It costs

more to order the parts and try and fix it than it does to just go out and buy a new TV.

Ben Harang, REALTOR® (07:11)
Right.

put it in the trash and go buy another one. And the appliances are getting to be the same thing. I tend to fix them probably longer than I should to keep them running. But at some point it's financially advantageous to just throw out the old one and buy a new one. You don't have to spend money on it anytime soon, hopefully.

Clint C. Galliano, REALTOR® (07:37)
Yeah, we've, we've gone through, I've been in my house a little bit over 20 years. We've gone through five different dishwashers. You know, you, you would think a dishwasher would last a while. The first four, they had various things that broke, that just made them useless. On one, we tried to get it repaired.

And they came out, charged us $175 to diagnose it and said it would be $375 to fix it because that particular dishwasher didn't have a modular design. They basically had to replace the whole bottom part of the dishwasher where the motor and the pump and all of that was. And so it was just a monolithic part.

Ben Harang, REALTOR® (08:18)
Mm-mm.

Clint C. Galliano, REALTOR® (08:23)
You couldn't just replace a pump or anything. And for $400, we went out and bought a whole new dishwasher than what it would have cost us to repair. So we did that. And then two and a half years later, that one starts acting up.

Ben Harang, REALTOR® (08:43)
I'm not laughing at you, that's life. That's how it happens.

Clint C. Galliano, REALTOR® (08:43)
Which, I know, I get it.

so we were thinking, well, we probably still got our money's worth out of it for what we paid versus what we paid on the previous one, because we paid probably $600 on it. But we did some research and come to find out that particular model of dishwasher had an issue with the control board going out.

Ben Harang, REALTOR® (08:57)
Uh-huh.

Clint C. Galliano, REALTOR® (09:08)
because of steam getting into the control board area. the other problem was that there was a shortage of the control boards for that model. We ordered one, it showed up and it didn't work. I changed it out and what I think happened is somebody ordered one and...

Ben Harang, REALTOR® (09:12)
Mm-hmm.

course.

Clint C. Galliano, REALTOR® (09:30)
changed out the control board and sent their broken one back and just returned it and got a refund. anyway, we were able to get another control board a couple of months later and changed it out. And that was about two years ago. So we haven't had an issue since, but the big problem was, that where the vent for the steam is, there's a little nut that secures the

Ben Harang, REALTOR® (09:36)
huh. huh.

Mm-hmm.

Clint C. Galliano, REALTOR® (09:57)
vent and the inside panel to the dishwasher door and it was like really loose when I first tore into it to get at the control board. So what I suspect is that when they put it together they didn't tighten it up to seal everything and so I don't expect the control board to go out again because I made sure I torqued it down.

Ben Harang, REALTOR® (10:17)
Yeah.

Clint C. Galliano, REALTOR® (10:19)
You know, but I mean, you

know, like you say, I'm washing machines. We, you know, we've been through four sets of washing machines in that time. The first one was the old use set that I had, but you know, kind of the same thing. said, we're going to get the fancy front loads. Well, that was a, that was a waste and aggravation. Those get nasty. Like you need to go and like clean it out with bleach and wipe it down. And that's.

Ben Harang, REALTOR® (10:28)
Mm-hmm.

No, no, no. That's a disaster.

Mm.

Yeah,

Clint C. Galliano, REALTOR® (10:48)
for a tool that's supposed

Ben Harang, REALTOR® (10:48)
YouTube University has a

Clint C. Galliano, REALTOR® (10:49)
to help you? No. So this last time, washer machine, water pump went out. And we had already worked on this washing machine before because we have an issues with a vibration sensor and wiring where rubbing against stuff and wearing out. So I've replaced part of the wiring harness.

and replaced the vibration sensor. And I just got fed up and we went out and bought wound up buying Speed Queen washer and we got one with it's

Ben Harang, REALTOR® (11:17)
mechanical

I hope and not with the electronic control board.

Clint C. Galliano, REALTOR® (11:21)
Correct. It's got this kind of like your coffee pot where ⁓ it's a mechanical switches and not a electronic control board. And this thing has four moving parts for the transmission. Whereas a modern washer may have 23 moving parts in the transmission. it's got a seven year warranty. We hope to never have to take advantage of it.

Ben Harang, REALTOR® (11:25)
Yeah.

huh.

Uh-huh.

Yeah.

Mm-hmm.

Clint C. Galliano, REALTOR® (11:49)
It also seems to be pretty easy to work in that you just take the front panel off and do whatever you need to do. No flipping it over or anything like that.

Ben Harang, REALTOR® (11:55)
Yeah.

One more one more suggestion and we're gonna move on There's a high dollar refrigerator freezer That is sold on a marketplace and I cringe when I see one in a house Because I don't know anybody that had this brand of high dollar refrigerator freezer that Lasts any time whatsoever. I'm not gonna say the some word ⁓ but it's

Clint C. Galliano, REALTOR® (12:20)
Samsung.

Well, hey, yeah, but

that's the one you talking about, right?

Ben Harang, REALTOR® (12:27)
I'm not going to it.

Clint C. Galliano, REALTOR® (12:30)
So, and

I'm not saying it to knock Samsung but everything we hear says that their appliances are horrible.

Ben Harang, REALTOR® (12:39)
So just do your research when you do need to replace an appliance and hopefully you only have to replace it once, but it has a normal life expectancy of 10 or 12 years. And that's really all you can expect out of any of them. So that's right. That's right. I know somebody that wanted the Speed Queen. They were advised to get the mechanical. They said, oh no, we like all the fancy buttons. They got the fancy buttons.

Clint C. Galliano, REALTOR® (12:54)
And simpler is better.

Ben Harang, REALTOR® (13:08)
fancy buttons went bad. They replaced it once, fancy button went bad again. They moved the washer and dryer on and bought the mechanical Speed Queen and they they're still rolling. So anyway we're not trying we're not here to throw people out of buying a house. Come on.

Clint C. Galliano, REALTOR® (13:25)
No, no, no. Well, I just saying, this

is advice to take to heart. And if you plan ahead, you don't have to go through the aggravation of buying stuff that in a couple of years breaks. And that's goal. saying, bought a Speed Queen, we resisted buying a Speed Queen for 15 years because it's not cheap. But if it saves us from...

Ben Harang, REALTOR® (13:30)
Yeah, it's real world.

Right,

That's right.

Clint C. Galliano, REALTOR® (13:53)
being without being able to wash clothes for three or four days while we're waiting on parts and me having to drag the machine out into the garage and tear it apart and change out a part. then, you know, it's more than worth it to me, you know, considering that some people have speed queens that last 25 years, this may be the last washing machine that we ever bought.

Ben Harang, REALTOR® (14:04)
all that's worth something. ⁓

Yeah. Yeah.

Clint C. Galliano, REALTOR® (14:20)
And as soon as the dryer that we've got breaks again, we're going to get a speed queen dryer.

Ben Harang, REALTOR® (14:20)
The whole Maytag room.

The old commercial for the Maytag repairman, loneliest man in town, because he had no work, because the Maytags washing dryers and refrigerator freezers just kept working. That was their marketing strategy. You you're as a Maytag repairman. And that's, you want a repairman that's lonely on your appliances. Because if he's busy, you're going to have a problem. Anyway, so to pay for that, to pay for that.

Clint C. Galliano, REALTOR® (14:48)
Let's get away from them.

Ben Harang, REALTOR® (14:51)
Put some money aside The $100 a month a good place to start If you have a few dollars put it in a put it in a separate account. So if you need it, it's there You know some people advise 1 % of the value of the house So if you you know $350,000 house, you might want to put in a couple hundred dollars a month so

When you when something breaks, you'll you'll have the cash on hand so you can get it fixed So you're not having to drag it outside in the garage to do it fix it in the heat You can you can pay somebody to replace it and depending how handy you are And if you buy a house you're gonna you're gonna become handy I promise you that you may not be handy when you when you sign the paperwork But when you after you live there for a couple of years, you you'll be surprised at how many things you learn how to do

I refer to YouTube University. You can learn how to do anything on there. It's a matter of how much gumption you have and how bad you want to fix it yourself. So. ⁓

Clint C. Galliano, REALTOR® (15:54)
Yeah, so talking about

putting money aside, you know, I've got a few rentals. When I'm analyzing a rental to see if it's a good idea or not, I budget between 3 and 5 % for maintenance costs. And that covers capital expenditures and things like that. I'm sorry, no, take that back. 3 % for maintenance and 5 % for capital expenditures.

So that way if I do need to replace a roof or an HVAC system or anything major or do some type of remodeling or something, that's already built into the budget.

Ben Harang, REALTOR® (16:35)
You do it based on the value of the property on the annual revenue.

Clint C. Galliano, REALTOR® (16:39)
It depends on the revenue. Maintenance is based on the gross revenue. ⁓ Same thing on the CAPEX. And the CAPEX do it two different ways. One is the simple way and that's just based on the gross revenue. The other way is the detailed analysis. It's usually a lot more, but it takes account.

Ben Harang, REALTOR® (16:42)
Yeah.

Mm-hmm.

Yeah.

Clint C. Galliano, REALTOR® (17:04)
or takes into account the life of the different components that you would be spending capex on and the remaining life and what it would cost to replace it. So it's a little bit more detailed analysis.

Ben Harang, REALTOR® (17:14)
Let's get back on the house. you want an investment, Clint

has an investment group you can look up and join, think. But that's not what we're talking about. We're talking about single-family residential home ownership. And then another thing you should have is three months worth of expenses in a bank, in an account that you don't touch.

So if things go bad, you can pay your house note for three months, you can buy groceries for three months, you can pay utility bills for three months. They give you some breathing room if somebody loses a job, gets sick, can't work for whatever reason. You ought to have some money set aside for that as well as the maintenance on the appliances.

And then we get into the good side of it. When Clint buys a rental, he doesn't have the homestead exemption. He pays property taxes on the full amount. If you buy a house in Louisiana, the first $75,000 of the assessed value is tax exempt. It's a one-time trip to the assessor's office to sign up for the homestead exemption is quick and painless. I try to do it after we've...

We close on a house, we just walk down the street to the assessor's office if we're in town and get it done and people forget that they even signed up for it. But locally, it's somewhere in the $800 to $900 a year that it's for you to sign up for the home state exemption. So if you're to live in a house, you should be doing that when you buy the house. And then the deductibility of

the mortgage insurance that you pay, not the insurance, the interest that you pay. The interest you pay on the money you borrowed is still tax deductible. I'm assuming it's going to continue to be tax deductible going forward. The big, beautiful bill hadn't been analyzed yet, so nobody really knows what's it yet. But we're hoping that the deductibility of mortgage interest is deductible.

Clint C. Galliano, REALTOR® (18:49)
address in

Ben Harang, REALTOR® (19:11)
And then one more thing is when you buy a new appliance, keep the receipts. So you know how old it is, you you get the serial number, you know what you have. So if you need to repair it, you have a better chance of repairing it. And then you know when you bought it, so if it's 12 years old and you're looking at a major repair, it may be time to replace it. May be cost effective to replace it rather than fix it.

So those are.

Clint C. Galliano, REALTOR® (19:39)
And so, and

if you do any capital improvements and major repairs structurally to your home also, or like replacing an HVAC or something like that, you may also get some tax benefits to that, but we're not CPAs, we're not accountants. Talk to your CPA or accountant at tax time so that you can figure out if that applies to you.

Ben Harang, REALTOR® (20:03)
And you also want to keep the paperwork from your roof. And hopefully everybody gets 25 years out of their roof. And no storms and no wind damage and you just get the pleasure of changing an old roof, which I would happily do after 25 years rather than going through a hurricane.

Clint C. Galliano, REALTOR® (20:20)
But that's a 50 year roof.

All right, moving on, moving on.

Ben Harang, REALTOR® (20:22)
Oh, oh

did they say 50 or 15 when they put it on I'm confused Yeah, yeah And then the the quote to remember Is your home doesn't care about your budget it only cares about maintenance I love it your house doesn't care how much money you put aside didn't put aside It doesn't matter what when it breaks is gonna break

Clint C. Galliano, REALTOR® (20:28)
Moving on, moving on.

You

Ben Harang, REALTOR® (20:49)
So you're much better off being prepared for that because you know it's coming. And I'm chuckling about it. I'll probably go home tonight and have something to deal with that I wasn't prepared to deal with when I left my house this morning. But things do happen. Things break. And if you're prepared for it, it's a whole lot less stressful. And even with the unexpected expenses that you will have through homeownership.

People say I'm going to because I don't want to deal with that. Well, you're paying your landlord to deal with it. He deals with it. You're paying him the rent that he buys the HVAC system with or the dishwasher or the water heater that you're using. So you're still paying for it. You're just paying for it by the month. So get yourself in a house and a note you can afford. Put some money aside. Learn how to do a few things and

30 years, you're gonna have a piece of property that's paid for if you don't move or refinance it. Where at the end of 30 years, if you pay in the rent, your landlord's gonna have a property that's paid for thanks to you paying your rent. So it's not even close. You buy a house, you can afford whatever that is. I've had a conversation with Clint in the past when there was some houses with...

extremely competitive interest rates, throwing closing costs at it. Just it made it to where you could get in the house for nothing. I told Clint, I said I would buy that house sight unseen and make myself comfortable for five to seven years. I don't care what the house is like. Everything that is going to be new, you won't have any maintenance. You just buy the house, make it comfortable and sell it in five to seven years.

You're going to have equity in the house. You're not paying rent and you can move up to the house you want and buy yourself some time. Okay, I'm off my soapbox.

Clint C. Galliano, REALTOR® (22:42)
All right. In case you couldn't tell, Ben and I are both realtors. If this is your first time here, we operate in South Louisiana. So if you're curious about buying, selling, or becoming a real estate in South Louisiana, reach out to one of us. This is the RE Real Estate Podcast, and you can listen to episodes, watch episodes, ask questions, whatever you want.

or get to either of our websites at RERealEstatePodcast.com. So give us a like, give us some comments, share it with your friends, subscribe to the podcast, subscribe to the YouTube channel. Show us the love. And if you find value, make sure that all your friends do the same.

Ben Harang, REALTOR® (23:30)
Sounds good. we just two guys in South Louisiana talking about real estate and buying and selling real estate in black and white. So if you get some value out of it, help us out and try to expand the footprint of the podcast.

Clint C. Galliano, REALTOR® (23:42)
Yes, indeed. All right, Ben, looks like we got another one in the can.

Ben Harang, REALTOR® (23:46)
All right, y'all have a great day. Have a good one, Clint.

Clint C. Galliano, REALTOR® (23:50)
You too,