RE: Real Estate Podcast

Ben Harang, REALTOR® (00:01)
Hello everybody. Welcome back to another episode of the RE real estate podcast. I'm your cohost Ben Harang along with Clint Galliano out of South Louisiana on a, on another nice Wednesday afternoon. ⁓ weather's heating up in the summer. but life is good. Good afternoon, Clint. How you doing?

Clint C. Galliano, REALTOR® (00:25)
doing wonderful man how you doing

Ben Harang, REALTOR® (00:28)
And I'm doing terrific. Life couldn't be better. My wife's been out of town and she's coming home tomorrow after a week of visiting grandchildren in Denver and ⁓ life's good. So what are we going to talk about today? Sounds like one of my favorite topics.

Clint C. Galliano, REALTOR® (00:47)
All right, so today we're going to be covering Renting versus Buying and we're gonna go over the pros and cons Give you a little backstory for this topic I had a client that was referred to me that wanted to buy a home in Thibodaux Because they're currently renting They're spending about $1,700 a month to rent

and they were pre-approved for about $300,000, which is not small potatoes, but they wanted to look at $100,000 homes. And those are few and far between in our market. And most of the time, if you find something at that price point, it's not going to be, it's not going to fit.

Ben Harang, REALTOR® (01:23)
Mm-hmm.

Clint C. Galliano, REALTOR® (01:42)
the government-sponsored overlays or pass their appraisals without some work. ⁓ One of his other criteria was that he didn't want to have to do any work to the home. So I suggested maybe looking at spending a little bit more money and look at a new construction home because he wouldn't have to worry about doing anything to it and the costs would be fairly cheap. And he said,

Ben Harang, REALTOR® (01:47)
Mm-hmm.

Clint C. Galliano, REALTOR® (02:12)
So we were supposed to have a consultation and he emailed me in the middle of the night and said, him and his wife talked it over and they decided they're just going to keep on renting. And even after I emailed him and said, hey, let's still have the consultation. You know, even if you decide to keep on renting, that's no big deal, there's no pressure. But let's talk about your options and, you know, kind of what the consequences of each are.

Ben Harang, REALTOR® (02:23)
Mm-hmm.

Clint C. Galliano, REALTOR® (02:41)
And they said, no, we're just going to keep on renting. Bye. ⁓ So I put together some numbers on comparing renting versus buying for a VA loan, FHA loan, and ⁓ USDA loan or rural development. And so that's kind of what led me to the topic today, possibly the next.

Ben Harang, REALTOR® (02:56)
Mm-hmm.

Clint C. Galliano, REALTOR® (03:10)
or three episodes, I guess, going through all of this, but to cover the pros and cons of renting versus buying.

Ben Harang, REALTOR® (03:11)
Yeah.

And there's a lot of heartburn, from people that, or for people that have never bought a house before. ⁓ Just generally, they sign in their life away for 30 years, if you like, and they absolutely are. ⁓ But when you rent versus buy, you sign it up for a lifetime of rent without any end in sight. ⁓

You're paying somebody else's mortgage. So anyway, we have a list of the pros and cons and I do feel strongly about it. Clint and I were talking before we went on about what the breakeven point is, how long, you know, if you're going to rent for six months ⁓ or a year, it probably doesn't make sense to buy, maybe up to two. I think a year, Clint thinks two, but in that range, if you know you're coming in and moving out within a year or two, you probably...

Should just rent something and move on when the, when the time's up, but anything longer than that.

Clint C. Galliano, REALTOR® (04:20)
And let's clarify

that. And it's not, well, I'm going to rent in Thibodaux and then move back to Houma I'm talking about in the area. So if you're coming from out of state to the area and you're only going to be here for those one to two years, then it probably doesn't make sense to buy a home. If you're planning on being here longer, then, you know, there's

Ben Harang, REALTOR® (04:30)
Right. Right.

Mm-hmm.

Clint C. Galliano, REALTOR® (04:50)
we're gonna show you or at least make the argument that it probably does make more sense to buy than it does to rent.

Ben Harang, REALTOR® (04:59)
Yeah. Yeah. And, ⁓ you know, you pay your mortgage or pay somebody else's mortgage, but you're paying, you're paying for a mortgage, whether you buy a rent and, and in my mind, it just soon be your mortgage, and pay it down. And, you know, 30 years is a long time, but five years goes by in a blink of an eye. ⁓ and you only have six times five years and you all of a sudden at 30 and you wonder why.

that the whoever you're looking at in the mirror looks different, but it feels the same on the inside. ⁓ life just keeps on going. So anyway, that's a, topic for about why I think you ought to pay your own mortgage rather than somebody else's in rent.

Clint C. Galliano, REALTOR® (05:49)
All right, so case for renting. It's flexibility and predictability in renting. ⁓ There's ease of relocation. If you want to move, it's easy enough. You're not tied there long term. It's fairly easy depending on how long your lease is for and what your lease says, what the terms of that lease is. It's a short term commitment.

You may be doing a six month or a 12 month lease, even though the majority of leases start out 12 months. ⁓ If you're renting from a ⁓ mom and pop landlord, they may just do month to month. And so that's even easier to deal with. ⁓ It's easy to adapt to life stages with that. ⁓ It's ideal for young people. ⁓ you're...

Ben Harang, REALTOR® (06:34)
Mm-hmm.

Clint C. Galliano, REALTOR® (06:44)
saving to buy a home and that's your goal, then renting is a good choice. ⁓ If you're a retiree and you're downsizing, that could be a good intermediate step or maybe an end game, depending on where you're at in your retirement. ⁓ those are, well, the flexibility is, it makes it easy to make changes. ⁓

Financial predictability and reduced responsibility and I think Ben kind of mentioned some of that ⁓ You've got some depending on How it's set up you may have some lower upfront costs majority of the time you're looking at Just a security deposit which is usually equal to one month's rent and your first month's rent ⁓ versus ⁓ down payment

Ben Harang, REALTOR® (07:37)
Mm-hmm.

Clint C. Galliano, REALTOR® (07:42)
possibly in closing costs when you buy. And this is not necessarily taken into account any concessions from sellers, which we're going to talk more about that when we get to the pros and cons of buying. ⁓ The other thing, yeah, I could see you ⁓ kind of jiggling around there. ⁓

Ben Harang, REALTOR® (07:45)
right?

Okay. I'll let, I'll let my comment go for a minute.

How's it?

Clint C. Galliano, REALTOR® (08:11)
The other thing is repair and maintenance costs. If anything happens while you're in a rental, your landlord is supposed to take care of it. ⁓ And again, ⁓ another thing to watch out for is if you're with a mom and pop landlord is that they may not necessarily be as diligent in doing maintenance and repairs. ⁓

But that's kind of the big thing. You've got broken air conditioners, leaky pipes, those types of things. If you're in a rental, that's not your concern other than reporting it to the landlord. And then the landlord's responsible for taking care of that.

Ben Harang, REALTOR® (08:48)
Mm-hmm.

Okay. So, so I can't help myself anymore on that one. I'm going to save the other one for later, but you're still paying for those repairs in a form of rent. And if you report it to the landlord, landlord's out of town, it's two o'clock in the morning. Uh, landlord can't find somebody, landlord's not responsive. Whatever the reason is, the problem doesn't get fixed and it, it's out of your control. Um, if you own it and those things happen.

You're going to pay for it, but you can get it fixed. It's up to you to get it fixed. You're not relying on somebody else to get it fixed. So that's just one thing to think about. Yeah. You, you're not going to pay extra for it, but you're not going to live with an air condition for a week that doesn't work or a bathroom you can't use because the plumbing stopped up or the leak leak under the sink. that's that has a whole cabinet wet under the sink. ⁓

You can take care of it as a homeowner and you don't have to rely on anybody else. Okay. That's my objection to Clint's comments, but he's right. There is predictability. Financially, it doesn't vary. If something breaks, you're not paying more for it. So anyway, that's just my counterpoint,

Clint C. Galliano, REALTOR® (10:16)
That's OK. All right.

Ben Harang, REALTOR® (10:17)
Thank you. I'm glad

I can talk.

Clint C. Galliano, REALTOR® (10:21)
Yeah

All right, so now we're going to move on to pros and cons for buying a home. Main things is, if you look at it, the hashtags or if you want to go back to AOL days, the keywords for renting are flexibility and predictability. ⁓ By comparison,

those same things for buying is stability and wealth creation. So on the building wealth part, excuse me, your mortgage payment is kind of like a forced savings account. And there's some caveats to that. We've mentioned them probably at least a couple of times on previous episodes.

Ben Harang, REALTOR® (10:59)
Mm-hmm.

Clint C. Galliano, REALTOR® (11:23)
the when you're paying your mortgage at the beginning of your loan term, you're mostly paying interest, but a portion of that payment every month goes towards paying down the principal loan or the total amount of the loan that you borrowed. ⁓ So you're paying down your loan.

Ben Harang, REALTOR® (11:38)
Mm-hmm.

Clint C. Galliano, REALTOR® (11:46)
So what that does is that builds equity in the home. After you do that for a while, you can either refinance or sell the home and harvest that equity. And so that's cash in your pocket.

Ben Harang, REALTOR® (12:04)
And equity just,

you and I know what equity is. I'm going to just get into a little definition. Equity is the value of your house minus however much you owe on the house or the balance of your loan is the equity that you sell it. If you sell it, that money is payable to you. ⁓ If you refinance it, you can take that out to go on a European vacation, to buy down on the rate, to lower the...

amount of finance, that's your money. And it increases monthly, not by very much, but monthly. And over time, it increases each month. And you'd be surprised how fast it adds up. And it's nice to see when it flips to where you're paying more in equity or more in a balance than you do in the interest if you follow the amortization schedule.

Clint C. Galliano, REALTOR® (13:00)
Yep. And then the other way that buying a home builds wealth is that real estate historically appreciates. So that means it goes up in value. And again, the caveats apply. It needs to be maintained. ⁓ Sometimes it may not appreciate it all depending on what the market's doing. But

Ben Harang, REALTOR® (13:23)
Mm-hmm.

Clint C. Galliano, REALTOR® (13:25)
There's always, historically, I want to say on average, you're probably looking at close to 4 % in this area long term that prices have appreciated. It's not 4 % every year, but on average, it's probably pretty close to that. ⁓ So that's how you can compound your wealth, so through your loan pay down and appreciation on the value of the home. ⁓

Ben Harang, REALTOR® (13:43)
Yeah.

Clint C. Galliano, REALTOR® (13:55)
Some of that's tied to inflation. Some of that's tied to devaluation of the dollar. But those are two whole other discussions that we're not going to get into right now. Because that's like some way long sidebars. ⁓

Ben Harang, REALTOR® (14:12)
And

on just a quick story, because I guess we're old enough to where we like to tell stories. My first house I bought and sold it 14 years later, and it had a total appreciation. It took 12 years to get out from underwater in that house, but I wasn't selling it, so it really didn't matter. I sold it.

Clint C. Galliano, REALTOR® (14:35)
And

what Ben means by underwater means that it was worth less than what he paid for it.

Ben Harang, REALTOR® (14:41)
or less than I could sell it for, you know. So when I sold it, it had appreciated about a total of 20 % over 14 years, which is a little over 1 % a year. If you look at it on a linear basis, but for 10 or 12 of those years, there's no way I could have sold that house for what I paid for it. And then I bought it like the weekend, the weekend, the...

Bottom fell out in South Louisiana. I bought the house before that weekend and then the bottom fell out and it took 10 or 12 years to come back. But I had a place to live. The house was moderately priced and I waited it out and played the long game. I decided I wasn't going anywhere. So it really doesn't matter what happens until you want to sell the house. So that's why the, the, long you're to be somewhere plays a factor into your decision, whether the

to rent a buy. Okay Clint, turn.

Clint C. Galliano, REALTOR® (15:44)
All right, ⁓ next thing ⁓ is stability and control. That's the other component ⁓ that's a parole for buying. You have payment stability. So what that means is that when you take out a loan, typically they're for 30 years, and your payment doesn't change. Now that's principal and interest.

⁓ Taxes and insurance may change over that time. So your total note that you pay every month may change year by year, but your actual payment on the loan does not change compared to rent where you could be living somewhere where the landlord increases the rent 3 % every year. That could happen. know, so that's a

Ben Harang, REALTOR® (16:30)
Mm-hmm.

Clint C. Galliano, REALTOR® (16:36)
that's kind of from a renter perspective, you say, well, that's crazy. I'll just move somewhere else. Okay, then you got to figure out where you can find a place to live and then scrape up the money. And if you're already scrambling to pay the rent on the first of the month, every month, the day that it's due, ⁓ then that's extra hassle you get to deal with. But that's one of the big differences between buying a home

Ben Harang, REALTOR® (17:00)
Mm-hmm.

Clint C. Galliano, REALTOR® (17:05)
and reading. ⁓

Ben Harang, REALTOR® (17:07)
⁓

hurricane Ida story. ⁓ I'm forgetting the name of the complex here in, here in Tibet, after hurricane Ida blew through, was damage to some of the buildings and they evicted everybody from the complex and people were up in arms. Well, how can you evict me? My, my unit's not damaged. I didn't, I don't have any water. It's I'm good to go. And they said, no, it's too dangerous for people to be living here.

while we rehabbed the complex. And I think they took advantage of vacating it, rehabbing it, and going up on a price, and the complex was probably less than five years old. ⁓ So they had a clause ⁓ in the lease that they could vacate the complex due to an act of God, and ⁓ everybody's jumping up and down. People that own their own houses, unless the damage was significant, were not displaced. ⁓

So there's all kinds of things when you're not in control that, I didn't know, I didn't know any leases had that, but apparently leases all across the state say similar things. ⁓ you know, so it's, it's just, if you don't own it, you don't control it yet. Somebody else's mercy. And that's, that's, that means a lot to, me. So anyway, no more stories today, Clint.

Clint C. Galliano, REALTOR® (18:07)
That's true.

my lease has it.

All right, from you. I may have a story that comes up. We never know. So another thing that you get with buying a home is a sense of permanence. So ⁓ you're able to stay in the community without fear of lease not being renewed or having to move. mentioned the second your rent goes up.

Ben Harang, REALTOR® (18:36)
from me. You got one, your budget is one more.

Clint C. Galliano, REALTOR® (19:03)
have to go find another place to stay. You know, if you buy a house, that doesn't happen. ⁓ You know, unless you're in a situation where your insurance goes up so much that you can't afford it, but that's, again, that's a whole other different discussion. ⁓ And then the third thing to add to that, that's a plus, is that you've got freedom of personalization.

You don't have any rules against somebody telling you that you can't hang pictures on the wall, that you can't paint a room the color you want, you can't put decorations how you want it, things like that. Those are the key pros. ⁓ Some of the cons, like you say, you have to deal with maintenance. But if you're budgeting property, like we told you in a couple other episodes, ⁓

Ben Harang, REALTOR® (19:58)
Mm-hmm.

Clint C. Galliano, REALTOR® (20:00)
then you should be prepared for that. ⁓ You have insurance that may go up. That's just a fact of life in the area. You should be prepared for that. ⁓ That's a misstatement. Nobody expects the Spanish Inquisition and nobody expected insurance rates to double for three years in a row. ⁓

Ben Harang, REALTOR® (20:23)
Right. Right. And

the good news is it seemed like they have topped out and at least there's no more increases that are coming like they used to be. And there's some talk and evidence of some of it of on the backside coming down a little bit. I don't want to give anybody false hope, but it looks like the huge increases are behind us.

Clint C. Galliano, REALTOR® (20:46)
So things are looking up ⁓ on that front. But those are things that can change. ⁓ So it should always be a good idea to not necessarily prepare for a specific scenario, but have yourself a buffer. So that's the other thing we advise is have a buffer ⁓ to handle stuff like that.

Ben Harang, REALTOR® (21:06)
Mm-hmm.

And the reality is if you're renting and insurance rates get whacked up, your rent's going up because the landlord's not going to pay it. He pays that premium with your rent dollars. So whether you're buying or whether you own a rent, you still feel the effects of increased insurance rates.

Clint C. Galliano, REALTOR® (21:36)
Yep. All right. I'm going go ahead and share. got, I mentioned it at the top of the podcast. I've got some, ⁓

infographic handouts comparing rent versus buy scenarios and kind of does a cost benefit analysis for over three different loan types. And there's minor differences and we're going to go over that.

Ben Harang, REALTOR® (22:01)
it

And

the bottom line after 30 years is eye opening.

Clint C. Galliano, REALTOR® (22:09)
Yes it is. All right, so let me get that up on the screen.

Ben Harang, REALTOR® (22:23)
I have to cut some of this out if you take much longer.

Clint C. Galliano, REALTOR® (22:28)
Are you supposed to talk and fill it in?

Ben Harang, REALTOR® (22:30)
⁓ so how about, you know, the lawyer sometimes will, will tell you, don't look at the bottom line of how much you're to pay in principle and interest for the house. is somewhere in a two and a half to three times range, depending on the, the interest rate and people will all floored when they look at that number. Clint's about to show you some, numbers where, ⁓

If you're renting with an nominal increase in the rent over 30 years, you're talking about, ⁓ low to mid six figure difference over 30 years, renting versus buying. So.

Clint C. Galliano, REALTOR® (23:17)
actually

worked with a client that our daughter worked at a bank and looked over the the loan estimate and told us saying after 30 years you're gonna be paying eight hundred something thousand dollars and she canceled the contract said I'm not gonna pay that much for a house and it's like okay well you're gonna pay three times that much it exactly

Ben Harang, REALTOR® (23:32)
Mm-hmm. Mm-hmm.

Well, and

You're going to pay more than that if you rent it for 30 years, if you rent something for 30 years.

Clint C. Galliano, REALTOR® (23:47)
All right, so this is rent versus buy on a VA loan scenario. The key assumptions is that the rent is $1,700 a month and increases 3 % every year. Home price is $202,000. It's a VA loan, so there's no down payment. Interest rate is 6.5%, 30-year loan. There's no mortgage insurance because the VA loan's guaranteed by the Veterans Administration.

property taxes on this home is roughly about $1,000. It's a little bit less than that, but being a little conservative, I'm estimating $1,000. Another key assumption is that this is a new construction home. And so the insurance is probably a little bit less than $1,800. So put $2,000 just to be, again, to be a little more conservative. This is also assuming 1%.

of home value annually for maintenance costs and that the home is appreciating 3 % annually. So over 30 years, you can see the difference in the costs between renting in the red and green in the buying. The buying costs annually, that number barely moves. ⁓ The renting costs.

Ben Harang, REALTOR® (25:13)
And that's only due to insurance

and taxes and maintenance costs. But the principle and interest never changes.

Clint C. Galliano, REALTOR® (25:20)
correct.

versus the...

Ben Harang, REALTOR® (25:25)
the

Clint C. Galliano, REALTOR® (25:27)
The rent costs, that goes up a lot. And then we've got equity gain, and those are per five year increments and how much equity was gained through appreciation. And I don't think it's taking into account loan pay down. I gotta double check those numbers. But ultimately, at the end of 30 years, if you rent,

You're looking at having paid $970,000.

Ben Harang, REALTOR® (26:02)
But

you didn't have any repairs to make Clint.

Clint C. Galliano, REALTOR® (26:05)
But you didn't make it. That's right. Well, so let's take that into account. If you buy this $200,000 house versus renting with those assumptions, you paid a total of $645,000, almost $646,000. So this is over $300,000. You didn't have to make repairs, but you could have bought a house.

Ben Harang, REALTOR® (26:24)
Mm-hmm.

Hmm.

Clint C. Galliano, REALTOR® (26:34)
And even if you had to make $50,000 in repairs, you still almost $300,000 to the good in buying.

Ben Harang, REALTOR® (26:41)
And what happens in

the 31st year buying versus rent? 31st year.

Clint C. Galliano, REALTOR® (26:48)
you don't

all you've got is insurance taxes and maintenance costs

Ben Harang, REALTOR® (26:54)
And you're to continue to pay the rent for your landlord to pay your landlord's mortgage. So it's, it's, uh, from somebody that, that was upside down in the house for a long time. Um, it worked out pretty well. So don't, don't be concerned. Really. The only question is how long you think you're to be in the area. Like Clint said, not on, not on main street on fourth street, but how long are you going to be in the home of typical area or wherever.

Clint C. Galliano, REALTOR® (27:02)
Yeah.

Ben Harang, REALTOR® (27:23)
You're watching this. if you're going to be there for awhile, ⁓ at the end of the day, there's a whole lot better off, I think. And it's not because I'm, selling it. You can be somewhere else and I'll never sell your house. ⁓ but you'll be at a better position. Five, 10, 15, 30 years down the road. If you buy versus rent, if you're going to, if you're going to stay in the area.

Clint C. Galliano, REALTOR® (27:49)
Yeah, and I'm a landlord and I still advocate that people buy rather than rent just because it puts them in a better financial position.

Ben Harang, REALTOR® (28:03)
Well, and the lack of housing that we have also, we have a lot of listings right now, but there are not a lot of affordable listings. And the rental market is tough from a tenant standpoint to find a place. So if there's a hundred unit complex, it gets put on the street. All of a sudden there's a hundred less housing units for people. And if you get caught up in that scramble, I know...

40 year olds that had to move back in with mama and daddy because they flat could not find a place to live. ⁓ You know, I sold a couple of houses on the backside of that to people that moved in with mama and daddy ⁓ in their thirties because they got displaced and they had to move back in while we figured it out and tried to buy a house 30 or 45 days after Hurricane Ida passed, which was a challenge. ⁓

So once you're in it and you own it, you control it.

Clint C. Galliano, REALTOR® (29:09)
All right, I'm going to look at, just touch on a couple of points here. We're going to look also at FHA loan and a USDA loan. And the key differences from the VA loan is that you've got the mortgage insurance premium. FHA is 0.85 % annually.

Ben Harang, REALTOR® (29:33)
And if you qualify for the VA loan, it's the best game in town, as it should be for people that serve the country. But I can't imagine a veteran being eligible for a VA loan and getting a FHA or USDA loan.

Clint C. Galliano, REALTOR® (29:34)
and

Yeah, and ultimately it depends on, I've had a couple that wanted to use another type of loan and I think ultimately it depended on their credit score and if they were going with somebody else, then they could do something different or at least that was their plan. I don't know if that would have actually worked out for them or not. anyways, so.

Cumulative costs with an FHA loan, you're looking at 673,000 and some change. Your rental cost is roughly about the same.

And the main thing is, is because you've got a little added expense in the costs here with the mortgage insurance.

Ben Harang, REALTOR® (30:45)
And, and mortgage insurance for people that don't know is, is what you pay monthly to offset the lender's losses for people that stop in their mortgage or can't pay their mortgage and they get foreclosed on. It's designed to make those lenders whole so they can keep the cycle of continuing to lend money for, the sale of real estate. And the market doesn't dry up. If we go through a foreclosure debacle like we did in 2008.

And I still don't know where the, ⁓ mortgage insurance coverage went in that timeframe, because it seems like nobody wanted to talk about it. ⁓ but.

Clint C. Galliano, REALTOR® (31:28)
Yeah. All right. And then the USDA mortgage insurance is roughly about 0.35. So typically your RD or USDA loan, however you want to refer to it, has cheaper mortgage insurance than the FHA loan. And another benefit is that it's a 0 % down.

I don't know about this 1 % upfront fee financed. I think that's ack.

Ben Harang, REALTOR® (32:01)
It does have a

1 % fee that's added to the loan.

Clint C. Galliano, REALTOR® (32:07)
Okay, yeah, so that's just tacked on. ⁓

Ben Harang, REALTOR® (32:10)
⁓ But that does eat it into

the equity when you go to sell it.

Clint C. Galliano, REALTOR® (32:16)
Right. So cumulative costs for the RD or USDA loan is higher than the FHA loan. ⁓ But you wind up with more equity than the FHA loan because you've got the lower mortgage insurance. And so that...

Ben Harang, REALTOR® (32:36)
But all three of them

are in excess of $300,000.

Clint C. Galliano, REALTOR® (32:42)
Yeah, I mean, in all three of these scenarios, you wind up ⁓ with a much lower cost than if you were to rent for 30 years.

Ben Harang, REALTOR® (32:52)
Right.

And unless you live in somewhere for free, you're going to continue to pay to live somewhere.

Clint C. Galliano, REALTOR® (32:54)
So.

Ben Harang, REALTOR® (33:03)
So I don't know if I made it. I think I might, there might be a little question about whether I think people ought to buy a rent. Clint, I'm not sure I came across real clear on what my thoughts are on that.

Clint C. Galliano, REALTOR® (33:16)
Well, I mean, I think we made a good case that if you plan on living somewhere long term, it's probably a good idea to.

to buy rather than rent from a financial perspective. ⁓ We made the case that if you're not gonna be there long term, then yeah, it does make sense to rent for that short period of time that you may be there, that one to two years. ⁓ But in the long run, and again, for me, it all comes back to financing. ⁓

Ben Harang, REALTOR® (33:34)
Mm-hmm.

Mm-hmm.

Clint C. Galliano, REALTOR® (33:57)
our finances. ⁓ So if you're, unless you like throwing money away, you're better off buying than renting.

Ben Harang, REALTOR® (34:09)
And, people still

today still think you need 20 % down to buy a house, which is what it was in the, until the late seventies, early eighties, ⁓ you needed 20 % down savings and loan would, would, ⁓ lend you 80 % of the sales price. And if it was a hundred thousand dollars, you needed to have 20%, $20,000 in cash plus the closing costs. things evolved.

in the late 70s, early 80s into, well, guess a little sooner than that, maybe the early 70s with the FHA program ⁓ to a much lower down payment. And when FHA came out, was a 2.5 % down payment. Now it's a 3.5 % down payment, but it's still better than a 20 % down payment. That makes more people eligible and able to get into a house than having to save the 20%. ⁓

You know, I think we talked about what it takes to, to get into a, um, a rental, a security deposit in the first month with some of these loan products. And if you can, uh, have the seller pay some closing costs for you. I've, I've seen people buy a house with very little money out of pocket. Um, maybe a $400 appraisal is.

what they were out of pocket at the closing, as opposed to a $1,700 a month.

Rent where you have to put up the first month plus the security deposit is $3,400 plus you, know, all the utilities you need to connect to and which is the same if you, if you own it, but we can, I've seen a whole lot of people buy a house for less than $3,400 out of pocket.

Clint C. Galliano, REALTOR® (36:03)
So I'm gonna tag on to that. ⁓ I've had some VA clients that actually get money back at the closing and that's above and beyond what ⁓ they've paid out of pocket and prepaid. ⁓ So I think that there's one of the loan product that may allow that to happen, but I'm not sure which one it is. ⁓

Ben Harang, REALTOR® (36:12)
Mm-hmm.

Yeah, I've

never seen them get have zero money in it and get money back. I've seen it zeroed out completely and when they closed they came up with zero but I've never seen them make money to buy a house. So you deal with VA more than I do so you obviously have seen it but that's that's that is an anomaly.

Clint C. Galliano, REALTOR® (36:51)
And I think it might have been a ⁓ seller's agreed to 10,000 in closing costs and the lender just applied $10,000 in closing costs to the file and there was a positive balance to the buyers. So ⁓ the other thing I wanted to point out is that there is a difference with utilities between owners and renters. A lot of times for utilities, the ⁓

Ben Harang, REALTOR® (37:05)
surplus. Yeah.

Clint C. Galliano, REALTOR® (37:21)
the utility companies will require a renter to put some form of deposit, whether it's 50, 75 or $100, $150 as a deposit in case they skip out or what have you, so that there's at least some money to cover the final bill. A lot of times, I'm switching over, had some tenants move out, so I'm switching over utilities into my name.

Ben Harang, REALTOR® (37:36)
Mm-hmm.

Clint C. Galliano, REALTOR® (37:51)
And the utility company says, so there's just a $12.50 connection fee, and there's no need for a deposit because you own the property.

Ben Harang, REALTOR® (38:03)
Right. they'll collect a deposit on either one or both of them, but the difference is it's always a lower deposit for the property owner than it is for the tenant. Because it's harder for the property owner to skip out than it is for the tenant. And we talked about the ease of ⁓ being able to move as a tenant, that there's a downside to that because you're to pay a little higher security deposit because

It's easier to move.

Clint C. Galliano, REALTOR® (38:37)
All right. I think we've covered that fairly well. ⁓ We'll probably do touch on a couple of other episodes continuing to cover this topic because it's fairly important. ⁓ At least we feel so. ⁓ You can let us know if you think so by liking, subscribing, commenting, and sharing. ⁓ So go to RERealEstatePodcast.com.

Ben Harang, REALTOR® (38:49)
Mm-hmm.

Yeah.

Clint C. Galliano, REALTOR® (39:04)
And you can watch the video episodes, you can listen to the audio episodes, or you can subscribe through your favorite podcast app. You can also ask us a question. You can find Ben and I's agent sites from there. Like I said, you can do all the things from rerealestatepodcast.com. So share it with your friends, get them listening to it. If you've got questions, ask questions, go ahead and find us on social media. We're on

most social media, ⁓ not everything, but on most stuff. ⁓ So go ahead and follow us and we'll see about doing a better job of sharing some of our content out there.

Ben Harang, REALTOR® (39:47)
And Clint and I have a good time doing this podcast and we laugh and joke around a little bit. And, ⁓ we think we would give you valuable information. ⁓ but if you have a question and you want to talk to somebody, reach out to Clint or myself, it doesn't matter which one. ⁓ you know, everything's in confidence. It it doesn't cost anything. we find people, people are apprehensive of making that first contact. but we.

We, we respect you, your privacy. We, we don't run. You're not going to find out your business on the street from me or Clint. so just have a conversation. Let's sit down. You don't have to sign anything. It didn't cost you anything. We sit down and if you get a comfort level and you want to proceed, we'll proceed. If you don't get a comfort level, then we got a, got a chance to visit meet and something might come up down the road. ⁓ but you at least broke the ice.

So if you have a question, don't hesitate to reach out.

So guess I'll see you then Clint.

Clint C. Galliano, REALTOR® (40:52)
All right, Ben.

Yep, we got another one in the can.

Ben Harang, REALTOR® (40:56)
Alright, alright, and hadn't started raining yet. alright, well, thanks for joining us and hope everybody has a good day.

Clint C. Galliano, REALTOR® (41:06)
Alright, see you then.

Ben Harang, REALTOR® (41:08)
I Clint till next time.