Renting a house can be a waste of a lot of money. If you think about it, when you don’t stop to see if you’re qualified to buy a home, you waste money paying rent for years. David Sidoni, the “how to buy a home” guy, says wherever you are right now, you SHOULD AND CAN START PLANNING TO buy a home. Mortgage payment with today’s interest rates ARE pretty close to the rent check that you pay every single month. Step out of that fear and step into home ownership. Make it your goal and join David as he tells you everything you need to know about buying a home.
Renting Versus Buying A Home
Rent sucks. It makes your landlord richer, and it doesn’t grow your personal wealth at all. Rents go up all the time. In the last decade, rents are going up way more than inflation, income increases, and the cost of living. If you haven’t looked into it, you can buy a home with a down payment as low as 3.5%, and 0% down if you’re in the military. You can pay a monthly mortgage for the same price, sometimes even cheaper than your rent payment. A mortgage payment is fixed for 30 years. It never goes up. There you go. That’s it. That’s the math. That should be the entire show, but don’t worry, it’s not.
I started this show in 2019 because after 13 years in real estate back then, I decided to give you a voice. Somebody speak to you directly, the first-time home buyer, because the truth of the matter is you’re getting screwed. The real estate industry is not talking and is not explaining things like rent versus buy to you. There’s a big gap in when they decide that they want to talk to you. You get out of high school or you get out of college and then you just start renting. They just let you go ahead and do that all on your own. Rent, throw away your money.
They figure out one day, you’ll figure it out. You’ll decide adulting is what you’re going to do and you’re going to stumble into their open house. That’s when they decide to pay attention to you. Forget about the fact that you just lost a ton of money renting. Maybe you needed 1 or 2 years to rent, but maybe if someone had told you right away, you could have saved those last few years of renting.
They don’t talk to you. They don’t care because you’re not a paycheck at that time. The real estate industry doesn’t want to talk to you and help you get a 1, 2 or 3-year plan. That takes too much time. The real estate industry is going to wait until you can be a quick buck for them. Walk in, ready to buy, that’s what they’re looking for. I’ve been doing this a long time. I have found out that the biggest thing with first-time buyers is fear. They’re afraid.
Now, you can hear the truth. You can get the insider information. It’s time to empower you, your friends and your family, anyone who needs to know this. You can do this. Why is there so much fear? You’re thinking, “Can I even do this? I don’t think I could pull this off.” There are a few reasons that you can do it. Number one, you hunted down the show, so that means you’re thinking about it. You want the right information and you need that stuff. You know why? Because that stuff, isn’t the stuff that they teach you in school.
They don’t talk to you about how to buy a home. It should absolutely a million percent be in class. If they don’t teach it in high school, then it should definitely be a class in college. You didn’t get that class, so now maybe you’re a little intimidated or afraid. That’s normal. We’re afraid of the things that we aren’t familiar with. You’re not familiar with it because it’s not out there. It doesn’t pay the bills for the realtors.
What I’m going to do is help you figure this out. It might take 1, 2 or 3 years for you to get ready, but figuring it out, that’s the mission. You can do this. I know you might feel afraid. I know you’re thinking, “David, this is not anywhere near where my brain is. I need you to give me a quick 1, 2, 3.” I got you. That’s because you’ve been trained not to know. Trained to feel like you’re the most undervalued, underappreciated, under-talked to person out there. I’m speaking directly at you. Can you do this? You can. Let me give you some rent versus buy numbers.
Start with the basics, “Can I buy a house?” I originally recorded this in 2019, but the numbers have changed a little bit and they’ve gotten even better if you can believe that. I re-recorded it and I’m going to put some new numbers in here. The original numbers were at 4%, and that’s the interest rate on your loan. Now, that interest rate is about 3%. These numbers are at 4%. If the rates go up in the next six months and it takes you six months to save, you’re still probably going to be lower than this.
[bctt tweet=”Rent sucks. It makes your landlord richer but doesn’t grow your future.” via=”no”]
3-4% Interest Rates
If you’re in a place where you can buy a home for $110,000, first of all, God bless you. It sure as hell is not that out here in Southern California, where I am. If you’re in a place that you can buy a home for a $110,000, if you’re making $30,000 a year, at 4%, you can afford your mortgage payment. If you’re in a place that’s $207,000 a year, with $45,000 a year, you can afford a mortgage payment.
Let’s say you’re in one of the more expensive parts of the country, $305,000 for just a condo to get started. $60,000, you can afford a mortgage payment. $305,000, $60,000, $401,000 place, $72,000 in income. Maybe it’s you and your partner that have a combined income of $72,000. You’ve got yourself a $400,000 home, condo or townhome. $500,000, $85,000.
Those numbers are not exact. You still have to work all your debt-to-income ratio, which is how much debt you have versus how much money you bring in. We’ve got to figure all that out, but these are the basics. Maybe you’re like, “That’s cool. Those are the basics, but I’m not even close to that.” That’s fine. Hang tight. There are a bunch of episodes on how to save, budget, raise your credit, and reduce your debt.
If you’re out there and you hear those numbers, and you’re at those numbers or beyond those numbers and it equals a home that you think you could live in, then you’re throwing away rent because you thought you couldn’t qualify and you didn’t know that you do qualify. Those are double, triple negatives. Maybe you’re hanging out because you thought you needed a 20% down payment. I’ve had plenty of buyers that have had that problem. They come to me and in a couple months later, they’re in a house. You don’t need 20% down. That is a grandma rule, old school. You’re ready.
Since 2006, the number one thing that my clients have been telling me by far is they wish they had bought sooner. When we get to the end of the process, they realize years wasted, money lost, and financial security. They could have been building all that time, but they waited too long to call me. 2 or 3 years before they bought a home, they were pretty much in the same place. They were renting.
Once people do that for a couple of years is when they finally go, “Maybe I’m all good.” They didn’t even stop to see if they were qualified 2 or 3 years ago. Not to mention the fact that in a market that’s going up, which it has been for the past few years, and which it might for 2022, 2023 or 2024. Then you’re going to miss out on the appreciation of the home while you’re paying that high expensive rent.
Wherever you are, let’s say you’re paying $1,000 in rent. You live in an area where $100,000 is an entry-level home. If you’re making $30,000 a year, you’re paying $1,000 in rent. You don’t ask questions about this. You put your head down and you wait two years. At $12,000 a year, that’s $24,000 that you have wasted when possibly you could be buying a home.
This is the way that you should be thinking about it, “Can I do this right now?” Let’s find out. You never know until you figure it out and run the numbers. Think about it this way. Down payments are low.
Twenty percent down payment is a thing of the past, dinosaur stuff. We’re not talking about that. You get in for as little as 3% down, 3.5% down for what’s called an FHA loan.
If you are a veteran, active or former military, zero down. Think of it this way. If you’re looking at 3% of the purchase price of your home, that’s going to be your down payment. Think of that as when you’re renting your first and last. You’re going to have to put down a first and last when you sign your next lease. We’re going to be looking at $3,000, $4,000, $5,000, $6,000, $7,000 in some of the more expensive parts of the country. If that’s your first and last, when you’re going to renew a lease or get a new lease, put that towards your down payment that is only maybe 3%.
What you’re going to find out is that your mortgage payment with low interest rates, and I said that in 2019 when I first recorded this and it’s still true now in October 2021. With low rates, you’re going to find out that monthly rent payment is pretty close to the mortgage payment that you’re going to have every single month.
One of the big reasons that I did this re-recording was because I saw an article on ApartmentGuide.com about rising rents. What’s the difference between renting and buying? Mortgages are fixed. They don’t go up, rents do. I’ve got charts, graphs and all kinds of things to show you, but your earholes are not doing something for your eyeballs. You can’t look at my charts, but I did see this incredible story in ApartmentGuide.com that had a list. I can read you that list.
Think about it. You can lock in your rent or you can keep paying the rising rents. Do you think that someday in your future you might make a little more money, and that your rent payment will feel easier because you’ll have some extra money? If your rent is rising, too bad. It feels the same. You can lock it in for 30 years.
If you don’t, here are the changes in rent from 2020 to 2021. Some of these are pretty gross because of the pandemic, but in the years past, they’re still pretty gross too. This is for a two-bedroom apartment. This is a one-year increase in rent. In Washington, DC, it went up 6.2%. Your average home is going to be appreciating at 3% or 4%, but it’s not the same as a rent increase. That’s an appreciation on hundreds of thousands of dollars. This is how much your monthly payment goes up.
[bctt tweet=”Mortgages are fixed and do not go up. However, rents do.” via=”no”]
This means next year 2022, you’ve got to go in and ask your boss for a raise of 6.2% if you live in Washington DC, or you can’t afford your apartment, or you just can’t put as much in savings. That’s the first one. San Francisco’s 8.4%. Fort Wayne, Indiana, 11.6% rise in rents. Madison, Wisconsin, 12.9%. Houston, Texas, 13.8%. Omaha, Nebraska, 14.3%. New Orleans, 16.9%. Arlington, Texas, 16.7%. Jacksonville, Florida, 30.5%. Tucson, Arizona, 33.4%. It’s 128 degrees in the summer.
The place I was born, Buffalo, New York went up 34.3%. New York City, 35.5%. Denver, Colorado, 39.9%. Are you kidding me? This is ridiculous. Raleigh, North Carolina, 42.7%. Irvine, California, where I’m sitting, 43.3%. Henderson, Nevada, 46.4%. Santa Ana, California, 50.7%. Reno, Nevada, 63%. I swear to God, I’m not making these up, Detroit, Michigan 72.7% and Long Beach, California, 80.6% increase in rent for a two-bedroom apartment in 2020.
How many more years can you keep taking that increase? What I’ve been doing with the show is I’ve been talking to folks all over the country. People who are trying to buy their first home or thinking about buying a first home are mostly trying to get their numbers together. The number one thing that freaks them out is that they didn’t realize, A) They could afford how to do this. B) A lot of them didn’t know that if they went out there and they got the good advice from somebody, it doesn’t cost you anything. Your realtor is free. You can choose the best one in your neighborhood and they’re free as long as they want to work with you. It costs you nothing.
If one of your fears is you think you can’t afford the good service of a top-notch realtor, no stress, it’s paid for by the seller. If you’re afraid of adulting and you can’t figure out how much this is going to cost you a month, let’s go back to the early formula. Think of your down payment, like a first and last on an apartment lease. Think of your mortgage payment as your rent check. I did it again. I said check like anyone’s writing a check. Remember, you want to talk to an experienced person, and experienced means old. I’m old because I said, “Write a check.” Your down payment is your first and last. Your mortgage payment is your rent payment. That’s it, not much more you need to know. You can do this. It’s right in your grasp.
Locally, I’ve got a Facebook group, How to Buy a Home. One of the dudes on there, started trolling me. He was this 26-year-old and started talking a little trash, and he happened to be right in my area. He was like, “What if a pipe breaks? My landlord pays for it. There’s no way I’m going to buy a house that makes no sense. I’m not going to pay for that.” He was also like, “High interest, 4% on $300,000 or $400,000 property. Do you know how much it’s going to cost me over 30 years?” I typed back, “Cool. I get it, Carl. That makes sense. Let me take you to dinner.”
Carl and I went out to dinner. By the time we finished dinner, I talked to him about all the things that I’m going to be talking about and a whole bunch more of these episodes, the tax benefits, the low down payment, the fact that your mortgage is pretty similar to your rent check. When I finished all that with Carl, he said, “You convinced me.” We’ve gone back and forth with him because life happens. First, he was going to buy a place here, then he was going to buy a place in Vegas. Every decision he makes now, he has the information to know, “I can do this.”
Once he figures out where he’s going to go, he’ll be able to rock and roll. Maybe he’s like you. At the time, he was 26 years old, graduated from college, spent a little time living in different places, and was about to rent a place. He didn’t quite have the money for the down payment. We said, “Let’s do a plan. It’s the last lease ever plan.” That means that eventually he’s going to figure out how to do these things and he’s not going to be wasting money for 2 or 3 years sitting in that lost gap of time, when no realtor wants to talk to you, but somebody should be telling you.
Here I am telling you in the ethers of the internet, putting it on the show. If you’re one of those people that’s out there and you’re like, “You were talking about $45,000, $60,000. I’m not even close to that. I just started my first job.” I get it. I’ve had conversations with other potential home buyers here in Southern California. Someone else had found me from the Facebook page.
I talked to Casey when she was 23 years old. She had graduated from UMass and she came back to Southern California. She’s totally awesome. At the time, she had a regular 9:00 to 5:00 job. On the weekends, she worked at Disneyland for fun and she had a 9:00 to 5:00 job. It’s something that she wasn’t sure if she was going to do forever, but it was something that she liked that she went to school for. The weekend stuff she had, that was a side hustle. She wasn’t even close to buying.
She could only afford about $800 a month. Around here, it’s got to be $2,000 to get something because it’s Southern California. It’s ridiculous. She said, “You know what I’m going to do, I’m going to go home. I’m going to take my side hustle money. I’m going to take 40% of that. I’m going to stick it in a savings account.” You can’t make a plan with an end game unless you know what the end game is. Then you work backwards and create your own formula.
Tips On Saving
If you want to do it, you can do this. It’s just the first and last, like you’re renting your next apartment. If you’re not there, then we’ve got all kinds of saving tips and credit tips, and all of those things that are going to be able to help you down the line with saving, to be able to get your down payment. I know I said the S word, saving. I know you’re super cool. You like to hit the clubs all weekend. You’ve got to hang out. You’ve got to pimp out your ride. The deal is eventually, you’ve got to do adulting. It happens. You need a plan.
If you’re saving to save, then that money is a lot easier to pull out if you don’t know exactly where it’s going. Here’s our mission. Here’s what I’m trying to do. I would like to help everyone out there find security for you and your family. I’d like to help you overcome your fear and get past it, so you can confidently purchase a home, to gain even more security and make yourself more comfortable. Stop paying your landlord because he doesn’t deserve your money.
If you’re out there and you haven’t thought about this, and this is the first time you’ve read or clicked on something, you did because this says How To Buy A Home, so you want to know. I got an analogy for you. Around here, with people older, my age, all the soccer moms and stuff, it’s a big deal to go to Target. Imagine you’re walking around Target with $100 in your pocket, but this is a weird Target. There are no price tags. That super expensive thing over there that you saw that you think is cool, you assume you can’t afford it. You’re like, “There’s no way because there’s no price tag. I’ll just keep going.”
What if that thing was $89.95 and you can afford it? The only thing that’s holding you back is your fear, because of what has been psychologically implanted in you. There’s no information that’s going to you. You’ve got the world at your fingertips on your phone, but no one’s telling you directly, so you’re afraid. You think you can’t afford it. The crazy thing is if there were a price tag on that thing, you would snatch it and be running to the counter. You know you have $100. You know that math, “I’ve got $100. This is only $89.95 and it’s going to massively improve my life.”
[bctt tweet=”Your down payment is your first and last. Your mortgage payment is your rent check.” via=”no”]
Here’s the funky thing about this. Not only can you afford that, but that purchase is going to save you your rent money every month. That thing that you’re buying for $89.95, you already have another one of those in your house at home and you pay for it every month. Imagine that thing like super awesome smoothie blender, and you’ve got one in your apartment that you rent for $1,000 a month. Now, you can save $1,200 a year, $24,000 over two years or double those numbers if we’re doing $2,000 a month. All you had to know was what that price tag is.
Once you see that, you can now shop with your $100 and stop renting for $1,000 a month, the one you’ve got at home. Continuing this goofy analogy, imagine that super smoothie blender also has a secret. Imagine it grows an average of 3% to 4% annually in appreciation to provide financial security, emotional stability, more wealth for you and your family. Yes, the beautiful word appreciation, “I don’t know what that means.” It means that’s how much your house goes up. That’s all you need to know.
If none of this makes sense to you, then my advice is shut up and save your money. You can get there, just start saving your money. Read this over and over and over again. You’re only on episode two. There’s so much more to learn. The bottom line is you deserve this. The math is in your favor and you can do the sooner than you think.
First, understand the math. If you want a local pro in your area that can help explain some of the math to you, someone who cares, a realtor who’s going to give you a plan and a roadmap. We have unicorn nation in full effect. I know I’ve mentioned unicorns before, they’re the fun realtors out there. It’s about 20% to 25% of them. That’s why I call them the unicorns. They’re magical, mystical, tough to find, but they’re out there.
They’re the experienced pros who are going to guide you into planning and give you their expertise, and help you early because they care about you like I do. It’s a tough one to find because the perfect realtor for you to help you out is someone who’s going to be able to get you a team, get you a unicorn mortgage broker. A lot of people will gravitate towards someone that is fun and energetic and that’s great, but maybe they’ve only sold one house in their life. You’ve got to find that balance.
The perfect unicorn realtor probably seems like they’re bipolar schizophrenic or something. I don’t mean to offend anybody. I mean that they’re someone that has to have multiple different facets of a personality. I consider myself one of them. Don’t be offended. You’re looking for someone that’s personable, that listens to you, that cares, is empathetic and wants to help you. Someone that you can connect and have a conversation with. Someone who’s thinking about your long-term life goals, not just their 30-day paycheck.
At the same time, you want it to be all touchy-feely, but you also want them to be practical, smart, logical. One of the big things that I do is a creative financial consultant. To talk to you about your savings, your down payment, be able to talk to you about diversifying your portfolio, your retirement funds, your saving funds, and where your money is going. Where does it make more sense? Does it make sense to put it into a house or to continue doing the large saving that you’re doing? That depends on a whole lot of numbers and a whole lot of math.
You’ve got to find someone with another split in their personality. They have to be crazy analytical to help you figure out how to dump your rent. Another side of them needs to be a pit bull negotiator, but not a total jerk. If they’re a total jerk, they probably burned every bridge in town. He needs to be someone who can negotiate tough for you, but still has a great reputation and a solid track record. If you put an offer on a house and the other agent looks at it and goes, “I hate that guy.” That’s not going to help you. That’s why I call them the unicorn. They’re elusive and magical. Hit me up if you need one.
A lot of people find me on Instagram, @DavidSidoni. You can also go to the Facebook page, How to Buy a Home or you can go to HowToBuyAHome.com. That’s the easiest way to ask any of your questions. I’m getting a lot of people every day asking questions. I’ll help answer them for you. Every once in a while, I’m on Twitter. I do have a YouTube page with a whole bunch more videos, if you want to find a topic about something that you haven’t found yet on the show. If you want to laugh, go to TikTok. You’ll see this old man try to dance and do goofy things.
That’s the way to find me. Reach out whenever you can. If you’re not ready to reach out yet, there are 50 more episodes you can read to for free. If you’re liking it, please rate and review it. It helps me to get this message out to everyone else. Share it with someone you know. I’m sure you know somebody out there who thinks that rent sucks. If they’ve got an extra 30 minutes to read this. I’ve got a ton of information on the website, HowToBuyAHome.com or DavidSidoni.com. There are lots more episodes for you. You can get deep into the nitty gritty. You have the opportunity to get all the information because I’m giving it out there for free because it sucks that it’s not out there for you. If you’re thinking, “How can I do this?” It’s all there. I will say it once and I’ll say it a million times, you can do this.
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This podcast was started for YOU, to demystify things for first time home buyers, and help crush the confusion. After helping first timers for over 13 years, I knew there wasn’t t a lot of clear, tangible, useable information out there on the internet, so I started this podcast. Help me spread the word to other people just like you, dying for answers. Tell your friends, family, and perhaps that random neighbor you REALLY want to move out about How to Buy a Home! A really easy way is to hit the share button and text it to your friends. Go for it, help someone out. And if you’re not already a regular listener, subscribe and get constant updates on the market. If you are a regular and learned something, help me help others – give the show a quick review in Apple Podcasts or wherever you get your podcasts, or write a review on Spotify. Let’s change the way the real estate industry treats you first time buyers, one buyer at a time, starting with you – and make sure your favorite people don’t get screwed by going into this HUGE step blind and confused. Viva la Unicorn Revolution!
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