TAMPA, Fla. (WFLA) — With rising rents, Tom Buscemi of Berkshire Hathaway Home Services in Tampa says home buying could be a good option for those who want to set a fixed budget for years to come.
“Rents are so high right now, they can’t afford it anymore! Every year they’re getting dinged three to five percent increase,” explains Buscemi.
He showed us a 985-square-foot, two bedroom, one bathroom Seminole Heights bungalow on Orange Blossom Avenue that he has listed at $209,900. He brought along mortgage coach Jay Doty, who ran some numbers and showed us how with 5 percent down, the home can be purchased with a fixed payment in the $1,300 to $1,400 range – principal, interest and taxes included.
By comparison, renters we spoke with who live in 2-bedroom apartments with similar finishes are paying up to $2,000 a month with yearly increases.
Rob Cronk is one of those renters in a two bedroom at Modera near International Plaza paying $2,000 a month.
“The amenities are great. It’s got a great gym, pool,” says Cronk. He hopes to own a home someday, but hasn’t committed to a specific neighborhood.
While many first-time buyers need to manage their ‘want’ list after being spoiled by luxury rental amenities, Buscemi explains the biggest factor holding renters from buying is uncertainty about where to buy. Many are young professionals who don’t anticipate staying in a job or city long-term. They enjoy the flexibility and quick exit renting offers.
However, a more strings-attached living situation can offer a fixed payment and the potential for a big pay-off in the future. Of course, there are no guarantees.
Still, lender and mortgage coach Jay Doty with NFM Lending says that even a short-term commitment can pay off. He says there are different strategies for different end-games. For example, buying at below market value with low closing costs is a good short-term strategy that will likely end in re-sale or renting out a home and taking on landlord responsibilities.
Ultimately, he warns that potential buyers need to trust their gut.
“If it creates a very unstable feeling, just like ‘Oh, wait a minute, that makes me very, very nervous, I may be transferred in a year, I don’t want to rent (out the property), I have very little money in the bank right now for savings,’ maybe renting is the best thing,” explained Doty.
Buying isn’t as simple as buy low, sell high, there are other factors and benefits at play beyond a sales price and interest rate. For example, homeowners can receive tax benefits and increase what they can deduct come tax time.
Buscemi believes the biggest barrier is personal preparedness – financial and mental. “It’s basically when you’re ready. When you have the credit and maybe a little bit in your savings account.”