Is It Better To Rent Or Buy (During Buying/Coronavirus Season)?

During these times of market panics and Coronavirus pandemics, there are always silver linings. There are endless opportunities in a sea of red; but thank goodness that we finally have a correction after what seemed like an eternity of bull markets. My duty today is to point out, what I believe, are golden opportunities and then hopefully answer your question of whether you should rent or buy during these turbulent days. 

Market panics are nothing new. If you've lived long enough, you will have had the pleasure of witnessing the dot-com bubble of 2000 and the great financial crisis of 2008. Shortly after, or even during these panics, there were buying opportunities everywhere you looked. If you looked hard enough, and did your due diligence, you would have been able to buy up some undervalued property to either flip or buy and hold. 

However, down and up markets are the norm. After over 12 years of an extended bull run, we've finally had a correction and I couldn't be any more excited. As a value investor, I've bought my first initial batch of $XOM and am looking into other undervalued stocks with low PE ratios, high yields, and a superb balance sheet. 

Whatever your goals are for real estate; or whatever type of investor you are, my goal is to point you in the right direction with whether I believe it is wiser to rent or buy during Coronavirus season. 

RENT

The rationale to rent seems like a solid one during these times. There are a few reasons why renting is a safe bet. The first reason is that you are not locked into a 30 year mortgage, have zero chance of home price depreciating relative to loan amount, and you don't have maintenance costs associated with taking care of your home. 

There are drawbacks as well. If you find yourself renting a home for the same price as you would be making a mortgage every month, you are losing at least 12 months of building equity. Equity is where opportunities are made. Elliot Bogod, world famous multi-millionaire Manhattan real estate investor, agrees. In his book "Get Rich In Real Estate", he mentions that if one were given the option to rent or buy, she or he should buy every time. 

BUY

There are many positives to buying property. Depending on what type of property it is, there are different nuances of benefits that maybe a Manhattan condo might bring versus what a house in Lynbrook, with a 2-car garage and fenced yard, might bring. Both have benefits, but they appease to different buyers.

For the Manhattanite, a turnkey condominium building might be exactly what they are searching for. For example, 111 Murray St., A 60 story, 800 foot tall building which was completed in 2018 has all the amenities a New Yorker would die for. With a 75 foot long swimming pool, 3,000 square foot drybar hair salon, a bakery with personal dining room, recreation room, hammon (or Turkish bath), and 20% off private jet services. In a condominium, all maintenance costs are absorbed equally by all of the owners which would require no real hassle other than the occasional in-unit maintenance. 

For single-family homes in more residential areas of Long Island such as Lynbrook, you have the luxury of ease of commute to Queens, which often has a glut of street parking depending on the neighborhood. This gives it the perfect balance of quiet, private suburban life with acreage, and the hustle and bustle of city life. Areas like New Hyde Park, Lynbrook, Roslyn, Valley Stream and Elmont have the perfect balance of suburban houses to McMansions with price-appreciating potential. The farther away you get from Queens, the more undervalued a home gets. This is where you receive value: with the merge of decent commute to Queens and privacy or space.

Like I mentioned, the drawbacks of owning a home during a down market are short term loss of value, high maintenance costs or upkeep, and ancillary factors like property taxes. 

However, like Mr. Bogod mentions, you own the house outright and earn more equity each year the longer you pay the mortgage. If you do your due diligence, your investment will double or triple within a few years. 

Market cycles are normal and the occasional rare market selloff is a "this too shall pass" moment. Take a deep breath, be patient, and look for those deals that are lurking just around the bend; you just have to search for them. 

This is not investment advice but just my opinion. If you're looking to partner with me to search for your next steal, you know where to contact me. 
Is It Better To Rent Or Buy (During Buying/Coronavirus Season)? Is It Better To Rent Or Buy (During Buying/Coronavirus Season)? Reviewed by Alex Sung on March 15, 2020 Rating: 5

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