Lease or Buy Primary Residence (JJ 678)

Transcript:

Jack Butala:                         Jack and Jill here.

Jill DeWit:                            Hello.

Jack Butala:                         Welcome to the Jack Jill Show, entertaining real estate investment talk. I'm Jack Butala.

Jill DeWit:                            I am Jill DeWit, broadcasting from sunny, soon to be rainy, southern California.

Jack Butala:                         Today, Jill and I talk about leasing or buying your primary residence. Seems like a simple thing, but it really can trip you up.

Jill DeWit:                            Oh my goodness.

Jack Butala:                         At any point in your life.

Jill DeWit:                            It could sink the ship for some people.

Jack Butala:                         Have you heard of this term, "house poor?"

Jill DeWit:                            Yeah.

Jack Butala:                         I've known people that are just house poor. They purchase such an expensive house that they don't have any money left for anything else.

Jill DeWit:                            I know.

Jack Butala:                         Including real estate investment.

Jill DeWit:                            Where did they get that advice? Where does that ... I know people, too, they think that they've, for some reason in their heads, they have to sink every last dollar into it because, "Oh, it's pay off some day."

Jack Butala:                         Right, or it's the best investment. Well, we'll talk all about it.

                                                Before we get into it, let's take a question posted by one of our members on the jackjill.com online community. It's free.

Jill DeWit:                            Okay. Shea asks, "I haven't done my first deal yet, so I apologize if my question seems naïve. I got a call regarding a property that is rural desert area. The lot in question is three acres and sits catty corner to a lot about the same size that is occupied. Like many people who actually make their home this far out from town, satellite images show that they have made full use of their property and have various outbuildings, derbies, I don't know what ... couple of broken down cars, and overall looks somewhat junky."

Jack Butala:                         That's a really nice way to put that. Congratulations, Shea.

Jill DeWit:                            Right?

Jack Butala:                         There's a bunch of stuff everywhere.

Jill DeWit:                            "While I've seen worse, I'm concerned about its proximity to the property that I'm looking at making it unsellable. On a scale of one to 10, one being tidy and 10 being a rotting junk heap"-

Jack Butala:                         One being Jill, 10 being me.

Jill DeWit:                            What? No. No, no, no. "I'd call this one a strong seven. I guess what I'm asking is when you guys are faced with this situation, how do you approach it? What kinds of things do you look for? What would kill the deal? How do you address the issue with the seller if you already have a signed offer? I know every case is different and I'm actually buying this property at a discount, but I'm obviously concerned about my ability to resell it. Even at a discount, do people still want properties next to junky neighbors, or am I just opening myself up to a headache? Thanks in advance."

                                                This is a common, common, very good question.

Jack Butala:                         It's a great new person question, and I have a to to say about it, but I'm gonna let you go first.

Jill DeWit:                            Oh, I was gonna let you go first.

Jack Butala:                         Oh, okay. This is an attribute, not a problem. The only reason that you wouldn't buy property, let me put it this way. When you're buying rural, vacant property,