[Music]
Hello everyone and Welcome once again to
another Edition another episode of the
Selling Greenville podcast I'm your host
as always Stan McCune realtor right here in
Greenville South Carolina and today
we're going to be talking about renting
in the upstate versus owning in the
upstate there's a big debate if you
talk to any Financial counselors out
there and I am not one of those right
I'm just a realtor so don't come to
me for financial counseling but I've
read books by financial counselors by
people like Dave Ramsey and there is
a debate out there whether it is better
to rent or whether it's better to own
and that is what we are going to discuss
today specific to the Greenville and the
upstate real estate market but before we
get into that real quick a little bit of
housekeeping as always you can find all
of my contact information in the show
notes my phone number is there my email
address is there I'd love to talk to you
if you have any real estate needs or you
know someone else that might I'd love to
find out and I'd love to just shoot
the breeze if you want to talk about the
podcast if you want to just catch up
whatever the case may be all of my
information if you don't already have it
it is in the show notes on whatever
platform you're listening to this on and
one more thing please if you like this
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us to get the show out to as many people
as
possible so again back to our topic
at hand here we are discussing renting
versus owning and I'm sure
probably most of the people listening
to this podcast have done a little bit
of both my story when I graduated
college I immediately entered the
workforce I was not a realtor back then
I kind of had a corporate SL small
business type of job in corporate
transportation and I rented right
away it I it did not make sense for me
to be a homeowner I wasn't a a able to
qualify for a mortgage that was
back in 2008 during the Great Recession
as many of you know I wasn't able to
qualify for mortgage I wasn't sure how
long I was going to stay in Greenville
at that time which was where I went
to college and so I rented for a
couple of years eventually after a
couple of years of renting getting
married having a kid I realized you know
what I think it's time for us to to
leave the rental for us to get our own
house the apartment that my wife and
I were renting at that time we had an
awful neighbor below us who every
time our infant daughter cried would
actually bang on the ceiling to let
us know that that was unacceptable that
that this lady needed to be
working or sleeping or whatever it was
that she was doing all day and all
night anytime our daughter cried we
heard from it from
her and and you know I've heard a lot
of people when I've told the story say
well I would have just done this or just
done that well it's easier said than
done when you've got an a neighbor
that you've got to to coexist with the
simplest for us we had only been we only
had a few months left on our lease was
just to hold the piece keep the piece
and then we moved out of there as soon
as we could and that's when we
finally became homeowners we bought a
fixer upper we lived in there for a
while we really completely renovated
that property and then this past year
actually was the the first time since
then that that we moved and so now we're
in Greer South Carolina not very far
away from the airport we love it out
here as well still in Greenville County
most of you know Greer is kind of
split between Greenville and Spartanburg
County but that's kind of our story
renting made sense for a Time
eventually home ownership made a lot
more sense it gave us the ability to
have more control over what we were
doing what we were doing with our
property more control over our neighbors
in in a sense the place that we ended
up at back then we were on about a third
of an acre lot so we had plenty of room
we we were not having people banging on
our on our walls or our ceiling or
floor or whatever it may be trying to
remind us that you know that our
child was crying because she had a hard
time comforting herself to go to sleep
that is neither here nor there you're
wondering what is it like to rent versus
own in Greenville South Carolina and
this is something that I have heard
people from all over the
country talk about the Greenville market
and say how astonished they are at how
expensive it is to rent around here
and that's interesting to me right
because it's one thing if you're coming
from you know like Landror if you're
coming from somewhere else in South
Carolina or you know maybe coming from
North Carolina down here or or coming
from Georgia over here and we're in
close proximity but I'm saying I've
heard people from the West Coast say
that Greenville rents are expensive I've
heard people from places like Arizona
and Utah say that that they feel like
the rental market here is expensive
people from the Northeast and so
obviously we don't compete with New York
City or San Francisco or La those type
of of rental markets and even in
Charlotte you know you go to
Charlotte North Carolina really any
major major Metropolis rents are going
to be disproportionately high but
given the size of Greenville Greenville
city last I checked I think it was
around
70,000 was the population of of
Greenville city now Greenville County is
much bigger than that Greenville County
is closer to half a million but
given that size really rents are
are a lot higher than you would expect
it to actually I had someone that
visited from Denver not too long ago and
I was showing him some houses showing
him some numbers and he was like this is
just like Denver and that was that
was kind of astonishing to me
but we have a disparity in the market
between renting and owning and what I
mean by that is there is actually
financially a point at which it makes
sense to rent and financially where it
makes sense to own here are some numbers
that I ran and actually let me explain
how I ran these numbers first I got all
of my data from the MLS the multiple
listing service this is where Realtors
enter listings enter data etc etc it's
our little secret black hole that
that only we have access
to and we can actually
enter homes properties for rent in
there just like we can for sale and so
there is some data on rentals in there
that can be very helpful so what I
did was I pulled the past 6 months what
properties have been rented the past
6 months what those numbers looked like
and then I pulled comparable data from
sales in the same neighborhood so I
filtered out properties that were in
areas I I didn't have you know 30 hours
this week to analyze this data I
actually I spent quite a bit of time but
I didn't have the entire week to to
analyze it so I filtered out all the
properties that weren't in some type of
a subdivision something or another that
didn't have some type of subdivision
label that filtered out a large portion
of the ones but gave me all the ones
that were still subdivisions and my
thinking there is that properties that
are within some sort of subdivision or
or general region are going to have some
consistency in terms of what they rent
for and in terms of what they sell for
there is one exception to that which
was a neighborhood known as alav Vista I
went ahead and just deleted that data
because it had homes ranging from being
sold for 300,000 to being sold for a
million that completely screwed up the
data and and again I just wanted things
to be consistent I deleted that
neighborhood just completely out of here
and just looked at what are the
properties in these subdivisions renting
for on average and then what are they
selling for on average and so here's
what I came up with on average based on
this criteria the average property that
rented was for
$1,478 88 cents I don't know where that
88 cents comes from there were a few
on here that for some reason had
cents in there 50 cents 25 cents
these landlords are really trying to
squeeze every penny out of out of
their tenants as possible but we came up
with
$1,470 188 the past 6 months rentals in
the MLS in some type of subdivision or
neighborhood excluding altav Vista all
right that those are our general
criteria that we're looking at now in
the Greenville Market there are a lot of
rentals that are below that 1470
threshold again the reason for that
well I should mention I also filtered
out apartments condos Town Homes those
types of properties these are single
family residences detached residences
only and so that basically got us
out of a lot of the lower end rentals
I just wanted to see what our houses
like cuz most people that are wanting to
buy they're wanting to buy houses so we
need to look at at an Apples to Apples
comparison
here the average home sale among the
same neighborhoods that I pulled these
rentals from was
$222,600
16 we'll just round it up
$616 so
222 616 I feel like I'm on the prices
right here 222 , 616 was the average
price that homes in these neighborhoods
sold for so again the average rent was
1470 a month the average sold was 222
616 okay so that's that and that's
not surprising we've talked about
just recently when we were looking at
Market statistics the median home sale
in Greenville is around
230 ,000 so the fact that our average
here was
22266 is really close to what our median
is so those are good numbers those are
good numbers that that we're looking at
here so then I took this a step
further it's like okay so we have that
average
22266 what would that look like as a
mortgage right what would it compare
in terms of if we're comp comparing that
number to the rental are we higher
are we paying more for our mortgage than
we would be to rent or are we paying
less so I did some calculations and of
course when you're renting you typically
are not paying for taxes and insurance
unless you have rental insurance which
is a good idea by the way but in terms
of having Insurance like homeowners
insurance the the tenants are not
responsible for that so what I did was I
took the the
approximate mortgage payment so I I
calculated an amortization schedule
figured out based on a
4% mortgage which right now you know you
can get a lot lower than that at some
point it'll probably go higher than that
but at 4% interest on your mortgage and
let's just assume taxes and insurance
are around $200 a month total for the
two of them I know that's a blanket
thing to apply to all of these but just
for Simplicity I just went ahead and did
that let's just assume that's a pretty a
pretty good guess that you're paying
1,200 for insurance 1,200 for property
taxes you're probably going to be paying
honestly in a lot of cases a lot less
than that and probably in some cases a
little bit more but in most cases not a
whole lot more than that most of these
are actually going to skew High based on
that calculation and so I took
the what the monthly mortgage payment
should be based on an amortization
schedule of a 4% interest rate on your
mortgage on a 30-year mortgage added
$200 a month in there and what I came up
with on that
$222,600
16 mortgage and I'm and I'm
assuming you know that's the full
mortgage amount no down payments or
anything like that the monthly mortgage
payment would be 1,200
$62.8
1,628 compared to the average rent in
those neighborhoods of
1470 so that is a difference of
$288 now what we didn't discuss is
Utilities in most cases around here
tenants are responsible for paying the
utilities I did not discuss HOA fees
HOA fees would typically be paid by
the by the landlord so there is a
possibility for some variance in there
for some of these that have HOA fees but
a lot of these communities because
they're housing communities not
apartment communities usually those HOA
fees are going to be maybe $3 $400 a
year total so we're talking about you
know a difference of maybe $30 a month
it's not for the most part A major major
difference so on average based on the
the data set that I selected
here that I felt like was a fair data
set from the past six months just
looking at houses just looking houses
within communities where there's
consistency of data the difference is
you will be paying
$28 Less on average if you own and if
you buy versus renting and that is
exactly what my intuition told me was
going to happen it seems like in most
cases it makes more sense to buy than to
rent and me as a realtor obviously
you're probably thinking well of course
he wants me to think that it makes more
sense to buy than to rent well listen
I'll remind you I own rental properties
as well I do not want everyone right now
to stop renting and to buy everything
that would be disastrous for me I I
would not have a good situation with
some of my rental properties that I have
so
I want there to be renters I want
Greenville to have a robust rent Market
but just looking at the data renting is
disproportionately high compared to
buying so we've talked about buying as
an
investment your primary resident you
should see it as an investment I kind of
last episode talked about well there's
another way to look at it here that it's
more than just an investment it's also
your lifestyle your lifestyle is heavily
impacted by by where you live here
I'm kind of pivoting back and showing
again the other side of it and that's
that you know a lot of people say well I
don't want to rent because I don't want
to keep paying money to the man right I
don't want to keep giving money to my
landlord not letting that money work for
me I want to have a situation where I
can have a mortgage pay my interest down
and eventually be paying off the house
having equity in that house being able
to then turn that Equity into something
beneficial down the road people
frequently call that strategy the
American dream that is how a lot of
people have built their wealth over the
years well there's another angle to that
which is that not only does buying
versus renting help you to to gain
equity in your house but and and
eventually to hopefully build wealth
down the road but it also helps you to
save money here and now in most
instances again on average based on this
data people that are buying are just
saving close to
$200 a month now when we dig into the
data we find some other things and and
this shouldn't come as a surprise that
homes that are more expensive are better
to rent than to buy a a great example of
this is if you want to live in the Gower
Estates or the Augusta Road or the North
Main sections or the the Art District
or Overbrook if you're looking to to go
into any of those areas you will save
money per month again we're not talking
about you know any of these other
things with gaining Equity or whatnot
again I'm not a financial counselor it
might make sense for you to rent it
might make sense for you to buy
financially that's not the scope of this
episode
in those areas where the purchase of the
home or the cost of the home like gawer
Estates for instance are average is
about half a
million and again that's about double
what our average home sale is around
here which is around the median is
around 230 the average is closer to
260 so in gawer where the average
home sale is around 500,000 I found the
average rent to be around 1,300
now that's a bit of an anomaly that
kind of has a lot to do with sample size
and whatnot we need more a heavier
sample size of course people that are
renting in go are typically renting
smaller properties and so that's causing
them to be not as expensive as some
of these other massive properties that
are being sold there that are 3 4,000 ft
but we see this consistently in
neighborhoods where the home sale is
more expensive than our average Augusta
Road the average rent there okay so this
is a little bit better sample size
was was $2,000 a month so that is quite
a bit above the average but the average
home sale there was 482,000 so even when
we factor in all of our mortgage
calculations and honestly our mortgage
calculation putting the 200 in there for
taxes and insurance now is probably too
low and and actually making the
purchase option more attractive
you're actually saving $500 a month
again probably more because of how I
i' I put this formula in you would
probably be saving more than that by
renting versus owning and so that's
something to consider if you are wanting
to live in some of those areas and you
don't think that you're going to be
there for very long and you're a little
bit concerned about the economy or
whatever the case may be you're not
looking to try to build up equity and
and or you're concerned about that
strategy it might make sense to to rent
in some of those more expensive
neighborhoods and and save the money
now and just kind of go about it that
way that is one way to look at it now
there was one major major major
exception to this trend and that was
an interesting one also kind of
intuitive where we had have in the
MLS a subdivision that's not really a
subdivision but it's kind of a
catchall subdivision called downtown and
that stands for of course Downtown
Greenville
and that can Encompass a whole lot of
areas now we a good realtor that enters
it will only enter downtown if it
doesn't fit any other subdivisions but
in that
downtown for single family detach
residences category the average home
sale was
320,000 which gave me an average
mortgage of about
1723 maybe that's a little low again
probably taxes and insurance would be a
little bit higher than 200 a month total
but anyway I came up with 1723 per
month and the average rent in the
downtown area was
2150 so downtown you're going to be
saving around
$400 by my calculation $425 a month
buying versus renting paying your
mortgage versus renting so that was a
very interesting anomaly that I ran into
now from a metadata
standpoint we see the data really flip
so we see kind of an an inverted I
can't think of what the term is called
but like an inverted curve once you get
below the average home sale in
Greenville this makes perfect sense
basically homes that cost below the
average and below the median and
again the the difference between average
and median the median is the middle
number in a string of numbers the
average is you take all the numbers add
them together and then divide them by
the total number of of numbers so I like
to look the med Ian in Greenville
because the market can be very topheavy
we have a handful of very expensive
houses and then a gazillion houses in
the mid2 200s by looking at the median
you actually get closer to the average
than if you look at the average but
the difference between the median and
the average is still only about a
$30,000 difference the median being
close to 230 the average being close to
260 and those are the two spots exactly
where we see the biggest break so
above 260 you really see that it is
based on these
numbers more advantageous or more
I should say less expensive the
advantageousness kind of depends on on
personal factors but it's less expensive
to rent versus paying your mortgage
typically for homes that are being sold
above 260 whereas below 260 that's when
the curve inverts and when we start
seeing much more consistently that it is
cheaper to pay your mortgage versus
renting and again I think that that
curve is prob would probably be even
more dramatic if I had really accurate
taxes and insurance numbers in here
which was beyond the scope of what I
was able to do for the purposes of of
this podcast then you go below
230,000 now this is our median home sale
price in the upstate below 230,000 is
where you really start to see the
differences so if I take the sample
of all homes below
230,000 here's what's
interesting the average rent price does
not change that dramatically versus the
entire sample size the average rent
price goes from
1470 with the entire sample size
including $500,000 homes
if you take all the homes below
230,000 and get rid of everything else
that average rent price only goes down
to
1430 that
is what was that a $40 difference a $40
difference but we're talking about
getting rid of all the homes above
$230,000 that is an astonishing
difference that means so that
1,400 1500 range
that is what families are looking to
rent for and it really doesn't seem to
make that big of a difference where the
location is or how expensive the
property is in general that $4
$1,500 range is going to be the average
that is a fascinating piece of data the
average mortgage of course went went
down so our average when we had the
entire sample size was
22266 yall remember that number when
we're looking at these homes that are
below 230,000 now we're looking at the
average I I shouldn't say mortgage
amount I should say the average home
sale amount of
187
749
$187,700 a month for principal
for for rather taxes and insurance
that takes us down to $ 1,
9634 so what does that mean that means
that the average
mortgage for these types of homes that
are selling below
230,000 is going to cost based on my
calculations close to
333
$3 cheaper than it would be to rent in
the exact same neighborhoods we're
looking at the exact same neighborhoods
that I pulled the rental data from as I
pulled the home sale data from that's a
big difference like that's going to take
a while to to have expenses I know as
a homeowner there are more expenses
sorry for that beep I accidentally hit
my my electronic desk here I know
that as a homeowner you have more
expenses but $333 a month is a lot of
money that you can use for other
things so does it make more sense to buy
or to rent again your
situation will determine that
ultimately but looking at the data in
Greenville until you get above average
in terms of the home sale price
everything that is average or below in
Greenville for home sales it is going to
generally be cheaper on average to pay
your monthly mortgage payment than it
will be to rent and even as interest
rates go up I know I base this on a 4%
mortgage interest rate even as
interest rates go up until they start
like really going up
dramatically these numbers will will
still remain pretty consistent I mean
even if we go from
you know again I I was basing on 4%
which a lot of you are getting lower
than that I'm seeing some VA loans
right now in the twos I mean it it is
insane right now what is happening on
the mortgage markets but even if we
go up to 4 and a half 5% that's not
going to change these numbers as
dramatically as you might think and
so if you're in a situation where you're
trying to to figure out whether you
should rent whether you should buy what
makes the most sense in general not
taking into account all the different
all your different personal financial
situations not taking into account
what type of mortgage you can get and
and not taking into account you know all
all of the those variables just looking
strictly at these numbers if you're
looking at an average home in Greenville
a home that is
$260,000 average average sale price
or below or 230 or below it's going
to be cheaper for you to buy that house
than it will be for you to rent and
there are other there are a lot of other
things to consider but strictly from a
cost standpoint it is disproportionately
expensive to rent those properties
versus buying now if you want to live in
a in a nice area like austa Road you
might consider renting a little bit
more seriously you're going to find that
renting is is is going to be cheaper
than it will be to buy at least from the
standpoint of your monthly mortgage
payments
downtown I might dig into that data a
little bit more because that that one
was the big anomaly and I'm curious
exactly what all the factors were
that went into that but downtown it
probably varies from one area to another
you know there is parts of of West
Greenville that people will consider to
be downtown or parts of South
Greenville that people might consider to
be downtown that you'd probably be like
no that is kind of its own different
area might be kind of a Mill area that
people are classifying as
downtown there's an area called Sterling
that's technically a
29601 area code ZIP code rather
and that is our Downtown Greenville
zip code but there are parts of Sterling
that really are more like Denine and and
Judson kind of the area the areas where
our main hospitals are so downtown is
the big wild card if you want to live
downtown it depends on what part of
downtown you mean probably if you want
to be in the heart of downtown I'm
guessing that's where renting is going
to be cheaper than buying if you want
to be kind of on the outskirts of
downtown based on this data I'm guessing
that buying is going to be cheaper than
renting and so there are a lot of
a lot of different considerations there
in General on average if you're
looking to come to Greenville let's say
you're coming from another area and
you're looking to be in a house expect
to be spending around $4 to $1,500 a
month if you plan to rent that's a a
good guideline a good measuring stick
there are more there are ones that are
cheaper there are ones that are more
expensive but that is your average right
there and if you want to buy you can you
know probably have an average mortgage
payment in the 122 to
$1,300 a month range in those same
neighborhoods at least as things
currently
stand that's all for today's episode
again if you want to reach out to me I'd
love to talk to you my contact
information
is in the show notes as always don't
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