Tuesday, August 16, 2022

One afternoon a few weeks ago, I was talking with a client when our conversation was abruptly interrupted by loud banging from his office. He apologized and said his landlord was there installing several smoke detectors because the Fire Department was coming in for an inspection the next day. They had previously been fined for failing to have the adequately updated sensors, so the landlord was there to do the necessary work.

He also started telling the landlord about one of the window shades that were jamming. Then, my client, who is in the medical profession, began a whole medical dialogue with his landlord. When he finished his conversation, I asked if his landlord was also in the medical field, to which he said yes. He said the building is owned by two brothers - a doctor and a lawyer who are really nice and will immediately address any issue that comes up. He then went on to say how handy they were, and that helps get certain things done quickly because they take care of it themselves.

After our call, I was thinking about my conversation about the landlords. Our call was about 40 minutes long, and the landlord was there doing the work throughout. I assumed that he had to go to HomeDepot (or the like) to get the necessary items and then spent at least one hour installing them. I certainly respect the pride of ownership that people have in owning a property. I also could appreciate that they are cost-conscious to handle things that they could otherwise do on their own. At the same time, I couldn’t help but wonder – does it really pay for a doctor and lawyer to do their own maintenance work when they could just hire a handyman to do stuff like this?

Here is another such example that came up recently, although in a different context. A client finally finished the renovations on his house and was looking to cash out some equity to replenish the construction costs. It was quite an extensive renovation, costing him close to $200,000 when all was said and done. He mentioned that he went with this contractor because he was a few thousand dollars cheaper than the other bids. He said the only negatives he heard about this contractor was that it always takes a lot longer than initial estimates.

They were finally getting ready to move out of their short-term rental, and he couldn’t be happier because he was paying over $4000 a month in rent. The construction took more than three months longer than expected, but he was overall satisfied with the contractor. I couldn’t help but wonder, between the extra rent payments and being displaced for a longer period of time, was it really worth the savings by choosing this contractor? Of course, I didn’t mention it to him, but did it really make sense?

These are but two examples of many similar situations where people aren’t necessarily considering the actual value of money in their overall circumstances. While providing mortgages is what I primarily do for a living, I find that most of my discussions center around helping people optimize their overall finances. It sometimes takes a separate set of eyes to help someone truly determine if something makes sense or cents.

Shout out and Happy Birthday to Sammy Baron, Jason Beckoff, Avi Blumenfeld, Sara Ehrenreich, Sammy Eisner, Avi Elishis, Stephen Flatow, Shneur Gershuni, Ari Ginsberg, Phyllis Krug, Shua Last, Shmuel Rosansky, David Secemski, Sholom Silvestri, Barbara Susman, and Yonah Wolf

Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved funding is a mortgage company offering competitive interest rates as well as specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience, including licenses and certifications as a certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [email protected]

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