When you are someone that is looking to purchase a piece of real estate, each decision you make is an important one. Finding the right REALTOR® to help you make the best decision is an important 1st step in the process of deciding whether renting or buying property is the best move for you. Although the choice may seem simple, there are pros and cons to each one that you should consider before making your final decision.
Renting property is a great way to still find housing and engulf yourself within a community of people without taking on the responsibility that ownership entails. If you are looking for something temporary or for something that you don’t feel tied down to, then renting may be the option to go with. A benefit to renting is the flexibility for you to be able to move if necessary. Additionally, if you are new to the area, renting allows you time to learn the community prior to making a purchasing decision. For example, if your career has high job transfer or you travel frequently or you want to learn where certain community or health services are located, renting is a fantastic option.
Additionally, this option could potentially be less stressful on the renter, as once you have satisfied the terms of your lease, you may pick up and go whenever you want. A property owner must, with the help of a REALTOR®, go through all the steps necessary for a successful house closing. Moreover, if you are an individual with moderate to low-income, there are rental housing options within almost every community, and most REALTORS® are aware of these affordable options for you and your family. Renting is also a great way to start building up good references and can possibly help you save money should homeownership be a goal for you. Another benefit to renting that ownership doesn’t contain is less maintenance costs. As a renter the responsibility of most repairs falls to the landlord, not the tenant. A very important step to renting is to always read through your lease before signing so that you understand all your obligations as the renter as well as the landlord’s obligations.
On that note, renting does not give you full control of your living environment. In the case that you are renting, the money you spend on living is not an investment like it would be if you owned the property. The money you put in does not work for you overtime like it would if you purchased that property. You cannot build equity and get money back in return once you decide to leave that property like you would if you had ownership and decided to sell. You are paying someone else to live there. Because of this, more risk could be involved as agreements could change, rent could increase, and in the event of you violating your lease, your landlord could evict you. Also, any changes you want to make to your living space to make it feel more like home, must be approved. For example, if you wanted to paint your walls to be a bright vibrant yellow that must be approved by your landlord assuming he/she will say yes.
Buying is a great option for someone who is looking to become part of a community long term. It is a great way to start building a lifestyle for you and your family where you have more options to choose where you live. Additionally, you have the freedom to make your home unique to your liking and your personal decorative style. You have full freedom to paint your walls any color you like. Decorate the rooms any way you like or remodel. All renovations are up to you as the owner; as are the repairs and replacements of items like plumbing, air conditioning, roof repair, unless covered by your homeowners’ insurance. Therefore, whenever possible try to put something away for a rainy-day fund.
Unlike renting, your money is an investment when buying. You are building up equity for as long as you live in your home. Additionally, unlike rent in which you cannot control the monthly payment except inside a lease, should you have a mortgage payment, these payments usually don’t change. Steady mortgage payments make it easy to budget for your cost of living outside of any extra expenses you may run into such as repairs or renovations, hence why a rainy-day fund is important. Unlike renting, your rent could increase with every lease renewal or relocation. Moreover, on the topic of finances there are some tax benefits to owning property as well. In some cases, you can deduct your mortgage interest payments whereas renting does not share these same perks. In many ways, your money is working for you when you own a home.
Although, there are quite a few benefits to buying and owning property, with freedom comes responsibility. Owning a home can entail quite a bit of maintenance. Even though you may get a great deal on the actual purchase of the home, renovations could cost way more than what is expected. It is when the unexpected happens and the buyer has no contingency fund, or the repair is not covered by insurance that stressful situations can happen for the homeowner. Most times when buying a home, it takes most, if not all, of the savings buyers have so please make sure you have a home inspection when buying to understand and to plan for any future repairs. It is always important to be prepared. This way your money is always working to your benefit.
Lastly, it is important to note that your home is not a liquid asset. In other words, in the event you need to move quickly, ownership could end up costing you time and money without a well thought out plan, as relocating, even just across town, can be a long process. Additionally, in many cases, people will sell a home to buy a home, and although you may sell quick, you may not find a replacement for the home you sold quite as swiftly. Therefore, with a well-thought-out plan and with the assistance of a trusted REALTOR® a move can occur, as stress-free as possible.
Your personal situation will always determine which housing options are best for you and your family. If the path is not clear write down your goals and then take some time to create your own personal pros and cons list, talk it out with those close to you and even with your REALTOR®. My wish for you is that whatever decision you make regarding Renting vs. Buying, it is ultimately the best decision for you.