Should You Rent or Buy? Important Things to Consider
There used to be an assumption that buying was always better than renting, that renting was the same as throwing money away, and that anyone who was a renter would naturally want to buy a home as soon as the opportunity presented itself. With home prices disproportionately high in many markets and fewer young people buying, this conventional wisdom no longer seems quite so wise. Below are a few things to consider as you try to determine which choice is right for you.
Your Passion
How badly do you want to buy a home? This might be the only question that you really need to ask yourself. Assuming that you can afford to do so, if you passionately want to own your own place, you’re not going to be happy as a renter. For many people, this is less a logic question than an emotional one.
Your Plans
On the other hand, if you’re still on the fence, one important element to look at is your plans over the next few years. Are you planning on moving? Do you want to have children, and if so, where do you want to bring them up? How stable is your job? If things look fairly unsettled, you may be better off renting for now. It’s much easier to pull up stakes and move at short notice when you’re a renter than if you’re a homeowner.
Homeowning Advantages
If your future plans look fairly stable but you still aren’t sure what you should do, you could also consider the advantages of owning your home. One of the biggest is simply that it belongs to you. You can do anything you want with it as long as you can afford it and it doesn’t violate local zoning laws. You don’t have to worry about your landlord hiking up your rent, kicking you out so their brother-in-law can live there or forbidding you to have pets.
Real estate can be a great investment as well. While there are no guarantees, it does tend to appreciate in value. In addition, once you have some equity in the house, you might qualify to take out a home equity loan. You can use this for many different things, including work on the house itself. You can review a guide on this site about the process to help you better understand it.
Renting Advantages
It’s also worthwhile to consider the advantages of renting, and there are quite a few. One of the biggest ones is that you don’t have to worry about being financially responsible for repairs. If the refrigerator dies or the roof needs replacing, that’s the landlord’s worry, not yours. You might want to take the money you would spend on maintaining a home and place it into higher-yield investments. Another big advantage is that you have more freedom. If you get a hankering to move across the country or take off and backpack around the world for a year, you can stick your stuff in storage and hit the road. If you own your home, you’ll need to figure out what to do it before you can go somewhere else.
Additional Costs
It is not enough to just compare the monthly price of rent to what your monthly mortgage would be. There are many costs involved in homeownership that you need to be aware of and determine if your personal finances are up to the challenge. Anything from neighborhood association fees, to budgeting for new appliances because the house of your dreams does not have any, should be put on the scale of comparison. There are also going to be fees involved during the process of purchase as well, things like realtor commissions and closing costs can total up to thousands of dollars that you are responsible for.
Consider outdoor maintenance as well, as this is a huge difference between owning and renting. What are you going to be responsible for in terms of your yard? Do you have the time to dedicate to things like shoveling snow, raking leaves, and mowing lawns? And if you do not have the time, do you have the money to hire these services out?
The Amenities
Renting a home can come with amenities that impact your budget, and lifestyle, and you should consider them. Does your rental come with a gym? If so, think about how buying a house means you lose that in-home workout opportunity. If this is an important part of your daily life that is going to mean either making an investment to create a gym inside your new home or paying a monthly membership fee to a corporate or studio fitness center.
Security can be another amenity to consider. Depending on where you live, if you live alone, and crime rates in your chosen area, you should think about how to protect yourself, no matter if you own or rent. Some rental complexes have doormen, or in-house security teams, while others have 24-hour surveillance cameras that can provide you with a feeling of safety. If this is something you value, and/or something you need, think about how to replicate that once you own your own home. Suggestions like home security systems, video camera doorbells, and fencing are common.
Another amenity that you might not think about is the opportunity to customize your space as a renter versus an owner. Even in the most liberal rental agreements, you are never going to be able to make the space 100% yours. If you own your own home, there are basically no limitations on what you can do with the décor, how you can hang things on walls, or even if you can, or cannot have a live Christmas tree around the holidays.
Tax Benefits
When you own a home, there are tax benefits. A tax depreciation schedule from quantity surveyors PropertyReturns can be a great way for homeowners to save money on their taxes. By taking advantage of this write-off, homeowners can significantly reduce their taxable income which can lead to big savings come tax time. Additionally, a tax depreciation schedule can also help homeowners keep more of their hard-earned money, as they will no longer have to pay taxes on any portion of their home that has been depreciated. This can be a great way to free up some extra cash flow, which can be used for other things like home improvements or investments. So, if you’re looking for a way to save money on your taxes, a tax depreciation schedule may be the perfect solution.
