Buy vs. Rent: Which Is Better for Your Wallet?
- by siteadmin
The housing market has been a hot topic for a while now. With so many people looking to buy their first house, rent an apartment, or flip a foreclosed property, the question of whether it’s better to buy or rent is often discussed. Every situation is different and can depend on several factors including how long someone plans to live in the house or apartment, the prices of homes or apartments they are considering purchasing or renting, and even personal preference.
Oftentimes you’ll hear arguments like “renting is like throwing money away” because you’re not building equity. But what about “buying is sinking all your money into one big investment”? The truth lies somewhere in the middle (like most things). Renting certainly does have its benefits, and buying isn’t always best.
Many people think that “buying is better” because of the ability to get a tax write-off. This can be true, but it doesn’t mean you should buy just for this reason. There are more important factors to consider when deciding, such as if you plan on staying in the house or apartment for a while. If you’re going to move in a few years, a tax deduction might not be worth losing all that money on closing costs and the down payment (and then still paying rent somewhere). And if your goal is to live in it for five years or less, there’s also the option of leasing instead of buying. Later on, we’ll go into some ideas if you decide to buy a home or apartment.
But what about “renting is better” ? There’s the flexibility of moving whenever you like, not having to worry about maintenance issues, and (this is especially important) rent usually doesn’t go up every year as a mortgage would. You don’t have to pay closing costs or make a down payment either which can help stretch your budget further. Also, since renters don’t own their property it means they won’t get stuck with depreciation if for some reason real estate values in the area drop (which does happen).
If you do decide that buying is right for you there are several factors that should influence your decision on whether to buy an apartment or house. First of all, look at the housing market in the area. If you buy a home that’s worth less than what you bought it for five years from now, you’ll have to fork over money to the bank. Renting is a lot more flexible if you need to move before then because there’s no penalty for breaking a rental agreement.
Another important thing to consider is maintenance costs. Even if a landlord covers them when something breaks, they can add up, especially if your place needs an expensive repair like new plumbing or wiring. And when you own your own place, everything (including appliances) are usually yours whether it’s still under warranty or not. Sometimes buying an apartment might be cheaper in this regard; landlords often require renters insurance which can help cover some of these things.
According to a Forbes article, it’s also smart to consider the local job market and future economic growth in an area. This can be helpful to know if you plan on being there for five years or more because if the job market is unstable you might not qualify for a mortgage later on. Also, consider commuting distance and public transportation access. If your work doesn’t allow you the flexibility to choose where you live this may affect whether renting or buying makes more sense.
And finally, think about what feels right. If you have your heart set on buying a house but none of these other factors seems like they’ll make any difference, maybe that means it’s time to stop thinking about “buying vs. renting” and actually start looking for houses. No matter what you plan on doing it’s always a good idea to crunch some numbers first, but if you’ve done that and are still trying to decide between the two, “buying vs. renting” is more of a subjective question. There are benefits to both renting and buying, so really decide which one feels right for your situation.
The housing market has been a hot topic for a while now. With so many people looking to buy their first house, rent an apartment, or flip a foreclosed property, the question of whether it’s better to buy or rent is often discussed. Every situation is different and can depend on several factors including how…