Feb. 26, 2020
The decision of whether to rent or own a home is one of the largest life decisions most people will make. The rent vs. buying debate is never ending because both sides have valid points, which is why it can be quite confusing. Often times the bias is more likely to veer towards buying because we equate owning a house with financial strength and success but renting has its own advantages as well. I will try to give you a clear picture of both sides so that you can make an informed decision in the future.
To be realistic, buying a house is not always easy compared to renting a place. One of the most famous myths about renting is that you are giving your money away. It is important to mention here that you always need a place to live and it will cost you money. Now it is up to your preferences and finances which is the best decision for you. Opponents of renting often say the rent you pay is the money you’ll never see again. That’s true to some extent but you are getting something in return which is shelter and safety, even if you are not financially very stable to buy a house.
Pros of renting a house:
· You don’t have to pay for maintenance: One of the most appealing advantages of renting is that a tenant does not have to pay the maintenance and repair expenses of the property they live in. It's not the tenant’s responsibility to take care of the petty issues like leakage or painting the house which saves a tenant from a lot of expenses that would come up they owned a home. If you are somebody who wants to live a stress free life renting a place might be a better option for you than buying.
· Flexibility: If you do not have any long term plans for staying in a city, if your plans are not certain, or maybe the nature of your job is relocation every few months and you can not make a long term commitment to purchasing a home then renting will be the better option for you. When you are renting a place, tenants do not have to make long term commitments which makes relocation a lot easier. when moving out it’s a lot easier for a tenant than for a homeowner. A tenant doesn’t have to worry about finding a buyer to sell the property to. Another factor that makes moving out easier is that tenants are usually more minimalist than a homeowner.
· Live in the place you always dream about: How many of us have a dream about living in a nice place but cannot do so because we do not have enough money to afford it? Many of us if not all. Renting can make your dream come true if you want to rent a larger home or perhaps live in a unique location. You can temporarily live there when you can not otherwise be able to buy.
· You don’t have to deal with the real estate market: Prices and loan interest rates of properties fluctuate, but if you are a tenant you have less exposure to these issues. You have a fixed lease and you don’t have to worry about the fluctuations of the market in the short term and mainly focusing on the rental market.
Cons of renting a house:
· Rents can rise anytime: unless you are living in a state where rent control laws are present to save tenants from unpredictable raise in their rents, your landlord has a complete authority and control over raising your rent once the lease has expired. The best thing you can do is maintain a good relationship with your landlord, it really helps!
· You won’t get any tax incentives: a homeowner has a deduction they can apply towards their taxes and other expenses from the returns of income tax. Renters may not get any tax benefits.
· Less control more rules: one of the most annoying parts of renting is that you have to follow the rules of your landlord and as a tenant, you have to follow all the rules. You also have limitations to what you can do with the property.
· Unpredictability and instability: unpredictability here refers to the idea that as a tenant you don’t know what to expect when your lease duration is over. Your landlord may raise the rates or may ask you to move out.
Buying your own place
We love the sense of ownership and one of the reasons why “buying” often wins in the rent vs. buy debate is because we enjoy the sense of satisfaction and authority that comes from homeownership. Most of us have the ultimate goal of owning a home because it brings us joy, satisfaction and the feeling of success. In this section, I will try to elaborate on the pros and cons of buying a house.
Pros of buying a house:
· Tax incentives: as stated earlier, if you buy a house and pay all the taxes and mortgage, it will depend on the state, but this is a big help towards your taxes and a big benefit in the long run.
· Equity: when paying your mortgage, you are paying down how much you owe on your home and as the market increases in value, you gain equity. This equity helps build long term wealth and gives you options down the road to refinance your home for a home equity line of credit, lower monthly payments or even get some cash out of your home.
· Internal satisfaction: once you have bought your place the sense of satisfaction of owning your home is an amazing feeling. You do not have to worry about finding rentals to live in anymore and you have a stable roof over your head.
· Freedom and privacy: when you are a homeowner, you make your own rules which gives you the freedom of doing everything your way. You can decorate your house the way you like and remodel because you own the entire property yourself. You also do not have to worry about inspections or your landlord coming over unexpectedly.
· Stability: owning a house gives you shelter, safety, certainty and ultimately gives you stability. You don’t have to worry about unpredictable cost raise as you would if you were a renter. You don’t have to leave or move out of the house on short notice.
Cons of buying a house:
· High cost housing: buying a house these days can be more expensive than what we usually anticipate. Mortgage, taxes, fees and other expenses can add up when buying.
· You have to take complete responsibility: as an owner, you have to take complete responsibility of bearing expenses of maintenance and repairing work of your home. Sometimes these unexpected costs can add up to be more than expected.
· Long term commitment: buying a house is generally a longer term commitment due to the mortgage and tax implications you can have if you sell a home too soon. Experts suggest before buying a house ask yourself “do I see myself living in this house for the next 5-10 years?” Buying a house might not be the best option for you if you have uncertain future plans or possibly moving out of the area.
· Harder to move out: moving out from your own home can difficult for a couple of reasons. First, you have to find a suitable buyer for your house and second, when you own a place you develop a feeling of belonging for it which makes moving out harder.
I hope this article has made both sides very simple and clear for you. There are a few facts that you might want to consider before making this important decision for yourself. We recommend weighing your options and possibilities. After all, in the end, its all about your vision of comfort. Do not listen to people’s opinions. Do your research and make an informed decision.