Is it better to rent a home or buy one? It’s a common question among Americans. Both options come with pros and cons, so it all boils down to the preferences of an individual.
There are good reasons for renting a home, but there are also plenty of arguments for buying one. The former can be less expensive since it means you won’t have to pay for repairs and maintenance. Owning, on the other hand, can be less stressful if you won’t have to worry about rising rents and an unfriendly landlord.
The decision depends on many factors, including your finances, age, the current situation of the mortgage market, the neighborhood, and plans such as buying a property and listing it for sale or selling it directly to house buying companies like Jaimie Buys Houses. Regardless, renting versus buying a home will always be a significant decision that everybody makes.
Should you consider renting a home that’s for sale or buy it for good? Below are some factors to consider when making the decision:
Calculate The Costs
The costs associated with buying or renting vary, so it’s best to break down the expenses.
As you know, if you’re going to rent a house, you’ll have to prepare an amount for the security deposit. It’s what protects the landlord against any damages that you may cause in the future. Before signing the lease, you’ll also have to put down the initial and final month’s rental payments. Before putting down the pen to paper, evaluate the contract, and see if the rent already includes water, internet connection, gas, and electricity.
Homebuyers, on the other hand, have to prepare for the monthly mortgage payment, which will cover the principal and interest amounts of the loan. Take note that your payments are subject to changes as it can go up or down if you have a variable rate loan or if your homeowner’s insurance premiums and property taxes change. And if your down payment is less than 20 percent, the lender will require you to purchase PMI or Private Mortgage Insurance, which, of course, can drive your monthly payments higher, too.
As already mentioned, homebuyers have to prepare a sizeable amount of down payment, which can range from 3 to 20 percent of the total purchase price of the property. Also, if you’re going to get a house in the HOA or Homeowner’s Association, you’ll have to consider HOA dues for services like community amenities, exterior maintenance, and landscaping.
Buying A Home As An Investment Opportunity?
Yes, real estate can indeed offer excellent investment opportunities, but you shouldn’t purchase a residence for that reason alone. As you probably already know, housing will always be an unavoidable cost of living. Liquidating a real estate investment asset would mean finding a new place to live, so unless you have another house waiting for you, homebuyers shouldn’t factor in the investment aspect of homeownership when they plan for housing costs.
You can only utilize a house as an investment when you know how to buy and sell homes opportunistically, which means buying low and selling high. It’s where the risk of getting priced out comes in if market prices continue to increase, especially if you’re on a tight budget and may not be able to buy another apartment or house.
Enjoy More Stability
One undeniable advantage of buying a home that’s up for sale, though, is the chance to enjoy more control and stability. You don’t have to worry about increased rental payments. And the landlord can’t take away the home from you by selling it to someone else. You can still move to another place if you want to, but it will now be your decision and not the landlord. Also, if you’re going to do some remodeling, it’s impossible with a rental, unless you have the owner’s permission.
Sharing Becomes Easier When You Rent
This argument goes for unmarried couples since most of them prefer renting instead of buying a home, and there’s a good reason why. Separating your finances and moving out becomes much, much easier when you’re only going to rent a house. If the worst happens and you don’t have any other option but to move out of the apartment, things are a lot easier when renting than buying a home, especially if you’re not married to each other.
There can be a few legal challenges that you have to face when purchasing a home as an unmarried couple, especially if you have decided to only indicate one person’s name on the property’s deed. Yes, both of you can contribute equal amounts for the mortgage payment but when disputes happen, only the deed holder can have a legal claim over the house. If, say, the deed holder decided to sell the property in the case of a break-up, the other person won’t have a choice but to leave behind any equity they have contributed and to move out.
So, if you’re an unmarried couple, you should consider renting to avoid the almost endless complications of purchasing and buying a home.
Challenges In Cashing Out And Liquidity
If you’re going to rent a home, you won’t have to worry about liquidity and housing market conditions. As you know, selling a house may take a long time and it involves loads of paperwork, not to mention the charges that real estate companies impose for a commission that further reduces the ROI. So, unless you’re sure that you can handle these challenges, sidestepping these entanglements by renting a home that’s up for sale is ideal. You only have to make sure that you’re going to perform due diligence and some key things for a trouble-free home or apartment rental.
Flexibility And Open Options
Home or apartment rental makes a lot of sense if you’re the empty nester type of person, ready to downsize, or still in doubt of where to spend the years after retirement. When the need to move away and go back closer to your loved ones comes later on, renting a home is your best bet.
Buy If You’re Emotionally, Mentally, And Financially Ready
Most people want a home, and it’s undoubtedly the same case with you. There’s nothing wrong with it as long as you don’t compromise other equally important things in life. So, unless you’re emotionally, mentally, and financially ready to own a house, renting one will always be the best thing to do.
The Bottom Line
Sometimes, renting a home is better than buying one. When you purchase a house, you’re going to get tied to one place. And if you receive a career opportunity elsewhere, selling your property can be difficult. Both options can give you a beautiful home, but renting one that’s up for sale comes with more flexibility.