Is It Better to Rent or Buy Your Home?
Often classified as one of the biggest financial decisions the average person makes.
So to make a long answer short: It Depends.
You may hear real estate moguls preach renting is always better than buying and buying a house is the worst investment you can make. (*cough *cough ..Robert Kiyosaki..)
In their own mathematical decision-making process, they might be correct. But I guess they do not consider the fact that buying a house is not simply a monetary investment… If you want to invest in real estate, that’s a different story. Check out Grant Cardone or Robert Kiyosaki for that.
When you look at the bulk of people who buy a house, they are typically in the middle class, earning a salary from their full-time job they plan on staying at for some time. Thus, they buckle down and look to buy a home in the neighborhood that suits them best. When buying the home, they don’t just think about the finances… they think about their commute, the people, the neighborhood, if it’s the place they want to raise their kids, the town, the school system, etc.
Not many home buyers look to buy a house thinking “this is a great investment that will give me a 3% return over time.” This is because to the average person, a house is not designed to be an investment alone. It’s designed primarily to be a home.
With that said, let’s look at the pros and cons:
Some pros & cons of buying your home:
Stability – A place to call your own
You are the owner and the house is yours…and probably the bank’s
You have control over the property- you can design it how you want it.
You can write mortgage interest off taxes. (Unless Trump takes it away!)
You can sell it and get some money back.
You may have a line of equity in the house.
Builds credit in the long run.
High Initial costs – You must put out a chunk of money (down payment, mortgage, insurance, taxes).
Maintenance costs – liable for the property’s maintenance & upkeep (if the AC system breaks- it’s on you!)
Tied down geographically & financially. What’s the opportunity cost of that money?
Some pros & cons of renting your home:
Flexibility – if you are in between jobs or don’t know where you will be in the coming months/years.
Low initial costs – security deposit & fees.
Little to NO maintenance costs – So if the water heater goes or a pipe breaks, you’re good! It’s on the Landlord.
You don’t own anything – little to no control
No equity in the property – only security deposit
“Paying someone else’s mortgage” as many say
It is important to consider your personal situation and reflect on what you are really after in life. Are you looking to settle down and call a place your own? Or, are you looking to stay flexible and invest/use that down payment money elsewhere?
Some very important things to consider before making a decision such as this are as follows:
- Current Debt (Consumer debt, Auto debt, Student loans, etc.) Are you financially strapped or free?
- What’s your career look like? How stable is it? How much do you make?
- What about the family? Married? Kids? Single?
- Where do you want to be in the long run?
Ultimately, you need to decide what you want in life and whether renting or buying is the best option for your long term life goals! Check out this calculator to get even more specific!
I’m curious to know your thoughts! Comment below! Please be sure to Subscribe, Like and Share! Thanks!
Cheers & God Bless,
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