Most people debate if they should rent a home or buy a home. Below, we will discuss the supporting claims for each decision, as well as important factors to consider before buying or renting a home.
Advantages of Renting a home:
- Renting a home is a far more flexible alternative to owning a house; obviously, by being a tenant, you can choose to live in an area that you may just want to try out versus long term ownership of buying a house. However, the trends in real estate show that selling a home can happen almost as quickly as giving a 30 day notice with the benefit of having equity built up.
- Being a tenant also makes the process of moving out much easier; as a tenant, you would not have to worry about finding someone to take over the property or looking for a buyer, as that is the landlord’s responsibility.
- Renting may provide you with the financial advantage of being able to save more money or potentially invest that money in the stock market, for example.
- Another significant advantage of renting is the ability to avoid paying for and figuring out repairs. Repairs are the responsibility of the landlord.
Things to look out for!
- Renting does not generate wealth or provide a return on investment because the rented property does not legally belong to you. So, if the property has gone up in value, if you were selling the home, you would be able to benefit from the increase in price, but as a tenant the equity and value of the home belong to the owner.
- Another factor to consider while making the choice to rent is that when a lease expires, there is no guarantee that it will be renewed.
- Being a tenant would also restrict your freedom to do home renovations or updates without the homeowner’s consent.
Advantages of Buying a home:
- Buying a home is widely regarded as the most rewarding financial investment ever made; by making the decision to buy, you will be in possession of a property that you own and control, as well as realizing a capital gain.
- Another remarkable advantage of purchasing a home is that the home value will increase over time, allowing you to profit from the property if you ever decide to sell it.
Things to look out for!
- Purchasing a home entails a number of expenses, including rates, taxes, insurance, and maintenance, which you will be responsible for as a homeowner.
- Another risky aspect of buying is the possibility that you will not be able to resell it for a profit. If the market goes down or neighborhood changes or if the city decides to build a homeless shelter down the street. All of these factors, which are outside of your control, will significantly affect your home value.
Finally, deciding whether to become a homeowner or a tenant is based on your evaluation of all the benefits and drawbacks of each option, always keeping your financial situation in mind.