If you live and work in the city, should you buy or rent an apartment? Buying allows you to have a place to call your own while renting gives you the flexibility to transfer if a particular location is no longer appealing.
Making a choice between the two options will depend on your current financial situation, what your current career situation is, and what your priorities are.
This guide will assist you in evaluating the pros and cons of apartment rental or ownership and which one would be the best for you.
Why Renting is a Good Idea
The following are the reasons why renting an apartment is an ideal choice to make:
One of the advantages of renting an apartment through sites like Property Guru is the amount of flexibility it gives you.
Yes, purchasing an apartment does give you a sense of security and stability, but what happens if your company relocates you to another part of the city, or even to another region in the country?
You could tell them no and jeopardize the possibility of getting a promotion, or you can agree and find yourself having to pay for an apartment that you are not using. It is due to instances like this that renting seems to be more advantageous for people that are still in the early stages of their career.
If you are just renting a unit, it wouldn’t matter if your company decides to relocate you, since you can just give sufficient notice to your landlord and transfer to another apartment. There are also instances where you may want to resign and transfer to another company that is offering you a higher salary and better position.
Do you believe that staying with your old company, just because your apartment is closer to their office, is the right decision to make?
Of course not! You need to advance your career via whatever method possible. Instances like this show that flexibility trumps stability for young professionals that are still in the early days of their career.
If you are a new hire at a company or are still at the beginning of your career, renting an apartment is far more affordable than buying one.
Yes, people state that you should start investing in purchasing an apartment as early as possible due to rising home prices; however, the problem with this idea is that you are making a long-term purchase based on a small income. As you get promoted within your company, your salary is going to increase which will enable you to make larger purchases.
Starting the purchasing process at the beginning of a career could be a foolish and premature decision, you will be stuck making payments on a small apartment when you could have gotten a much larger one.
There is also the matter of how much of your salary will go into paying for an apartment per month. If you are just renting, the payments are much smaller which enables you to utilize the excess cash towards other pursuits such as taking a vacation or investing in stocks.
Why Buying an Apartment is a Good Idea
The following are the reasons why buying an apartment is an ideal choice to make:
Peace of Mind
The good thing about taking out a long-term loan to pay for an apartment while you are still young is that after 10 to 15 years, the apartment should be fully paid off.
The only bills you would need to worry about are your utility bills and association dues which are much cheaper than the monthly rent that you used to pay. Having a place to call your own also gives you peace of mind since, in case you are ever in an accident, you could take a few weeks of non-paid leave to get better without having to worry about paying the rent.
Long Term Investment
Owning an apartment is also an excellent long-term investment since you can rent it out for the first 10 to 15 years of its economic life and then you can sell it at a later date for a much higher price than what you paid for it.
The rental income would help to pay for the monthly loan payments while the proceeds from the sale of the apartment could go into your retirement fund. You could even choose to rent out the apartment fort he entirety of its economic life and live off the rental income that it generates.
Choosing between renting or owning an apartment is all about where your priorities are. Either choice has its pros and cons that need to be considered carefully before committing to them.
In the end, choose based using your financial capability and what other people say you should do. If you can’t afford to buy an apartment, then you should definitely not do so.