Home ownership used to be a necessity several decades ago. The plan used to be so simple: graduate from college, find a job, buy a house. A simple plan for a simpler time. Today, there are many more possibilities and the notion of renting a home is not as farfetched as before. This article is meant to serve as a guide for you to decide whether renting or buying is right for you.
5 Tips on Renting or Buying
– It all depends on whether you’re in it for the short term or the long haul. Buying a house and then selling it again after just a few years will burn a hole in your pocket. Some may argue that they will only sell when the market is in their favor, but if that’s easy to do, all of us would be real estate moguls. As a rule of thumb, buying is better than renting if you’re planning on keeping your home for five years or more. The New York Times calculated that you could potentially save $10,460 – an average of $1,743 per year that you stay.
– The nature of your work is a big deciding factor. If you need to be flexible, there is really no other option than to rent. You could be asked to move when the housing market is down and be forced to absorb any loss. Also, houses take time to sell even when the economy is good. Having your money tied up to your old house will limit the amount you can put as down payment and increase any financing expenses on your new home. You are spared from these problems when you opt to rent. You gain mobility and you can relocate as often, quickly, and as painlessly as needed.
– Do you have a business? Owning something outright is not as trouble-free as it seems. Plunking down a huge sum of money on a home may leave your bank account dry when a business opportunity opens up. When faced with this scenario, you have the added challenge of juggling whatever free money you do have. You also have to consider upkeep and taxes when you decide to buy. When you rent, you get to free up a large part of your money to be used as capital for your business. Consider your priorities and go from there.
– There are things that you simply can’t buy – that credit card ad holds true even in real estate. Many office spaces and production facilities are rented for this specific reason. Most prime locations are not for sale and their owners rent them out to businesses because of all the traffic they get. You can buy a remote lot out in the middle of nowhere and put up your business there, but that’s hardly a sound decision. This is also true with some types of jobs and the need to be located close to them. The thing with renting a place close to work is that you have to go where the money is.
– Consider the intangibles. Buying or renting a house is not all about making a sound financial decision. You should also consider factors that are highly subjective. Moving is very stressful to children. Leaving friends and familiar surroundings to move to a strange new place where they don’t know anybody can severely affect their wellbeing. There are times when the monetary gains are not worth the stress you get from moving. Maybe you have settled down quite comfortably in a nice neighborhood and not even a promotion can get you to leave. Perhaps the wise decision in this case is to stay put and just commute to work.
Make Your Own Final Decision
When faced with the dilemma of having to choose between renting or buying, there is really no clear-cut answer. Instead, you must weigh all your options in order to know what’s going to be right for you. Priorities can change and your plans could be rendered obsolete overnight. Stability is nice to have, but so is mobility and flexibility. Only you can put one higher than the other, and only you can make the final decision.