Moving itself is a big step. For some people, it means leaving everything that is familiar for a place that is new and unknown. There are a lot of factors to consider when deciding to move and often the biggest one to consider is if you want to buy or just rent out a place first.
Making that decision depends on a lot of factors like where you are financially in life, what your career path is, your flexibility as to the location, your warming up to the idea of staying in one place for a long time, and the current state of the real estate market.
Our team can help you make that decision by talking about the different aspects of either buying a house or renting one out.
Renting a house is a popular choice nowadays, especially for the younger generation who tend to prefer moving every once in a while. Homeownership isn’t for everyone.
Advantages of Renting
- No maintenance cost or repair bills. When you rent out a property, it is the responsibility of your landlord to handle any major repairs and maintenance. Of course, it is expected that you will take care of the property but if anything happens that is out of your control, you don’t have to shell out a ton of money to get it fixed.
- No need to pay Real Estate Taxes. Another benefit of renting is that any and all taxes will not fall on you to pay. It is enough that you are paying income tax, property taxes are another headache altogether.
- Downpayment. When you choose to buy a house, even if you get a house loan, you still need to make a downpayment. This usually doesn’t come cheap and if you are at a financial stage in your life where money is tight, our team suggests renting until you can save up for your house.
- Location Flexibility. Renters have the advantage of being able to live anywhere, especially in densely populated areas. Homeowners are limited to areas they can afford.
- Downsizing. If you’re a renter and you decide that the space is too much, you can pre terminate your lease for a fee, and then you are free to look for a place that is better suited for you.
Disadvantages of Renting
- No Equity. Your rental payments do not go to any long-term investment nor go towards owning an asset or building up savings. Any changes you make to the property also inure to the benefit of the landlord.
- Instability. You are merely paying to live in someone else’s property, any indiscretion with the landlord could get you kicked out of the house and it would also affect your being able to rent out other places.
- Regulations. Renting means agreeing to abide by certain rules. You cannot do whatever you want to the property. You can’t really call a place your home if you need to ask for permission every time you want to paint a wall or hang up pieces of furniture.
Buying a House
For some people, owning a home is a great milestone achieved. It represents a stage in your life where you want to settle down and put down roots.
Advantages of Purchasing a House
- Equity. Owning a house means having equity you can use as leverage to apply for various loans that you can use to buy a car, go on a vacation, do some upgrades, or even purchase a second home.
- Security. Unlike renting, there is a huge sense of security when you own a home, as long as you make your mortgage payments. You don't have to worry about the whims of your landlord.
You can also make as many changes to the house that you want. Permission is not needed for any construction or renovation you want.
- Increase in value. With the current market trends, real estate values are only going up. Buying a house is also making an investment for your future. You can sell your house in the future at a premium and move to a place better suited for you.
Disadvantages of Purchasing a House
- Maintenance and Repair Costs. Normal wear and tear are expected but when more serious things happen like a pipe bursting and flooding your basement or part of your roof caves in, you as a homeowner will have to pay for all of that.
- Commitment. Purchasing a home will require you to stay in the same location for an extended amount of time. You have to really be happy with where you are at. It is not easy to leave property behind when you decide that you want to move cities.
- Property Taxes. In addition to any income tax you pay, you also have to pay for the privilege of owning a house. With the prices of homes skyrocketing, taxes will also be getting more expensive since they are computed based on the market value of your home.
- Down Payment and mortgage payments. You have to be financially stable when you decide you want to own a home because the down payment alone is 20% of the full amount and mortgage payments don’t come cheap either. But rates are still at an all time low and there are other financing options if you can’t secure a traditional mortgage, financing like Hard Money Loans can be a very attractive option for people looking to move into a home that needs some rehab done to it for example.
Make sure that you still aren’t paying off other loans because that could lead to financial instability and you could end up losing everything.