Don’t be confused about renting vs buying a house. As you know, there is not any exact answer to this age-old conundrum. Your decision should depend on your personal and financial condition along with the present market trends and economical situation.
“it depends on” is the best answer to your renting vs buying problem.
Moreover, there are pros and cons linked with buying a house and renting one. However, before you make a decision, you must first figure out what you exactly need and what you can afford.
5 RENTING VS BUYING QUESTIONS YOU SHOULD ASK YOURSELF
Before we discuss the pros and cons of renting a house vs buying one, here are a few questions you need to ask yourself. This will help you figure out which of these options work best for you.
- What is your budget?
- What are your family requirements?
- How long do you want to live in the area?
- Do you prefer stability over flexibility?
- Will you be able to pay for home repairs and maintenance?
While you figure out where you stand on the renting vs buying spectrum, you can take a look at some of the pros and cons of renting a house as well as buying one.
RENTING A HOME
For most young people, buying a house is simply not an option because of budget restrictions. However, if you are stuck in a rent vs buy debate, here are a few benefits and downsides of living in a rental property that you must be aware of.
PROS OF RENTING A HOME
These are some of the most important benefits of renting a home.
- Increased flexibility
- More opportunities
- Less paperwork
- No home maintenance cost
- No need to pay property tax
Increased Flexibility
Since living in a rental property is a short-term commitment, tenants have the liberty to pack their bags and move into another house or apartment just by providing a short notice. They don’t have to worry about finding someone to move in or take over the lease. This makes renting a much more flexible option, especially for young professionals whose jobs might require them to stay in different areas or cities for months on end.
More Opportunities
Buying a house or a flat in the area of your liking might be beyond your budget, but there is a good chance that you can at least rent out a unit there. Even if you have limited funds, you can still live in a popular neighborhood and enjoy access to top facilities.
Less Paperwork
Needless to say, there is way less paperwork associated with renting a home compared to buying one. Of course, you’ll have to sign a tenancy agreement that will protect your rights as a tenant as well as those of the landlord, but apart from that, you won’t have to worry about any other paperwork or file any documents.
No Home Maintenance Cost
Tenants don’t have to worry about repair and maintenance costs, as the landlord is supposed to pay for them. However, tenants might have to pay a certain amount in case of any damage to the property or as specified in the tenancy agreement.
No Need to Pay Property Tax
Apart from paying the rent and utility bills, tenants don’t really have to worry about any other property-related costs. Whether it is the homeowner’s insurance or property tax, the landlord is the one who is supposed to pay the bill.
CONS OF RENTING A HOME
There are also a few demerits of renting a property.
- Unstability
- No Equity
- Rules and restrictions
- Rent increments
- Moving expenses
Unstability
If you’re looking for stability, renting a home might not be the best option for you. Your landlord can force you to move out of your home on a short notice, which is often not enough to look for a new place that fits yours and your family’s needs. The situation can be even worse if you’re already going through a rough patch and don’t have enough funds to put down a down payment let alone bear all the other expenses that come with moving homes.
No Equity
Although paying rent is mostly cheaper than paying a mortgage, at least those paying the latter have something to show for it down the road. Meanwhile, monthly rent payments don’t build up equity or grant you ownership. The money you pay your landlord is essentially gone as soon as you hand it over.
Rules and restrictions
There are certain rules and restrictions that come with living in rental property. First of all, you can’t renovate, remodel or re-decorate the place according to your preference. While some landlords might allow you to repaint the home or change a few things around, most of them aren’t too fond of tenants making modifications to their property. Secondly, some homeowners may not allow pets inside their home. So, even if a tenant really wants to adopt a cat or a puppy, they simply can’t do so without asking the landlord for permission.
Rent increments
While tenants don’t have to worry about the appreciation or depreciation of the value of a property, they do have to worry about the possibility of a sudden rent increase. Even with some sort of rent control measure in place, landlords are free to increase the monthly rent when it’s time to renew the tenancy agreement.
Moving expenses
Packing your entire life and moving to a new place is never easy, but the costs associated with the entire thing make it even more difficult. Apart from paying for the moving service, tenants also need to put down the down payment and clear their utility bills. Not to mention, if they relocate to a different area, they might have to change their children’s schools or spend more on transportation.
BUYING A HOME
Here are a few pros and cons of buying a house that will help you figure out if ownership is the right choice for you.
ADVANTAGES OF BUYING A HOME
When it comes to buying vs renting a house, the former has quite a few upsides.
- Stability
- No Restrictions
- Opportunity to generate income
- Ownership
Stability
Owning a house or a flat gives you a sense of financial stability and security. No one can force you to move out of our legally owned property and you don’t have to worry about a sudden increase in the monthly rent. Even if you buy a house in installments, the monthly or quarterly installment remains fixed until the end.
No Restrictions
Being a homeowner, you have the complete freedom to knock down the walls to open up your living room and paint the walls to your liking without having to answer to anyone. You can update fixtures, change the décor, fix up the garden and even do major remodeling work to suit your personal style and needs.
Opportunity to generate income
Owning a home also allows you a great opportunity to generate income by putting it up for rent. If you have some vacant space, you can simply rent it out and earn some extra money while maintaining ownership.
Ownership
Buying a home is arguably the biggest investment you’ll ever make. It’s a big financial decision that comes with a lot of advantages, with the biggest being the sense of empowerment that it provides.
DISADVANTAGES OF BUYING A HOME
- Requires substantial money
- Value depreciation
- The added cost of maintenance and repairs
- Less flexibility
Requires Substantial savings
Buying a house requires a substantial amount of money. Even if you are buying it in installments or plan on paying a mortgage, you still need to put down at least 20 percent of the entire cost as the down payment.
Value depreciation
Generally, the value of houses and buildings depreciates over time due to old construction style, outdated design and general wear and tear. This means in order to flip the house for a profit, you’ll first need to invest money and time into upgrading it. The location of your property also plays a huge part in this, as the value of houses located in popular residential areas does not tend to depreciate as quickly as those in other areas.
Cost of maintenance and repairs
As the saying goes, owning a home comes with a lot of responsibilities. Whether you are buying a recently-constructed house or an old one, you are bound to face maintenance and repair issues popping up within the first few months of purchasing the property.
Less flexibility
As opposed to renting a home, buying one limits your options to move around or explore job opportunities in different cities. While a tenant can leave their home after serving a notice to their landlord, a homeowner needs to go through an extensive number of steps to put their house up for sale.
Conclusion
So, when it comes to renting vs owning a home, there are pros and cons associated with each other. While your financial condition plays a huge part in deciding the right choice for you, it’s not always about money. You also need to evaluate your personal goals while deciding if it is better to rent or buy a home and see what could be better for you in the long run.
