To Buy or to Rent, That is the Question
2016 Feb 17 | by rei
Understanding the basics between renting and buying your own home
Probably one of the biggest goals any person has in life is investing and owning a house. As a kid, many of you have dreamt of having a place to call your own and by the time you get a job, the more you yearn for it. Most people have been accustomed to the idea that owning a house is the final piece in their life’s puzzle, but one should also question, “How do we know you are ready to buy or rent one?
Weighing your options
Choosing between renting a home or buying a house and lot is the hardest financial decision to make because one has to be fiscally responsible in doing so. On one hand, owning a house is never easy and a lot of mature investors would advise younger ones to invest in a property as this is the safest and best acquisition one can make.
Yes it’s a great investment but given the current market value of houses today how do you know if you can one sustain it? And that is why most people resort to renting. Renting, on the other hand, is considered the easiest way to acquire a roof over your head. But is renting really worth it? It may be, but it isn’t a tangible investment.
Buying and renting are like apples and oranges — delectable but totally different from each other. The money paid in renting doesn’t lead to ownership, unlike buying the property itself. But the costs that will be incurred when buying a house will make anyone think otherwise, which makes it even harder to decide which is better. Nevertheless, both can be wise financial move depending on the income, needs, and situation.
To further help, here’s a rundown of the things to be considered to see which course to be taken.
Top 4 Considerations before Buying or Renting a House
Below are the most important factors that must be considered whether you are renting or buying a home:
#1. Stability vs. flexibility
Lifestyle should be the top priority when deciding between buying or renting a house. A career-driven person whose work requires relocation from time to time will find renting viable, as well as those who detest commuting or driving to work or school. Buying a house and lot on the other hand will work best for new families or those looking at having their own homes and families in the future.
#2. Length of stay
Determine the period of residence. If one is looking for something temporary, renting is the way to go. It is best suited for those who are looking for a place for the time being, like those from the province who are settling in the city either to work or to study, or foreigners on a vacation or business trip.
But if looking for something permanent, owning a house will be a sound move since having your own home gives you privacy and freedom to do as you wish with the house. If your dream house is located in a gated community, you’ll have the option to enjoy the amenities your community has to offer. The advisable length of stay should be at least (5) years to build equity and at least recover the cost of buying the house.
#3. Market price
The price of owning and renting are significantly different; with the former being more costly than the latter. Research on the current value of houses for sale and for rent and evaluate which will work best for one’s income. Seeking help from a realtor or an agent can also be helpful in determining whether the price matches the property.
#4. Source of income
May it be buying or renting, both costs an arm and a leg. Financial stability is required, especially in buying a house since the monthly payments can be pretty penny. When deciding whether to buy or rent, consider source of income and only take the option that can be sustained. Buying wouldn’t be a first choice for many because of the mortgage but renting also requires monthly payments.
Now that we have established the qualifications and obligations expected when renting or buying, let’s now look at the pros and cons of both.
Buying a House: Important Things that You Should Know
Homeownership is deemed an investment of a lifetime; literally not metaphorically. Yes, it is expensive, but it’ll be worth it once the last payment has been accomplished.
Having a permanent roof over your head and not having to think about the consecutive rent increases and lack of freedom trumps all the drawbacks of buying a house such as high mortgage or expense
Given that, here’s an extensive discussion of the advantages and disadvantages of buying a house:
The Pros and Cons of Buying a House
- Renting isn’t a long-term commitment which give renters the ability to move out if the house doesn’t work well with them until they actually settle for one place.
- Renters can live in urban areas or anywhere they choose and want; near their work, school, and other establishments.
- All expenses on the house, like maintenance, repairs, upgrades, replacements, insurance, and taxes are shouldered by the owner and not the renter. Sometimes, utility bills are also assumed by the landlord.
- Moving out is easier, especially when career or opportunity entails change of address. Renters can easily leave the property without having to pay for any of the fees house owners usually pay when they move out of the house.
- Renters save money since all house costs is paid by the landlord and they can share the rent with other people to lessen their expenditure.
- No need to worry about the immense down payment, loans and the value of the property not appreciating.
- Renters, depending on the place they’re renting, can enjoy amenities such as pools, courts, fitness certain, etc. for free or at a bargain.
- There’s no satisfaction of owning a house. Most people have dreamt of having a house, but owning one in our current economic situation can be next to impossible. Renting may be a good for a certain period of time but the fulfillment of owning a house is still different.
- Renters don’t enjoy creative freedom in terms of decorating the place or reorganizing the furniture because the landlord or owner sets the entire place. Although they can do tweaks, they still have to ask for their landlord’s permission. If the renter is unlucky, he/she can’t even get in new furnitures.
- The amount of renting over a long period of time can equate to the value of purchasing an actual house.
- Landlords customarily have rules and regulations all renters should abide, particularly when it comes to pets and visitors.
- A rented place is typically small and have less space for all the renter’s things and needs. As a result, renters have to adjust and can only bring limited things that will fit in the property.
- Rental fees are mostly not fixed and is decided by the landlord or owner, and they can raise it up anytime they want.
- Renters can be kicked out anytime when the landlord or owner decides to sell the place, end the lease, or have someone else rent the place.
- Renters don’t enjoy the same tax benefits homeowner do like mortgage interest payments and property taxes deduction from their tax return.
5 Basic Tips to Make the Most of Renting or Buying a Home
#1 Check the Property Size
When looking for a place, one should consider the number of people that will be residing in the house and if it fits and has all needed. Does it have enough rooms? Is the kitchen and dining big enough? Does it have a parking space? A backyard for kids? How about storage space? This can be tricky especially when renting since most rented places only have limited space. This isn’t any different from purchasing a house, given the property size against the price. Houses can cost millions of pesos but can only fit one person. Choose a place that will fit all needs and people but consider its price as well.
#2 Get a realtor or an agent
House values both for purchase and lease vary from one place to another, and sometimes, the property doesn’t justify the price. It’s hard to identify which property is better leased or purchased, so it is suggested to seek help from a realtor or an agent. These people are experts in everything about homes and they can help not just to look for the right place but also score the best deals that one can get.
#3. Consider Accessibility
With our country’s traffic getting worse each day, it is best to choose a place that is adjacent to all the important establishments such as workplace, school, commercial establishments, hospitals, etc. Living near these place can save anyone a lot of time and can be cost-effective especially for those who are driving around the metro or commuting.
#4 Assess the Location
When choosing for a location, take into consideration the neighborhood. It’s hard to live in a place where one isn’t welcome or the neighbors act as if they’re the only ones living there. Another thing to consider is to evaluate the place if it’s accident or disaster prone. With global warming taking its toll, calamities are not very far behind. Choose a place that has great flood control and isn’t a fire hazard.
#5 Apply for loans
It’s no secret that houses are outrageously priced and there’s no way that we can get one in a snap of a finger. Fortunately, there are a lot of platforms to seek loans in getting a house, and are actually made easier. Though there are qualifications that need to be met in order to be eligible, it’s still attainable. Just be sure to get the loan that the end will be accomplished as agreed.
Whether buying or renting, be sure that the decision is prudent and well-thought-out. A house is a huge responsibility, regardless if bought or leased. Although buying a house would be an achievement, it is not a prerequisite to be considered successful. Renting is a great substitute if one really wants to purchase a house but not necessarily a waste, as many people claim, especially when one can’t afford house at the moment. Word from the wise, only take what you can and not bite off more than you can chew or you’ll be the one on the losing end.
What’s your take on this? Do you prefer buying or renting?