When to Buy? Why should I buy?
Those types of questions a person ask themselves could fill a blog all on to its own.
Let’s keep it simple and look at a few Pros/Cons for Renting and Buying:
Pros of Renting:
- Financial easier to do
- With as little as 2 months rent (1 month for the down payment and the other for the first month rent) to put down and the application fee (on average $40-$50 per adult applicant) — you can be in your rental property by the first of the month or mid-month if needed.
- Allows one to relocate/stay mobile
- If you are not committed to a location or if the location is just a “pit” stop; then renting might be easier. Renting allows you to established temporary roots.
- Everyone knows the rule of real estate is LOCATION, LOCATION, LOCATION: Renting will allow you to “test drive a location to make sure it is the area for you”
- No maintenance
- Assuming you do not have a slumlord, that leaky toilet is not your problem. Pick up the phone call the maintenance person or the landlord; that toilet problem is a thing of the past and your pocket will not feel a thing.
- Regular household checkups for the AC unit and pest control — unless otherwise stated in your lease — will be taken care of by your landlord.
Renting what a life…or is it?
Cons of Renting:
- No control of the rent amount (in between leases)
- The landlord will dictate how much you will spend. If you are confident that you will be in a location for more than a year; than go for a multi-year lease. A landlord (unless otherwise dictated in the lease) can not raise your rent mid-lease.
- Landlord dictates decorating
- Landlords will usually let you paint the walls that electric blue trimmed in purple with hot pink polka dots. Just make sure you white wash over that “Monet” before you move out if you expect your deposit back :-D.
- Now that wall that is not needed and is a bit of an eye sore — No sorry, you can not remove it; unless the landlord gives permission (which is doubtful)
- No equity aka “Rent never goes away”
- In the end, renting is just paying someone else’s mortgage. Other than a roof over your head; you will not get any equity for all the years of paying rent.
- And like I like to remind people — “Rent never goes away and you can count on it to go up”
Pros of Buying:
- Equity
- Shake off the major House decline from 2007/2008 timeframe — real estate is a legitimate investment. As the value of the home goes up and your mortgage debt goes down; the equity in your home goes up. You can not beat that.
- Creative Control
- Now if you have a wall or if you want to add a wall to your abode; there is no one to stop you (Just make sure you get the proper permits and inspections performed)
- Mortgage goes away
Cons of Buying:
- Do not buy more house than you can afford
- Regardless what the bank tells you about how much house you can afford; it is your responsibility to determine how much house you feel comfortable spending. Trust me, I have never found myself arguing with a loan officer that I could afford more house. If anything, I found myself subtracting from the number they gave me and I purchased less house than I could afford. it is a habit that I would highly recommend.
- Wrong location
- If you are a introvert; purchasing a house in the middle of a bustling city; might not be the right location for you. If you are an extrovert; that quiet country living might not be for you. If you know you want 8 kids; that high rise luxury condo – might not be the best option for you.
- My point? No one can determine what is the right location for you. Only you are the master of where you should live.
- HOA/Condo fees
- More and more new developments have Home Owner Associations (HOA) and/or Condo fees. For some people this is a God send. If you have a “Sanford and Son” wannabe next door – the HOA will make “Fred” clean up that junk yard. At the same time, you want to paint your house hot pink with yellow stripes; the HOA might be sending you a letter. So depending on your situation, HOA/Condo fees can be a nightmare that you must pay for.
Which ever path you are currently on — make sure it is a path that fits you. Both paths have pros and cons; if you are trying to make that transition from renting to buying; do not forget to sit down and come up with a game plan. A game plan helps identify what you are working for and towards.
Until next week – From My Family to Yours