How to Decide Whether Buying or Renting Is Right for You
by Rebekah Bell
When it comes to life’s greatest questions, there are some things that are constantly being debated: Chicken or egg? Pepsi or Coke? Renting or buying? Although there’s no definitive right or wrong answer when it comes to figuring out the benefits of buying vs. renting, there are several pros and cons to weigh before making a final decision. Here’s everything you need to keep in mind about the advantages and disadvantages of buying vs. renting.
Pros of Buying
For many people, buying a home is part of the American dream. And conventional wisdom has long held that it’s a worthwhile investment instead of chucking monthly rent payments at a property you have no equity in. One of the most tempting aspects of owning a home is the ability to have complete control when it comes to remodeling and redecorating. Because you’re planning to be there for the long haul, you can invest the necessary money on renovations and upgrades to turn a house into a dream home.
Buying a home can also have financial benefits. For starters, you’ll own a major asset and receive some notable tax benefits. And if you finance with a fixed-rate mortgage loan, you’ll know the exact amount you’re expected to pay on principal and interests for the duration of the loan instead of being caught off guard by unexpected rent increases. Homeownership also can add stability, especially for your kids: Research from Harvard University has shown that children of homeowners tend to have better home environments, higher cognitive test scores and fewer behavior problems than children of renters do. Plus, there’s something really special about being able to make memories in the same place year after year.
Cons of Buying
Though buying a home often seems like an appealing prospect, it does have some downsides. For starters, saving up enough money for the traditional 20 percent down payment can be a major barrier. If you don’t have a high-paying job or are worried about job stability, it can also be difficult to gauge whether you’ll have enough money coming in each month to easily meet the payments. Although homeownership often feels like a marker of adulthood, you might potentially make more money over time by investing in the stock market instead of opting for a real estate asset. In addition, you’ll have to pay thousands of dollars a year in property taxes. And, since you own the home, you’re responsible for any maintenance issues that occur, from flooded toilets to broken air conditioners.
Pros of Renting
If you value flexibility, you might want to opt for renting. After all, it’s much easier to pack up everything on a whim and move to a new part of town (or an entirely different city) when you have a month-to-month lease instead of a 30-year home loan. For those who are just starting out in a career or interested in exploring an area before putting down roots, renting can provide a valuable sense of freedom.
Renting is also a good option if you don’t have enough money for a down payment, don’t want to worry about paying yearly real estate taxes or would prefer to put your money in the stock market or spend more money on international travel instead of chipping away at a mortgage. It’s also a good option for those who want to enjoy their living space without worrying about the hassle of maintenance and home repairs. There’s also no risk of home price depreciation, which can reduce stress and headaches that may stem from the economy crashing or taking a major nosedive.
Cons of Renting
For many, one of the major cons of renting is that you spend a lifetime paying money without ever having a real estate asset to show for it. That means you’ll never enjoy the perks of homeownership or the wealth that can potentially be generated from owning a property outright. Because rent payments will continue to rise over time, you might eventually find that your rental payments exceed the amount you would be paying on a monthly mortgage.
You’ll also have to deal with a landlord or management company, which can sometimes be frustrating. And you may feel a sense that your time in a rental is more temporary and uncertain, which might create less stability.
There’s a lot to consider when it comes to deciding whether to rent or buy a home, so it’s a good idea to make a list of your personal priorities to determine which is right for you. Whether you decide to search for the house of your dreams or want to find the perfect new apartment, reach out to the Suarez Team to help guide you through the process and help you find a place that you’ll fall head over heels for.
Rebekah Bell is a writer who lives in Los Angeles.