Renting Or Buying A Home – Which Is Better?

By Danielle Russell

Many renters find themselves in a state of perplexity – they often ask themselves at least once, should I keep renting or should I buy a home? And often, the answer to this perplexity is buying a home, especially for those who think of the bigger picture. You better believe it applies even in a crowded market for real estate.

The Advantages of Renting

Renting can have a few advantages depending on the part of the country you live in. Compared to mortgage payments, many rent payments are more inexpensive, which can give you a financial advantage. Serving as another benefit would be the culpability of the landlord towards matters such as house maintenance and necessary improvements and repairs. Unfortunately, renting has several other disadvantages that overshadow the aforementioned advantages.

Renting – What Are the Cons?

Renting, as mentioned, has many major disadvantages. If you have any opportunity to purchase a home or condominium, it almost always makes sense to do so.

The biggest and most obvious disadvantages of renting would be the property losing value. Assume you rent a residence for $1,000 a month and you live in the residence for two years. You will have paid a total of $24,000 in rent, a pure expenditure. You would have nothing to show to your name except $24,000 in cash spent on staying in a residence. Compare this to what your landlord has gained.

Rent payments are closely aligned with a landlord’s mortgage payment. Taking the given information above, let us assimilate your $1,000 rent to the landlord’s mortgage payment. That payment of yours would have gone to your landlord’s mortgage loan as he would pay it down over the two-year span you stayed in the residence. Your landlord, indeed, has everything to gain, not the least the appreciation of the property.

Appreciation, in case you are not familiar with the term, means the increase in an item’s value. If the rental appreciated $20,000 in two years, the landlord has received a windfall. They may have seen a gain of $24,000 in appreciation and payments lowering the mortgage. If only your landlord could give you a plaque of appreciation. Pleasure doing business with you, partner, now on to the next renter!

Now, what would have happened if you had purchased a similar home with similar financial figures? You would be enriching yourself, and NOT your landlord by $24,000, through your property’s appreciation. Renters are probably hearing those violins in the background and expecting their landlord to jump them from behind and identify himself as Norman.

But all is not lost – maybe it’s time you saw the light and bought your own property. YOU should be laughing your way to the bank, and not your landlord.

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Topics: Investing | Comments Off

Tags: family, Finance, Finance and Real Estate, financial planning, home, Home and Family, home buying, home buying tips, Investing, Investing and Finance, mortgage, Real Estate, Real estate buying, real estate selling

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