Owning a home might be a dream for many. Some say not only is this a sure fire way to increase your wealth, but it's also the mark of success. While the latter two might be true, the question lingers. Should I buy a home or rent an apartment? The concrete answer is that it depends on your current living situation.
Why Renting Makes Sense
There are many benefits when you rent an apartment or even a home. In almost all cases, the landlord is the one responsible for all repairs. So if your air conditioning unit ceases to work or the plumbing backs up, you won't have to bear the costs. Repairs can be costly. And avoiding having to replace air conditioning parts can be expensive.
There are also financial reasons as well. Local governments usually apply some sort of tax on your homestead. You will be required to pay this tax when you are the homeowner each and every year. However, when you rent, you won't be responsible for any taxes. You simply pay the rent each and every month.
Many assume that the value of housing goes up each year. That is simply not true. If you buy at the top of a market or in a bad neighborhood, you may find yourself in a poor predicament. Let's imagine that you did exactly that. Now you may own more on your home than it's worth. Or even worse, you might not be able to sell your home at all. And you surely don't want to give it away at bottom of the market prices.
In addition, the seller (that's you) of the home usually has to pay the full commission on the transaction. Maybe you just wished you chose to rent. We haven't even mentioned the downpayment that homeowners are usually responsible for.
So yes, renting can and does make sense for many. Just because you rent, doesn't mean you are a second-class citizen. Enjoy the freedom of being able to come and go as you like.
Why Buying a Home Makes Sense
Just as renting might make sense, purchasing a home has its own benefits. Over time the price of a home usually does increase. If you plan accordingly and purchase in a good neighborhood with well sought ought schools, you can wager that the value of your home will increase. Yes it make not go up the first or the second year, but if you stay long enough, you will be able to reap the increase in value that homeownership often does bring.
When you rent a place, you are actually paying a fee that is included in your rent. The landlord isn't in the business of breaking even. Let's assume that you own your home outright, and don't own the lender any money. Then in essence, you're almost living for free. At this point, your only debt is the property tax (if applicable).
Also owning a home does bring a certain satisfaction. Although you might not be able to measure this in dollars and cents, it does have an intangible value that renting just cannot compete with. The house is yours, nobody can tell you to leave, or terminate your lease. Just remember that owning a home usually is best for those who have a stable career and/or the wealth to take care of unpredictable matters.
When Renting is a No-Brainer
Of course, there are examples when renting just makes plain sense. Under these circumstances, it would behoove you to rent.
- Your employment outlook is not stable
- Your going to be moving to a different city in the near future.
- You don't have enough money for a down payment.
Andrew Reichek is a real estate broker and is an agent for Rentkidz. This apartment locating company helps renters locating rental property for tenants.