The following is an article “Real Estate: To Buy Or To Rent?” by Marc Primo.
Have you ever wondered why on one hand, you know someone who has been renting his home for as far back as you can remember, while on the other hand, you also know someone who has just paid off his mortgage and now lives in a place he can truly call his own?
Things to consider
The difference between renting and buying property isn’t so much about spending power, but more a matter of circumstance. This differs for every individual, with variables ranging from occupation, marital status, and lifestyle, to name but a few.
A young professional who just landed his first job and decides to buy his own home in order to live near his place of work is about as senseless as a married couple with two toddlers and their pet golden retriever renting a studio apartment in a red light district.
When does it make sense to rent?
If, for whatever reason, you are the type person who relocates often, then clearly renting is the sensible option for you. When one does not hold residence in the same place for long periods of time, the purpose of a home becomes more of a short term lodging, versus a fixed asset for those who prefer to settle down in one location indefinitely.
Another circumstance wherein renting is more practical than buying is purely out of convenience. Many people who can easily afford to purchase their own property choose not to because of the never-ending maintenance costs and high property taxes that come with it.
When you rent, your only other recurring expense would be association dues, allowing you to anticipate just how much you will be spending every month. What’s more, when your rented home eventually suffers the inevitable leak or electrical glitch, simply call your landlord and it is his duty to take care of it.
When is it time to buy?
Nothing signals long-term commitment and financial security more than home ownership. Those who typically fall into this category are married couples with children who haven’t left for college yet, and the same married couples two decades later who now live in an empty nest, but are now enjoying the ROI of their property.
For one, home owners need not worry about rising rental rates annually. Those who are paying off their home have the benefit a fixed-rate mortgage, allowing their monthly amortization to remain constant all throughout. And as an added bonus, you always have the option to write off your mortgage interest in certain cases—something you simply cannot do with monthly rental payments.
In a nutshell
The easiest way to decide whether to rent or buy is to ask yourself how long you plan to live in that property for. If the answer is less than 10 years, you’re better off renting. Ten years and beyond, it’s time to become a homeowner.
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