In this article, I will share what is better, buying or renting a house. Well, that depends on a lot of things like property price, the average rent on the market, availability of mortgages, and tax benefits. Plus, the advantages and disadvantages of a property will also affect the decision to buy or rent a home in a particular neighborhood.
So here are a lot of things to consider before you make the financial decision, whether to buy a house or rent it. It’s a personal choice that can vary with time and the money you have.
But here, I will help you to make the best decision in your current financial situation with some proven reasons to buy or rent a home. So let’s first start with the financial decision.
Which one is Cheaper, Buying or Renting A House
Tell me, what do you think is cheaper, buying or renting a house? Some will say renting is cheaper as you don’t have to put all your money into one place, and you can use that money for other investments like stocks, mutual funds, or even other real estate investments.
For example, if you have $100,000 in your bank, you will put $20,000 as a down payment to buy five houses, not just one, by paying the whole $100k amount on buying one property.
That is the advantage of renting a home over buying. But managing those five EMIs can bring a lot of sleepless nights, and that’s the biggest disadvantage of it.
If you don’t have a security option or any risk management option in place, then it’s recommended that you buy a house. So you can sleep well.
It is one of the factors that can influence your decision whether buy a house or rent it. There are many other factors that you need to consider before making the final decision that I will share next. Read on.
Table of Contents
Buying a House Pros and Cons
Now, focus on these advantages and disadvantages of buying a house over renting.
- You can build equity by paying each of your mortgages.
- There is no landlord to run from when the rent time is near.
- You can have more stability.
- It has many tax benefits, especially if you are buying it in your wife’s name.
- It gives you the opportunity to upgrade your home according to your taste.
Got it? Now let’s see the disadvantages.
- It requires lots of money to buy a house.
- The paperwork will push you to go mad.
- There are many extra expenses with your mortgage payments.
- Home prices are increasing rapidly in the country.
- You will become responsible for what happens to your house, not the landlord.
If you do not like these ten PROS and CONS, buying a house is not for you. You should rent it and save your money. But wait, do not decide before knowing the advantages and disadvantages of renting a house.
Renting a House Pros and Cons
Don’t worry if you don’t have the money to buy a house. Rental properties can help you out. Here are the advantages that I was talking about.
- It has low initial costs to get possession.
- Less paperwork is needed.
- Has the freedom to move anywhere.
- Only a few or no responsibility for maintenance.
- It builds credit month by month
- No property tax bills for tenants, mostly.
- You might have to pay a higher rent depending on the market condition.
- If the landlord decides to sell the property, you have to relocate within a short time.
- Your rent builds equity for the landlord.
- Vacancies will remain low in a bad rental market.
- No tax benefits for you to apply (mostly).
- Very little or no freedom in rehabbing the house on your own terms. You have to ask permission for it.
In short, if you rent a house, you will be controlled by the landlord. Look, no one wants to live on rent for life. Everyone wants to buy their own home. They rent because they can’t afford to buy or don’t want to commit.
Your reason might be different. But renting saves you money and gives you less freedom and the opportunity to invest in other pieces of stuff.
Buying a House vs Renting – The Emotional Part
Buying your own home is always an emotion, no matter what you talk about finances. Now I will share with you three emotional things that affect the decision either buy a house or rent it.
- What do you want, commitment or freedom? If you are getting married, then you need a house. You are making a commitment. But if you are a young person, renting might seem a more suitable option as today’s enough generation wants to make an investment.
- How long will you live there? You will say not much, maybe five years. Because your company may send you to a different place. For that, renting is smart. But if you want to live there forever, then buying is better.
- Income and credit score: These are financial options, but it also includes, some emotional attachments with them. If you want status and want to show people that you earn good money, then buying a good house is all you need. And credit score will help you be a great customer in the eyes of the bank.
Now tell me, are not these emotions attached to buying a house or not? What is better, buying or renting a house? That’s up to you. But if you can’t decide, here are my personal tips for you.
What is the best for you Buying or Renting
Now the choice will differ from person to person, but after answering these questions, you can make your final decision.
- How much money can you afford in a mortgage payment?
- How long do you plan to stay?
- Do you want to commit or want freedom?
- Can you do little home repairs?
- What are your financial goals?
- Do you plan to move to a different city for work?
- Is the neighborhood affordable?
After answering these questions, you will know the inner voice of your decision. Ask, and you will get an answer.
So what is better, buying or renting a house after understanding all these advantages and disadvantages? Can you handle your emotional part, and do you have the answers to those questions? If yes, go and buy it. I hope this article will help. Thanks for reading.