BuyiNG VS RENTING
There are several blogs revolving around this topic – whether buying or renting is better, which one is more advantageous than the other. Some try to intentionally weigh up buying and some try to weigh up renting based on bias.
What is less commonly seen, is people talking about preference. Which one do you think would be better fit for you? Which one do you think suits your lifestyle? There are several factors when it comes to choosing between buying or renting, and they are all pertaining to your personal needs and your lifestyle. Circumstances make buying and renting different for several people around the world, and it is not advisable to follow somebody else’s steps in matters that can be so personal to someone. It is obvious that there are cost differences between both, but there are intangible differences that matter the most when it comes to buying or renting.These are the kind of questions you should ask while thinking about buying over renting or vice versa:
- What are your financial plans or family goals?
- Are your plans reaching towards the direction of a long term or short term
- Are your options more geared towards stability or flexibility?
- How long are you planning to stay, or are you planning to stay at all?
These are some of the basic starting points to consider when it comes to thinking about whether to buy or rent a property/home. They merely provide you with a roadmap or guidance to help you to reach the ultimate decision.Your roadmap to rentingIf you’re someone who has more of a short term plan in terms of finances and lifestyle, then renting would be a preferred area of choice. There are several times where people are not secure within their jobs and think it would be more suitable to keep moving and remain flexible rather than stable, this is one of those situations where renting may be ideal, because you’re not responsible for anything related to the property, and you can simply pack up and leave based on your own needs.A significant difference is that there is no hassle with regards to selling the property because the process itself takes a lot of time, and there is no promising that you would be able to sell the property for more value than you originally bought it for, based on market value. With renting, that area is ruled out completely. You might even be renting in order to build credit points for when you might want to own a house in the future, and it would be ideal to wait until you can either afford enough to buy a house on your own or build enough credit to finally attain a house on a mortgage basis. If you choose to rent for a long time, the rent will stick with you for a lengthy period and you might end up paying more when you rent than in comparison to when you buy – this is subject to the rent, how much it increases or decreases as the years go by, etc. Another thing to keep in mind would be the fact that once again, selling the property is not in your hands. If the landlord decides to sell the property to a different owner, you might not be able to live there and eventually have to move out, making stability quite difficult in a situation where a home is rented. Your roadmap to buyingIf you’re following a long term financial and lifestyle plan, it would make sense for you to buy instead of rent, because it would mean that you probably have plans to live in that particular place for a long time. If your family has established itself in one place, and work-wise, it is convenient for you to stay in that one place, it could secure your stability and be of great benefit to you. Lifestyle and personal plans are some of the most personal reasons why one might want to choose to buy over renting and these are the attributes that should first be taken into account before you actually start making the tangible calculations/comparisons between both options.On the practical side, you would probably need a lot of money on the forefront in order to buy a home or property as well as the entire process of paperwork. If you don’t have the time, money or patience to handle such things, buying would most certainly not be ideal for you, and it would make more sense to wait it out rather than impulsively making the choice to buy at that point. Purchasing the property with the mere expectation of the value going up would be a gamble, speculation. You can’t speculate, nor can you predict the future.
Here is an example of how a couple were not able to manage mortgage payments due to the husband losing his job in between the process.If you buy a house with the intention of living in it, you might lose money over the years aside from your mortgage payments in terms of the fact that you would be in charge of all the fixing and remodelling that might need to be done to it. Even though the expenses will drastically reduce after the mortgage has been paid off fully, you would have lost a lot more money and the cash flow would not be rolling in much of a smooth manner.If you buy a house with the intention of not living in it and would rather put it up for rent so that you could earn rental income from tenants, this could benefit you even more in the long run, because rental income is more certain than price appreciation. The rental income would mean that you have a monthly income from the property purchased, and once you have paid off the mortgage, you will become the legitimate owner and be able to save much more at the end of it, in retrospect.Since it takes such an intimidating sum to invest in a property, Smart Crowd is a niche that is able to balance ownership along with cash flow. It is now possible to own a share of a property with minimal capital along with earning rental income from it. For a more detailed view about financing your real estate investments, check out our blog on “how you should finance your real estate investment“.
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