We all reach that decision at some point in our lives; do I keep renting, or bite the bullet and buy a house? There are pros and cons to each side of the renting vs buying a home debate, and a lot of it will depend on your particular situation. However, there are some general thoughts that may help you make the decision. So let’s look at the pros and cons of each so you can determine if it is better to rent or buy a house.
Renting: What It Offers You
Most of us have rented at some point in our lives, and there’s a good reason for that. Renting is ideal for individuals who aren’t ready to settle down yet, and who haven’t quite built up a long enough work or credit history to be seen as a good risk for a loan. Renting is also good for individuals who want to keep their options open when it comes to changing jobs and locations in a hurry. Renters have the freedom to move out at-will, whereas owners still own that property even if they aren’t using it.
Additionally, renters have an on-call maintenance person for their needs. So whether it’s a backed-up toilet, a broken sink, or an electrical short, you can call your landlord and get it fixed in a reasonable amount of time at no extra charge. Some houses and apartments might also have additional perks, like a fitness center or swimming pool, that might be far outside your budget.
Renting: What It Costs You
Renting isn’t all sunshine and rainbows, though, otherwise, no one would ever stop doing it. Because when you pay rent to your landlord, you aren’t building up equity in a place of your own. Even if you stay in a place for ten years, it’s still not yours. Worse, your landlord can decide to not renew your contract, so there’s always a lack of certainty when it comes to renting. Additionally, renting means you have to follow your landlord’s rules. That might mean no painting the walls, no pets, or in some cases no guests past a certain time. You’ll also need to keep the place in the same state as when you moved in, so you’re limited in your painting and decorating choices. If you change the place too much, you’ll end up losing your security deposit, and may be charged other additional fees.
Buying: What It Can Offer You
Buying a house, on the other hand, means that you are able to do what you want, when you want, without fear that you suddenly won’t have a place to live anymore. When you own a home, you have a resource that helps you build equity, and it can give you a solid foundation in your life. Additionally, you have the freedom to make your house truly your own. If you want to hang new doors, knock out walls, strip out the carpet, or get three dogs, you can do that without having to consult someone else to get permission.
Additionally, buying a home has a definite end point, whereas renting will never stop. Eventually, you will own your home, and at that point, you have a place that is truly your own. Your starter home will be a haven for your friends, your family, and you can even use the equity you’ve built up in it when you retire if you need to pay your accounts in order to maintain your quality of life.
Buying: What It Can Cost You
On the other hand, buying a home is a big responsibility. It ties you to an area, and it means you’re taking charge of everything in it. You have to buy insurance, you need to make your mortgage payments on time, and if something goes wrong or needs fixing then it’s your job to fix it. The same goes for taking care of the yard, painting the deck, or changing the outside light bulbs… it’s your castle, and it’s your job to take care of it.
Which One Is Right For You?
Renting vs buying will depend largely on what you want, and your personal circumstances. If you’re a student, for example, or if you’re planning on moving for work, family, or business, then buying a home isn’t going to be the right choice for you. On the other hand, if you’re settled in an area, you want to put down roots, and you want to build something instead of just putting money in your landlord’s pockets, then buying a home is definitely a better solution than renting any longer.
Finding the right agent
Just remember, when you decide to buy a house, make sure you select the right real estate agent. Your agent will help you get from where you are, to where you want to be. We’d love to be the team to help you.
Brady Miller, CFA is Chief Executive Officer at Trelora, Inc. Brady joined Trelora in August, 2018 as Chief Financial Officer. He moved into his current role later that year and is responsible for all daily operations and growth of the broader real estate business. Prior to joining Trelora, Brady was Chief Financial Officer of Leeds West Groups which is one of the largest, and fastest growing automotive retailers in America. Brady managed their real estate portfolio, financing, human resources, and accounting. He earned a Charted from the CFA Institute in 2016 and holds a bachelor’s degree from the University of Colorado, Boulder where he majored in Finance and Real Estate.