For years, this topic is still a source of debate.
For millennials, they favor renting than buying. Their point is: why not use your cash on other money generating investments instead?
But for baby boomers, they have a different point of view. For them, buying is better. Their most common reason is that when you rent you’re only making landlords richer leaving you with no house and lot when you retire.
Both have acceptable points.
But which option is better for you?
If you’re on your 20’s, buying a home may not be a priority yet. But years later when you’re on your 30’s and starting a family, this is usually the stage where you start to think. Should you rent or buy a house?
Deciding is hard so here’s a brief look at the advantages and disadvantages of each.
Why you should rent
Are you the type of person who changes jobs often? If yes, renting is the best option because you can move easily. You may rent a house that’s a few blocks away from your office. This saves you of a daily commute or heavy traffic.
2. More savings
If you rent, you don’t have to pay for the house maintenance and repairs, your landlord will be responsible for all these. (Although this would still depend on your lease contract.)
You won’t need to shell out a huge down payment for the house. Upfront costs may only consist of a security deposit, advance rent, and moving cost.
3. Opportunity to use your money on other things
You can invest the money that you would have used as down payment to buy a house. You can use it, too as a capital to start a business. Or just use the money to travel around the world and enjoy.
Why you should not rent
1. Not building equity
It is definitely not an investment. The money you’re spending monthly is simply pure payment for rentals. You won’t own anything in the future.
You don’t own the house so you are bound by certain rules. Conditions might exist. For example, you can’t renovate the house or do some painting or make any alteration without the approval from your landlord. Some won’t even allow you to have pets!
Why should you buy a house?
1. You have a house for your retirement
The house is all yours so you are guaranteed a place to stay when you get old.
You also have the freedom to sell it and use the proceeds for your retirement.
2. Potential income
Instead of being a tenant, why not be the landlord? You’ll get a fixed monthly income if you have your house rented. Or you may try house sharing apps like Airbnb or VRBO for short-term renters. Buying a house is considered an investment if you generate a positive cash flow from the asset.
3. Tax benefits
Property taxes and mortgage interests are deductible to your income tax burden.
4. Full control
You are the boss and you live under your own rules. You have more freedom to modify your home according to your taste and sense of creativity.
Why you should not buy a house
Buying a house can put a strain on your finances. It requires a huge down payment and you’ll be surprised with the numerous fees when you apply for a loan. It is a long-term commitment and a fixed obligation so you have to make sure that you are ready financially and emotionally.
2. Less mobility
You cannot just transfer to a new location whenever you want to. Selling a house is a lot of work. It also takes time to find a suitable buyer so make sure to choose a location that suits your lifestyle and budget.
I know these things are a lot to take into consideration. But knowing the advantage and disadvantages of each will help you make a sound decision.
Take your time and do your research. It’s far better to make an informed decision now than regret about it later.
And whatever option you choose, make sure your choice is aligned with your future plans, goals, priorities, and present financial position.
Track All Your Accounts With Personal CapitalPersonal Capital lets you see all of your accounts in one convenient place. Sign up now for free.
More from my site
Latest posts by Joy (see all)
- Stay On Track with Your 2023 Goals! Here’s How - January 12, 2023
- How To Plan Your 2023 Business Goals - January 12, 2023
- How Social Media Has Changed and How This Impacts Your Business - November 20, 2022
April Estor says
I do believe that renting at a young age it a great option to save up for the future as well. Most of the young ones prefer renting one before buying their own property. Though it’s great to have one when you’re young you should consider if you are having that right amount when having your own house. Anyways, great read and thank you for sharing them. Cheers!
Philip Pasma says
Ah, the never-ending debate! If you listen to Kevin O’leary he says you should only rent if you have a family.
Alaine Michaels says
Buying a house is definitely heavy in the pocket because of its upfront cost but everyone knows that buying a house is one of the best investments you can make. In my opinion, if you are able to finance a home, go for it rather than wasting money on rent when you can pay monthly for a house that will be yours in a few years.
Great information in your article, what are your thoughts on using your self directed ira to Purchase Real estate
A very informative article about real estate investment! People who wanted to invest in real estate must learn the basics in order to understand that it is possible to get high revenue from this.
Very balanced take on the subject, Joy.
Renting does offer a lot of lifestyle and location flexibility, but that can come back to haunt you if there’s an economic upturn with soaring rental prices.
Unless you’re living in a country where rents are capped, but that’s rare.
Owning a home takes a lot more work and planning, but the dividends later in life are usually more than worth it, as is the equity…if you’ve made the right choices.
Ted Chong says
People are working so hard. But, still, a lot of the people do not have the credit to buy a home. To rent or to buy a house? You’re right. The decision is hard. Thanks for sharing this brief guidelines to look at the advantages and disadvantages of each.
Warner Dough says
A lot has been debated on whether to buy a property or to rent it. This article perfectly lays down the pros and cons for both. The smart thing is to evaluate your position and situation and then decide accordingly.
Alan Blake says
There is no fixed answer to whether it is better to buy or rent, but it is not bad to rent and it is not bad to buy, everything depends on your economic situation and market rate.
Before questioning whether the best thing for you is to live rent or buy, be aware of your income and your job stability, but also the value of the home according to the area in which it is located.
Zoe Campos says
Thanks for reminding me that buying a house means that we can guarantee ourselves a place to stay once we get older. My husband and I are not planning to have kids so we considered renting, but the points you stated here really made a lot of sense. It might be a good idea to shop around single-family homes around our area and see if we can buy something.