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.