You may have come across articles answering the question if buying or renting a home is better. They present strong and valid arguments on both options. Part of the American dream is to have your own home hence many prefer homeownership in the US. However, single-family rentals grew by 3.6 million units and apartments by 3.2 million in the last ten years following the housing crisis in 2007.
For small and starting entrepreneurs who earn enough to get by, owning a property is not an instant decision they can make. In the same way, you may not want to rent a space all your life. After all, a house is a future-proof property for you and your family. Following this logic, the wise decision is to rent before you have the capacity to buy.
Rent vs. Owning
Renting is bound by a lease contract. You pay your dues to your landlord on a monthly basis, depending on what you have agreed upon. After your lease expires, you can move to another place which makes renting a flexible option. A common misconception about renting is you are wasting money. People will always need a place to stay in, and you will have to open your purse one way or another. You may not be building any equity, but you can avoid sudden costs such as repairs and home improvements. These maintenance costs are included in your rent and you have an accurate gauge of your housing cost each month. However, your landlord can increase your rent especially when your contract is up for renewal.
On the other hand, owning a home means that you are entitled and responsible for your property. Homeownership provides you a sense of assurance and stability. Although, the notion that a house is an investment is not always true. Some earn loads of money in investing in real estate. Some may be lucky to find their property’s resale value significantly mark up after years of ownership. However, it is hard to predict if your neighborhood’s market price will go up or down. The relocation of a major employer in your vicinity or a surplus of housing could cause the stagnation of your property’s value. Hence, your primary reason for buying a house should be for your personal convenience.
Costs of Homeownership
By buying your own home, you are building equity. Hence, you will have a higher overall cost compared to renting. Even if your monthly mortgage payment costs as much as your monthly rent, other additional expenses come with homeownership. Here are some things you‘ll be paying for that you wouldn’t have to as a renter:
- Property Taxes
- Garbage pickup
- Repairs and maintenance
- Homeowners Insurance
- Disaster-related insurance
Another thing you will have to deal with is the permanence of your home. You can’t choose who you want as neighbors. More importantly, you can’t decide on your taxes. While your property’s value increases in an economically booming city or town, your property taxes do that too. And if your salary does not catch up with those increases, you may find yourself unable to stay in that house.
Why Rent Before Owning?
While the facts laid out may seem daunting, it is not to discourage you from owning your house. As long as your property’s value does not depreciate, you will build equity that you could liquidate in the future. Although, profit must not be your primary goal for owning. To buy a house, you have to be ready for a long-term commitment both financially and with your lifestyle.
If you feel your business will be more marketable in a different area, renting makes relocation easier. It gives you fewer immediate expenses to worry about as well. The market is full of renting options suitable for your paying capacity. Precondo is an example of a website you can check out for different options in different areas. Until you’re ready to commit to homeownership (or not), renting will always be a secure choice.