Should You Rent or Own ?
Should You Rent or Own a House? Well, that’s a tough question to ask to anyone. You cannot say yes or no straight away without analyzing relevant factors into consideration. Sometimes, you would better off renting even if you have the money to buy a house in your favorite location. There are several factors such as location, costs, mortgage payments, your personal goals with your home and your financial condition associated with your decision to rent or own. In order to provide you a better comparison, here are a few important factors and their applications with renting and buying a house:
1. Costs involved with owning and renting
In the case of renting a house, generally your monthly costs are going to be relatively lower than when you buy a property as purchasing include more costs attached with different factors such as not needing to outlay any upfront costs such as a large down payment and monthly added costs such as utility bills, home maintenance, property taxes, mortgage, furnishing and decoration etc which can be different or same over a year. Mortgage will also include a certain percentage of interest to be given to the bank. If you buy a property, you should always be prepared for some unexpected maintenance costs due to any emergency, such as a replacement of hot water tank, new roof, or appliances . However, when you rent a house, you just need to pay a fixed monthly cost, rent and payment for damages. But the flip side is you are building equity in your home as it should be increasing in value over time. Whereas with Rent it is gone and not recoverable.
2. Investment Opportunities
There is no investment associated with renting a house as all your money will go to your landlord whereas in case of owning a house, your mortgage will definitely pay off eventually.
3. Maintenance Costs with owning a home
If you rent a house, you are not supposed to be responsible for repairing costs but if you own a house, it’s you who is going to pay for each and every repair in the house. Sometimes they can be quite costly if you suddenly have to replace the furnace or hot water heater or other major repairs.
4. Income Streaming
It is highly unlikely yet somewhat possible to rent out or sublet the rooms in the home you’re renting out but it’s easier to create a passive income stream if you personally own a home.
Renting a home is associated with relatively lower commuting costs as you can usually find places to live in generally unaffordable housing to buy . On the other hand, if you own an affordable house in a suburb region, you are more likely to spend more money and time on commuting. However, it can be more if you are renting a home in prime areas as it will have higher rents.
If you rent out a house, you can move out easily whereas if you own a house, it would be difficult for you to move out as it may be associated with mortgage penalty and time involved in preparing the home for sale and listing and showing the property.
How to Decide?
Not everyone will have the same circumstances. So the answer will not be same for everyone. Top real estate agents recommend that you should ask yourself these 4 questions yourself and then decide whether to rent or own accordingly:
- What type of house you actually want both in long term and short term?
- What’s your financial condition to buy or rent a house?
- When are you planning to move again?
- Does home ownership have significance for you or not?
It is generally a better idea to own then to rent if you are able to come up with the down payment necessary and you can qualify for a mortgage. The only time it would be better to rent is if you are in a down turn in the market and you sold your home at a high price and now prices are dropping. Then you can rent for a period of time and if you can time it right you can get a deal on your next home. But this can be risky and once you are out of the market for a period of time it can be difficult to get back in. It can be harder to qualify for a mortgage again and to come up with down payments necessary.
Contributed by : Greg Clarke Kelowna Royal Lepage Realtor. If you are considering buying or selling a home in Kelowna Contact Greg Clarke at 250-869-9119 for a Free consultation to help you to have all the information needed to make a smart home buying decision.