Renting Vs. Buying: What Is the Right Choice for You?

“Should I buy a house or keep renting?”

If you’re looking to move, for any reason, this is probably the first question that you’re going to need to answer. It sounds simple and straight-forward enough, but every homebuyer has different needs and circumstances. There is no “one size fits all” solution. Unsurprisingly, what’s best for a couple expecting their first child may not be best for a single buyer right out of college!

Every scenario begins with the individual evaluating the choices from their own vantage point and deciding what would work best for them at that point in time.

Some questions to ask yourself would be:

What does life look like for the next 5-7 years? Stable or ungrounded?

Is there a possibility of relocation for work or any other reason?

Are there any possible big life changes happening in the near future, like marriage or pregnancy?

How is the health of family members? Could that become a factor to you?

Do you need flexibility or can you put down roots?

Are you prepared for higher and possibly unexpected expenses?

Each of these questions should be considered with great thought. Buying a home is a huge commitment and not able to quickly change, so understanding every aspect of the decision before going through with it is paramount.

If you’ve asked yourself the personal questions and are still not sure which option would be best, it’s time to evaluate the benefits and possible drawbacks of each.


The Pros of BUYING

Long Term Stability & Security
It’s really no surprise that one of the most enduring reasons to buy a home is to build a foundation of stability for yourself and/or your family. There are plenty of other benefits, but understandably this is the one that draws people in first. Knowing that you have a roof over your head, a kitchen to store food, and a bedroom to sleep in at night that belongs to you gives a great peace of mind. If you’re looking to put down real roots for the long term, buying is the way to go.  

You Can Build Equity
The word “equity” is thrown around a lot when discussing the financial aspects of buying a home, but what does that mean exactly? By definition, it’s the difference between what you owe on your mortgage and what your home can be sold for. Essentially, “building equity” means that you increase your stake of ownership in the house over time. It happens by paying down your mortgage through the years and/or buying a home that becomes worth more than you paid for it. It’s not always guaranteed that a home will appreciate in value, but more often than not, it will. As you move through time, the equity that you build in your home can be used as another line of credit for you if necessary. It can take some time, depending on your specific situation. With rates rising over the past few years it’s taking buyers much longer to “break even,” especially those with <1% of a down payment. Regardless of the amount of time it takes, it is still a good resource for homeowners to know that they have in their back pocket. 

Your House, Your Rules, Your Responsibility
Do you want to paint bright yellow walls in the living room or install colorful wallpaper in the half bathroom? Do you want to tear down a wall and make the living room and dining room join into one open space?  If you buy, you can try to do whatever your heart desires! Try being the key word here. There are always physical limitations to what can and can’t be done, but no one else can tell you that you aren’t allowed to try. You get the final say on what goes on in the home, from trim styles and paint colors down to the air freshener scent. It’s all up to you, for better or worse.

YOU Can Be The Landlord
Owning a home opens up the opportunity for a possible income flow, depending on the needs of the owner. If for any reason the owner does not need to live there, or can’t for whatever reason, they are able to rent out the property at their own discretion. This is dependent on the type of home and/or any applicable homeowners association rules, but a real possibility for owners who are willing and able. The option to have another income stream is always good to have in your back pocket!

The Cons of BUYING

You’re The Maintenance (Wo)Man
One of the biggest adjustments in the jump from renting to buying is the responsibility of home maintenance and upkeep. If you are renting a home/apartment and the furnace breaks or a tree falls through the garage, most likely you’re calling your landlord and they are taking care of it from there. If you buy a home and something goes wrong, it’s all you. You’ll be the one making the phone calls and footing the bill for any necessary fixes. These issues can pop up at really any time, so buyers must be aware of the possibility that at any moment they could get a multi-thousand dollar problem dropped at their feet. Sometimes multiple at the same time. That’s not often and is not meant to scare buyers away, but it’s important to consider and be realistic about.

Costs of Ownership
As touched on above, the up front and long-term costs of homeownership are usually the biggest barrier to entry and con to any potential buyer. Between property taxes, HOA fees, fluctuating mortgage rates, down payments, maintenance and any other unplanned expenses, it can start to get pricey to take on buying. There’s no guarantee that things will start to go wrong once the title is transferred to you, but there’s no guarantee they won’t either. To be a homeowner, you and your wallet must stay prepared for anything and everything. 

The Pros of RENTING

Flexibility Galore
One of the main draws for renting a home or apartment in any city is the flexibility that it provides for movement. We all know that life can be crazy and unexpected. Being able to roll with whatever punches come your way and change course when necessary is a lot easier when you aren’t responsible for a physical property of your own. Sure you could rent it out if you had to move, but you would still be the owner at the end of the day and saddled with landlord duties. If you aren’t able to commit to that, renting is going to be ideal for you.

Less Upfront Costs
The financial barrier for renting is significantly lower than the barrier to buy. When buying, you need to have a down payment ready amongst many other expenses right off of the bat. Some examples are the inspection & appraisal fee, any necessary fixes, taxes, moving supplies/movers, whole home furnishings and more.  To start renting you’ll probably need a security deposit and/or first/last months rent. That’s not nothing, but it definitely isn’t a down payment. 

Not Your Responsibility
Every homeowner has firsthand experience in “Murphy’s Law,” the idea that anything that can go wrong, will. Ask anyone who has bought a home how quickly they had to fix something. Odds are most will have an answer of “within the first few weeks.” When you own a home, every fix, big or small, falls on the homeowner. By renting, the possible overhead of maintenance gets essentially eliminated. Toilet broken? Call the maintenance department of your apartment. Heating on the fritz? Call maintenance. Garbage disposal not disposing? You guessed it, call maintenance. If you don’t have an emergency fund for many possible issues, which is less and less likely in today’s economy, renting may be the better financial move.

The Cons of RENTING

Less Space & Storage
Why do many renters decide that they want to buy a home? They don’t have enough space where they are! You can grow out of a place for a lot of different reasons, but once you start, it only becomes more and more apparent as time goes on. Typically smaller, an apartment can become cramped much more easily than an entire home. A lot of apartments have no basement or other storage spaces either, so it limits the tenant quite heavily.  

No Renter Perks
Buying a home is an investment. With every dollar that gets paid, a return on investment grows for the homeowner. You can’t say the same about renting. The money you pay to rent an apartment goes straight into the landlords pocket, helping their own ROI and leaving you with nothing to show for it. Your payment is purely for a roof over your head. Which is important, don’t get us wrong, but it isn’t helping to build equity for the renter. Possibilities like a homeowner line of credit for renovations or expansion aren’t even on the table. Not everyone is looking to grow their money and invest in their space, but if they are, renting may not be the best way to go.

Landlord Rules Only
Because owning property is such an investment, landlords aim to protect theirs however they see fit. That means their way or the highway! Whether renters like the rules or not, they don’t get a say. If a landlord doesn’t want pets in the property, even if there’s a huge fenced backyard available, it means no pets. Unless the landlord is a close personal friend, usually a renters opinion is not sought out or listened to. That’s fine for many who like to stay hands off, but if you want to be able to have a say in the rules of your home, you may want to reconsider.

 

Again, there is no blanket “best choice” for everyone when it comes to the renting vs. buying debate. Every situation is different and needs vary from one family to another. The best thing that you can do is ask yourself the questions we mentioned earlier, do your research, and make the most informed decision you can.

If that decision ends up being to buy, we’d be happy to help you with the process start to finish. Give us a call today to talk about your options!