Are you Better Off Buying or Renting?

Apart from career and relationship, another major decision in our life is whether to buy a house or not. When we are just receiving paycheck to paycheck every month, it would always cross our mind that we might be better off renting, especially nowadays when we are facing a lot of economic turmoil. But then if we are that type of people that values investment, then buying might be a better choice. To buy or rent a house is a big decision and whatever we make will affect our lifestyle and most of all, our finances. 

Weighing carefully every PROs and CONs of buying and renting a house would be a great help before we dive into this life-changing decision.

We all know that a house is one of the most important possessions in life because this is where we put down our roots. One of the advantages of owning a home is that the owner has an investment that can grow over time and can also be a source of tax deductions. It can also be inherited by the next generations in the family so they will not have to go through all the daunting process of owning one.

Homeownership is seen as a way to build wealth, but it has its own cons, such as losing its value. Circumstances like a significant population decline and a surplus of housing, can cause the value of your home to decline. It might mean that the house you bought for a hundred thousand dollars today might still worth the same after a decade or more. It’s a clear loss of money and worst, your house's worth might decrease over the years. To avoid this, make sure to select a good location for the property and figure your loan first to see whether it would be a profitable move.

Some people want a permanent space and place to build a family and raise their kids, which is why they choose owning over renting. Buying a home is also the only way if you want residency. People who are after these benefits will definitely have no second thought of buying a home.

We can’t deny the intangible benefits of homeownership but it is not for the nomadic type of people. Because real estate is an illiquid asset, it can’t easily be sold whenever you want or if ever you need to relocate to another country because of significant transaction costs.

Another con is the high overall cost of owning a home, definitely higher than the overall cost of renting. There are a lot of expenses that a homeowner has to settle occasionally, monthly, and yearly that a renter doesn’t have to pay such as repairs and maintenance, insurances and property taxes. Adding up all these costs of homeownership, you might be better off financially by renting while investing the money you would have put into a home into a retirement account or a profitable business.

Some of the benefits of renting are predictable monthly expenses, flexibility and someone to handle repairs for you. These mean that when your lease ends, you are free to move without penalty. However, if your landlord decides to sell the property, you have to move suddenly and that can be too stressful to find a new space to live in.

When deciding whether to buy or rent, you have to consider a lot of things - money, comfort and your life's vision. Remember that owning isn't always more sensible and renting is not always a way to save.