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  • Writer's pictureElken Miller

Sooner or Later......The Buy or Rent Dilemma


One of the toughest questions to answer in real estate: Do I continue to rent or do I buy? There are many reasons why the question is not so easy to answer. While some of the reasons make sense on both sides of the debate, depending on your individual circumstances, you can be right on either side. Let's take a look at the pro's of these two opponents.

ADVANTAGES TO BUYING ++++


Privacy: When you rent, the landlord or an employee of the landlord, may enter your home at any time. How secure does that feel? When you own your own home, you alone make the rules of entry. Your home isn't owned by someone else, and no one has the right to enter without your permission.





Investment: A home is a long -term investment. If you buy a home as a primary residence, it can increase in value over time and provide a financial windfall when you sell. Buying a home is a good investment. There are times when the market may decrease the value of your home, but a typical home increases in value year-over-year with a value higher than having your money sit in a savings bank.



Build Equity: When you build equity, it means that you increase the difference between your home value and the amount you owe on your mortgage. You can do that by increasing your home's value, like making improvements, or decreasing the amount of money you owe on your mortgage by making extra payments along the way.



Pride in Ownership: There is no other feeling than owning your own home. Homeowners take pride in their home by making improvements and working hard to maintain their property. Personalizing your own home helps your house feel special and unique. You can typically tell when a neighborhood is filled with homeowners vs. renters.









Strong Community Ties: Being a homeowner in a neighborhood of other homeowners often leads to a sense of community. You get to know your neighbors, attend community events and have the feeling that you belong. Communities are inherently about relationships with others and a feeling of connectedness, which have a major positive impact on mental health. Without community, people may feel more isolated and lonely. Psychologically, owning a home often imparts a sense of permanence and stability to homeowners. If you buy a home and you have (or intend to start) a family, a home can serve as a haven for children and adults alike.


Tax Incentive: A Mortgage Tax Credit Certificate (MCC) is a tax credit issued by the government directly to a homeowner that allows them to reduce their tax bill by a specific percentage of their mortgage interest. The IRS allows homeowners to deduct part or all of their property taxes and interest paid on mortgage loans on the itemized form. These deductions help lower your overall taxed income.



Customize Your Home: Your home is yours, which means you can do whatever you want to it inside your 4 walls. If you live in an HOA community, there will most likely be restrictions on what you can do on the outside (paint colors, landscaping, adding an addition, fencing), but inside have all the fun you want. Without an HOA, you can drive home to your customized pink house with purple doors!


Pay YOUR Mortgage Instead Of Your Landlords: Every monthly payment you make on your home is to pay off your debt, not someone else's. When you rent, you are actually paying your landlord's mortgage, which builds up their equity in the house you are living in. At the end of a year or two or five, your landlord will have paid off that many years off their mortgage, but when you move out, all you have to show for it are your belongings.





Build Personal And Generational Wealth: Buying a home provides you with personal wealth over time. You typically need to live in a home for five years in order to break even on your purchase, but generally, your home will continue to increase in value with time and you will continue to owe less on it with each monthly payment. The home you bought for $450,000 in 2023 will most likely be worth $600,000 when the mortgage is paid off. If you pay off your mortgage you'll hold 100% equity in your home. You can pass this wealth down. Wealth that grows and helps support future generations is called generational wealth.



ADVANTAGES TO RENTING ++++

Short - term Commitment: Most leases require a minimum of a 12 month commitment, but some allow for shorter terms (3 -6 months). This allows you to have freedom to move after your lease is completed, giving you a chance to experience different neighborhoods or try different types of housing (single family home, townhouse, duplex, apartment) BEFORE making a commitment!


No Maintenance Cost: Repairs and maintenance costs for living in a rental typically defer to the landlord, so you can put away your toolbox! When things start breaking or falling apartment, you will not need to pay for it. Some landlords put specific things they will and will not cover in the lease, so read it carefully.


Access to Amenities: Many rentals, especially if you are renting a condo or a house in a newer built community, offer access to a pool, workout room, playground, club house, business room, and/or dog park. These are great amenities that a renter can enjoy without having to pay the monthly fee.


No Real Estate Taxes: Real estate taxes vary from state to state, city to city and neighborhood to neighborhood. Regardless of the taxes, renters will not be responsible for them.







No Down payment: You will need to provide first and last months rent and a security deposit, but that is a minimal amount compared to the down payment you would need to purchase a home.





Lower Insurance Costs: Many renters don't know that renter's insurance is required in most states, however the cost of renter's insurance is significantly lower than a homeowner's insurance.






Flexibility to up-size or downsize: As yours and your family needs ebb and flow, renting gives you the freedom to move into a larger or smaller home. You won't have the burden of first selling your home in order to live somewhere that fits your needs.















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