Renting Vs Buying: Which is Best For You?

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The debate of renting vs buying a property is one that has been around for years. There are pros and cons to both renting and buying, whether it’s for initial costs or future asset plans. Which one is the right move for you, will depend entirely on your position, location, and goals.

Personally, I rented properties for 5 years in cities and rural locations, then purchased a property outright without a mortgage. So that decision was easy, but the main things that need comparing here are the mortgage and rent.

Renting Vs Buying – Is it for you?

The biggest factor in deciding whether it’s better for you to rent or buy is your location. In large metropolitan areas, prices for buying are generally high, and the competition for good rental properties can be fierce.

This means that you’re likely going to be paying more in rent every month than you would if you owned the property outright. However, if you’re looking at a smaller town or city, prices will be lower and there may be more availability in the rental market. So, it’s important to factor in your location, and also your future locations when making a decision.

Another factor to consider is your current financial situation. If you’re not in a stable job, or if your income is variable, then buying a property might not be the best idea. When you’re buying a property, you’re taking on a large amount of debt that needs to be paid back every month, regardless of your income. You have to be prepared to have that burden over you for many years to come.

This can be a big financial burden, and if you’re not in a secure job or your earnings fluctuate, it can be very risky. Renting, on the other hand, gives you more flexibility in terms of your monthly payments. If your income drops, you can sometimes delay your rent, find a cheaper place, or as a last resort, borrow some money to cover it.

You also need to consider your future plans. If you’re planning on staying in one place for a long time, then buying a property can be a good investment. Over time, the value of your property is likely to go up, and you’ll build up equity in the property. You can then use this equity to buy another property or simply sell the property and make a profit.

If you’re planning on moving around a lot, or you’re not sure where you’ll be in the future, then renting might be a better option. This is because you won’t have to worry about selling the property, and you can simply move on to a new rental when you need to.

You should consider the current housing market too, if prices have soared, it’s best to hold off on purchasing a house and waiting for the market to drop. This will ensure you get the best price for the property and can cash in on the appreciation when the market rises again.

One major factor that often gets overlooked here is your credit score. If you have a poor credit score, you might find you are not eligible for most mortgages and the ones you are, will require high repayments with high-interest rates. If this is the case, buying a house will be out of the question until you have worked on building up your credit score.

Consider reading: Ways to save money on a low income.

Pros and Cons of Renting a Property

There are some definite advantages to renting a property:

  • You have much less responsibility than if you owned the property outright. Your landlord is responsible for maintaining the property and dealing with any repairs that are needed. This can be a big advantage, especially if you’re not very handy, or you don’t have the time to deal with repairs.
  • Freedom to move much more easily than if you owned a property. If you need to move for work, or you simply want to live somewhere else, then you can usually give your notice and be out of the property within a few weeks. This is much easier than trying to sell a property, which can take months.
  • No expensive fees for surveys and insurance come with renting. This could include inspection fees, mortgage fees, and title insurance.
  • You don’t have to worry about market fluctuations when you’re renting. If the value of your property goes down, you’re not going to lose any money, as you would if you owned it.
  • You can experience different homes and living by yourself, understanding all the maintenance and upkeep that’s required before moving onto a house.

Some of the cons of renting a property include:

  • You’re not building up any equity in the property. This means that you’re not going to have anything to show for your money at the end of the tenancy.
  • Rents can also go up over time. You could end up paying more for the property than you would if you’d bought it outright.
  • You might also have to deal with difficult landlords, or properties that are in poor condition.
  • There is no security. The property can be sold at any time with little notice, or your landlord could decide to not renew your lease, meaning you’ll have to move out.
  • You can’t customize rental properties too much and have to get permission from your landlord to make any changes.
  • It’s not an investment and doesn’t provide any real value. You are basically paying your money for somewhere to live, the property will never give back to you. Therefore it limits the amount you can save every month and will slow down the process of you being able to purchase your own property.

Pros and Cons of Buying a Property

Buying a property has some advantages including:

  • You’re going to build up equity in the property. This means that, over time, the property is going to be worth more than you paid for it. You can then sell the property and make a profit, or use the equity to buy another property.
  • More control over the property than if you were renting it. You can make any changes that you want to the property, without having to get permission from a landlord.
  • It’s a stable and secure choice. You’re also not going to have to worry about the property being sold from under you, as you would if you were renting.
  • You’re going to be eligible for a tax break on your mortgage interest. This means that you’re going to save money every month, which can add up over time.
  • The value of the home could increase or the property market could surge. Meaning you could sell for a bigger profit than you paid.

Some of the disadvantages of buying a property include:

  • The upfront costs are usually higher than if you were renting. This includes the deposit, which can be a very large sum of money. You’re also going to have to pay for things like legal fees and other fees associated with buying a property.
  • The monthly costs are also usually higher than if you were renting. This includes the mortgage payments, as well as things like property taxes and insurance.
  • You’re also going to have to deal with all of the maintenance and upkeep of the property. This means that you’re going to have to pay for things like repairs, painting, and other things that come up over time.
  • You might also have to deal with problem neighbors or a bad location. This can be a big problem if you’re not careful. Not only will it be unpleasant, but the prices for the property could also drop due to the deteriorating area and you may struggle to sell.
  • You won’t have the freedom to be able to up and move to somewhere else so easily.

Renting Vs Buying: Which is Best?

The answer to this question depends on a number of factors. These include your financial situation, your lifestyle, and your long-term goals.

If you’re looking for a place to live that is comfortable and has all the amenities that you need, then renting might be the best option for you. Renting can be a more flexible option, and it might be easier to find a place to rent that is within your budget.

However, if you’re looking for an investment or a place to call home that you can build equity in, then buying might be the better option. Buying a property can be a great investment, and it can provide you with a place to live that is entirely yours.

Renting is best for:

  • Freedom
  • Quick solutions
  • An affordable option

Buying is best for:

  • Investment and appreciation
  • A place to call home
  • Stability

Final Thought

There is no single answer to renting Vs buying, which is best? The answer depends on your own individual circumstances. You’ll need to consider your financial situation, your lifestyle, and your long-term goals to decide which option is best for you.

Buying a property is always best for your future, an investment, and to actually make use of your money – but it is not always the most viable opti