Renting vs Buying? Which is better? Everything you need to consider

Is owning a home in America still as nice as it sounds?

Topic is buying or renting? I have 11 points for you to considering when it comes to deciding on renting or buying. This is a topic that come up again and again regardless if you just graduated or about to retired.

Although I provide real estate services to those who need help with buying and selling. However, I also manage properties so I can present my perspective and honest opinions for both sides.

Let’s first start with something simple:

1. Duration: this is how long you plan on staying at this next home. If you know for sure that you plan to move and NOT keep the property as a rental. Then obviously renting is most likely better. The breakeven point is about from 3 to 5 years. This is determined by the amount of rent you pay overtime versus how much it costs to own incorporating any fluctuation in the housing price.

2. Love: If the house is within your budget and ignore buying or renting for a minute, think about how much do you truly love the house. Is it your dream house. If it is, then all other details may be less important.

Wait, but you hear from many self-claimed financials gurus say never buy a home to live-in because you can invest that money elsewhere like in business or stock market but the question is are you going to and when? You probably will just save that money in the bank or worse buy useless or extravagant things like Bennie baby or Chanel purse. The you also have heard “buy the biggest house you can, home value always goes up”. By the way, house appreciation has toned down since the last great recession. What I am trying to say is there is no one size fits all kind of answer. It depends on both objective and subjective factors.

Subjective:

1. Are you a handyman? To what level? Do you want to do any maintenance? Even you buy the most perfect house, maintenance and repair is needed. Or pay high HOA and have them handle it most of it. Or rent a place to have the property owner worry about all the repairs.

2. How much change do you want to make it “YOU”? You will need permission from the landlord or property owner on every single thing you change like painting a wall or install a fixture or you just want to keep things the way it is and feel fine?

3. Use of your money: Do you mind knowing the fact you’re paying to borrow instead of paying to own?

4. Freedom: most people like freedom. So, ask yourself, “are you okay living somewhat by someone else’s rules?”

Objectives factors: fairly easy and straightforward. To determine, you need to crunch some numbers and do an analysis:

1. Costs for homes: this includes purchase cost with a big down payment and a big closing cost. Then add the ongoing costs like taxes, HOA, repairs, upgrade and improvements, which you will need to stay with the market value. An upgrade countertop in the kitchen is a good example.

2. Cost for renting: simple, just your monthly rent, watch out for early termination.

3. Investment: is your home an asset or liability? It is both depending on whether you sell it or rent it out and its ability to generate capital gains or cashflow. If you rent, you can take the money that would have gone to buying a house to invest in other assets like stocks, business, or cryptocurrency. I recommend you use your money to invest in something. Like I explained in another video, with so much money injected into the economy, value of money will lose it’s worth over time.

1. Location: Buying or renting can be better or worse depending on the State and City. Obviously, CA and NY is better to rent in than other lower costs state like GA.

2. Stability: Rent increases on average from 2% -8% annually. If you don’t want to move because of the hassle then stay and pay up. Make sure you are not forced to move because the property owner decide to sell. I am not saying this to scare anyone. Rent increases are certain, and in periods of inflation, it will be faster or higher. For owning a house, you have a fixed mortgage rate to pay and repair, but you don’t have to do it.

3. Current Events

My perspective based on the zeitgeist and the current situations:

In my previous videos I talked about deflation or inflation (https://www.youtube.com/watch?v=WbDCeNVgi0o&t=27s) , if my thinking holds true, it will be advantageous to buy. Current interest rates are at all time low and but there’s potentially a stall in buying activities due to the catastrophes, it again may be a really good time to buy. For renting,

property owners are going to be more careful now due to so many people are unable or unwilling to pay rent these days. If you can prove that by having a good credit score and/or a steady job, you have a big advantage over other renters. You can even hold leverage to maybe workout a better deal

In summary, both renting and buying favor the consumer who can afford it.