When it comes to the daunting task of finding your next home, choosing between renting or buying is one of the most significant decisions you’ll have to make. While both can offer some upsides and downsides, it’s essential to consider several factors before choosing one over the other.
The most important consideration is cost and how much money you have to put into your new home, but there are different pros and cons to examine before jumping into either decision with both feet.
Advantages of Renting
Renting offers more flexibility and freedom than owning a home. You can get month-to-month leases to make quick decisions about moving in the future, such as if a new job pops up across the country. You aren’t required to do major maintenance or work on the property at your own expense, as the landlord typically covers those things. Renting may also be cheaper than a mortgage in some areas, saving you money in the long run.
Disadvantages of Renting
You have less control over the costs associated with the property, such as rent. Your landlord can increase the rent at any time as long as it is in line with government regulations surrounding rent hikes. Although, if you rent in a building newer than 2018, there is no limit to what a landlord may increase the rent! Many tenants - and landlords are not aware of this - but beware of this if you love a new condo building or home to rent. You’re also not paying into anything, so when you pay your rent, it’s gone. You won’t gain any equity with it.
If you want to paint, put in a garden, or make any other changes, you’ll also have to get permission from the landlord. If they say no, you’ll have to make do with what you have, which could ultimately lessen your overall satisfaction with your living space. Other downsides include a lack of pet allowance and the chance that your landlord will sell, causing you to have to find a new place to live before it’s sold.
Advantages of Buying
When you own a home, you have both stability and feelings of settlement. Once the mortgage is paid off, that home is yours to keep for as long as you’re alive and even then, it remains a part of your estate. There is pride of ownership to consider, the complete freedom to make any changes—big or small—you want, and the chance to break into real estate investing. Homeowners also get tax incentives and the ability to have complete and utter privacy and control over their property.
Disadvantages of Buying
Owning a home can be a huge undertaking. You're responsible for everything, so you have to foot the bill for repairs, home maintenance costs, and anything else to keep your place up to par and liveable over the years. That all adds up. Homeownership is often hailed as a good investment, but volatile markets can actually end up costing you value if you’re forced to sell at the wrong time.
There is also a substantial upfront cost associated with buying, and property taxes can increase, leaving you with higher bills than you may initially realize. While an owned property is an asset, it’s not liquid, so if you need money fast and have to sell to get it, the process could be long and stressful. Homeownership is also not for people who like to live nomadically because it doesn’t provide the same freedom as renting.
Choosing between renting and buying involves weighing the pros and cons of both. Owning is better for people who want to settle down and can afford the upkeep required to take care of a property for years, while renting is better for those who want more freedom and maybe don’t have a large chunk of up-front costs saved up. It’s all about your current financial state and lifestyle, how each option fits into where you’re at in your life, and what you value most.
However, I will say that, I have never seen a millionaire, who didn’t own real estate……