“Home is the nicest word there is.” Laura Ingalls Wilder

To rent or buy? That is the enduring question. It’s one of those major defining life choices and you can feel like you’re the rope in a real estate tug of war. Perhaps on the one team you have parents or friends who have invested in buying property and feel they are on solid ground and so should you. The other team could be the flexible, alternative lifestyle group that don’t want to be anchored to one spot for their whole lives and encourage freedom from mortgages. It’s always an emotional see saw and a major financial decision. Before you impulsively leap off a bridge on a bungee rope, take the time to truly evaluate all of the pro’s and con’s surrounding your two options. We’ve already compiled a comprehensive list for you so pour yourself a nice glass of merlot, sit back, relax and prepare yourself to make an informed decision.

The Renter Archetype

Let’s investigate the rental scenario. We know that one third of all Americans rent their homes, according to the New York Times. That is a lot of people who have not chosen to buy into the “American Dream” of home ownership -which can be a mighty societal pull. What differentiates the renter from the buyer persona? First up, take a moment to truly reflect on your personality. Are you someone who likes to move regularly, as you enjoy change in all of its manifestations or are you someone who craves consistency and stability? Renting can be the purview of the restless gypsy. Every time your lease comes to an end you can easily move on if you wish. You have no obligation to stay in the same apartment, city or country. You can change your life in an instant. For some this is a massive pro for renting.

Rental Savings

When you rent you are not building equity on a property, but you can build it in another way. You will be saving money from not having to pay property taxes, homeowners insurance, mortgage interest, constant maintenance and repairs, trash pickup, water and sewer service, pest control etc. The money you save can be invested into your retirement fund or other investments.

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Not My Problem

One of the best parts about renting is that you don’t have to be responsible for any maintenance of the property. If there is any repair needed or maintenance issue requiring attention, the landlord simply gets a call and the problem gets resolved. You do not not have to concern yourself with any part of it and it costs you nothing. You’ll also get the added benefit of increased leisure time as you won’t have to be constantly working on the house –mowing lawns, fixing pools, painting and maintaining.

 

You also never have to worry about fluctuations in the real estate market which could impact the value of the property. Again, not your problem.

A man builds a fine house; and now he has a master, and a task for life; he is to furnish, watch, show it, and keep it in repair, the rest of his days. Ralph Waldo Emerson

No Sudden Expenses

When you apply to rent a property the credit requirements are less strict than when you are applying for a mortgage. A quick credit score and credit history will suffice. You will know exactly what your rental cost will be every month. There will be no surprise expenses for burst pipes or leaking roof.

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Rental Blues

The downside of renting is that at the end of each lease period you could face a hefty increase in your rental or maybe the property is being sold and you have to vacate. This can be extremely disruptive.

 

The cons list also includes:

  • You don’t qualify for federal tax benefits like deducting mortgage interest and property taxes.
  • Landlords can be slow to fix repairs
  • No equity building –every dollar spent on rent could have gone into paying off a mortgage.
  • You can never exercise complete control over your yearly rental –it is always subject to change.
  • You do not have the comfort of housing security. You can get an eviction notice of 30 or 60 days and be forced to move.

Home Sweet Home

“There is something permanent, and something extremely profound, in owning a home.” Kenny Guinn

Choosing to become a home owner is potentially a glorious lifelong commitment. Perhaps you are starting a family in an area that you love and you can imagine your dream home being the anchor of your lives. It provides comfort, stability, security and a sense of personal achievement. It is a symbol of the fruition of your hard earned efforts.

Money in the Bank

With every mortgage payment, you are building equity. Every dollar you put down on your principal amounts to a dollar of equity which is the actual ownership of your home. When you reach 20% equity you can draw on your equity to refinance your mortgage to get a lower interest rate. You are also eligible for a home equity loan.  Every time you upgrade your property with renovations, you are increasing your homes value. And with a fixed-rate mortgage you know that you will be paying the same amount every month until your mortgage is paid up.

The Federal Government Rewards You

As a property owner you get some great tax benefits like the Homestead Exemption and Federal tax deductions to lower your overall tax burden. When you are a homeowner you can also use it as an investment property and gain rental income. You could choose to rent out the entire property or just a room or do short term rentals through companies like Airbnb or other house sharing platforms.

No Permission Required

It’s your home –you can do whatever you like with your decorating or renovations. You don’t need landlord permission (maybe only the homeowner’s association). You can alter your environment to suit the changing needs of your life without anyone’s consent (except maybe your partner’s).

A Sense of Pride

It could be said that you will have less leisure time because a property can really absorb many hours on maintenance and general upkeep. But every single thing you do for your property is an investment in yourself and your family’s future. The loss of a few leisure hours only gains you increased property value, homeowner’s pride and a sense of accomplishment.

Property Ownership Pitfalls

The downside of buying a home can include:

  • Your property value could depreciate based on economic factors beyond your control.
  • Potentially high cost of maintenance and repairs
  • Initial outlay can be extremely high, including a large down payment
  • You could have a restrictive, controlling Homeowners Association
  • Property taxes and insurance premiums can increase dramatically over the years.
  • You might not be able to sell your property when you need to if the housing market is in decline
  • There are large transaction costs if you sell your property.

Property Ownership Pitfalls

The downside of buying a home can include:

  • Your property value could depreciate based on economic factors beyond your control.
  • Potentially high cost of maintenance and repairs
  • Initial outlay can be extremely high, including a large down payment
  • You could have a restrictive, controlling Homeowners Association
  • Property taxes and insurance premiums can increase dramatically over the years.
  • You might not be able to sell your property when you need to if the housing market is in decline
  • There are large transaction costs if you sell your property.

Following Your Heart

Screw it, let’s do it! — Richard Branson

Now that your wine is finished and your head is full of possibilities. Start by asking yourself one final question, “Have I always wanted to own my own home?”. If your answer is, “hell, yes” – then make that dream happen. Your life dreams will outweigh any cons on any list. It is always both an emotional and financial decision to embark on a home ownership journey. If you think you are leaning towards property ownership here are 21 Hints You Are Ready to Buy Your First Home. So maybe you want to switch to a glass of Cabernet Sauvignon to read all about it?