Renting Vs Buying - 4 Factors
Deciding if rentals or one of the many types of home ownership is best for you really comes down to looking at four factors.
Buying vs Renting: Mitch's Buy vs Rent Calculator & a Tax Benefits Calculator
Spending Less While Also
Getting ''Rent Control''
Does it Cost More Or Less To Own Vs Rent?
Generally speaking, with interest rates as low as they currently are monthly rent payments are equal to or greater than the monthly mortgage payment to buy a comparable place. For many the decision to rent comes from looking at housing as shelter vs a long term investment.
Historically rental rates increase from year to year, vs a mortgage that can be locked in for 7, 10, 15 or 30 years. So, long term buying will give you greater control over your housing costs like a virtual "Rent Control."
The bottom Line, in today's economy, is that if you can qualify for a loan, and have even a low amount of savings for down payment and closing costs, it probably makes more sense to buy vs. rent just based solely on cost!
Plus, typically real estate will appreciate in value. And, even if the market doesn't increase in value in a worst case scenario, there can be substantial income tax benefits to owning vs renting which means the government will allow you to take part of the dollars you would have otherwise paid in income tax to be used to pay your housing payment and home purchase.
How Long Do You See Yourself
Living In The Next Place
How Long Do You See Yourself Living In The Next Place
If you're planning to move within 2-3 years, you might not want to incur the costs of buying a home realizing that the home would have to increase in value 2%-3% per year for the purchase price down the road just to cover your selling costs. However, if you intend to stick around for 3 years or longer, then buying usually makes sense.
At the same time, if you are open to leasing out the property, vs just selling it in 2-3 years, then it may still make sense to buy now vs lease. If you view this as a real option, and the posibility of relocation out of the city is also a real possibilty then be sure to talk with Mitch about the best property to purchase now that can also be an ideal rental property if that need becomes a reality.
Do You Know Where You Will
Be Living In Three To Four Years
Maintaining Flexability Does Not Always Mean Renting Is The Best Option
If you think the possibility exists that a new job or position could prompt a move to a different part of town or even a different city than renting may provide greater flexibility between short term leases, annual lease renewals and even 'job transfer' clauses that allow you to break a lease early with little or no penalty if you take a new job out of the area. Similarly, if you are new to town or and you are not sure which part of town you want to living on long term then renting gives you the ability to 'try before you buy.
At the same time, if you are open to leasing out a property, if you decide the current location of your next place does not work for you long term, then it may still make sense to buy now vs lease. If you view this as a real option, and the posibility of relocation out of the city or to another part of the city are also real possibilities, then be sure to talk with Mitch about the best property to purchase now that can also be an ideal rental property if that need becomes a reality.
A Hassle to Some, Is A Dream For
Many. So, Have Cake & Eat It Too!
One of the Few Times When You May Be Able To Have Your Cake & Eat It Too!
For many owning their own home is lifelong dream. The notion of buying a place, fixing it up substantially or even just decorating and putting your own real mark on the property is an option that rentals don't provide.
However for some having to deal with home repairs, landscaping and occasional improvements are viewed as costly, time-consuming and a hassle. While these folks may automatically think leasing is the only option, in reality keeping the correct home warranty in place with a condominium or a brand new home could be the best option!
More often than not, with Mitch's Buyers, a good home warranty is put in place on the property at closing. For a $100 deductible per incident this provides the buyer great coverage for most mechanical systems, appliances etc., during the 1st year after closing. By maintaining this coverage for the entire time you own the property, versus just the first year, the $40- $60 per month warranty gives you the ability to call one number for most interior related issues just like calling a landlord. You don't need to select contractors nor worry about which contractor will preform.
Similarly, with "Condo type" homes a homeowner association (HOA) board or management firm, hired by the board, deals with the daily exterior and common area maintenance and repairs. So, this gives you as the buyer a second phone number to call for exterior related issues. Plus for some homeowners, that travel a lot for work or pleasure, a condominium can also be a great option since it's much easier to come and go without worrying about daily maintenance, care or security.
Condominiums range from Highrise apartment like "flats" to detached single family homes or zero lot line developments that to most appear to be just like any other home. With zero lot line properties all of the exterior landscape and snow removal is typically handled by the HOA and with some of these properties all of the exterior structure can also be maintained by the HOA. Similarly paired patio homes, where units typically share one or two common walls, leave the homeowner to deal only with the daily maintenance and care of the interior of the condo that can be mostly covered via a good home warranty plan. Townhouses or Row houses usually share one wall with each neighbor and mid rise or high rise condominium developments typically don't have doors directly to the outside but rather a shared common hallway. All of these different types of attached properties provide varying degrees of privacy and traditional "single family lifestyle" but without 100% of the responsibilities associated with traditional home ownership.
If you don't care for an attached property and really prefer a single family detached home, then buying or building a brand new home combined with the right home warranty, minimizes the amount of exterior repairs and surprises. Plus routine maintenance like landscape and snow removal can be contracted out with qualified contractors.