Wednesday, September 1, 2010

Should I Rent or Buy???

Let's take a look at the classic debate: Rent vs Buy.

I often hear (from agents mostly) that if you rent, you're only throwing away your money. True! Sort of. See, it's much more complicated than that. Deciding between renting and buying is actually very situational and can depend on many factors. Much like a real estate transaction, each person has a different situation and your "game plan" as I like to call it, needs to be tailored to each specific person.

Let's quickly take a look at the advantages of both renting and buying:

Renting Advantages
1. No long term commitment. - You are not committed to any particular property for longer than you sign a lease for. If you have an uncertain job situation this can be very advantageous.

2. It often costs LESS to rent. - Studies have shown that often renting costs less than owning a home. Rents can often be slightly lower than mortgage payments & upkeep costs on owning a home can also add a costly element.

3. You don't have to worry about repairs/improvements. - Part of being a responsible homeowner involves upkeep of a home and making improvements to the home that will protect your investment. As a tenant, you are not responsible for any of this! If something breaks... call the landlord!

Buying Advantages
1. You OWN it. - When you purchase a home, it's yours! You can do whatever you want (within the law) to your home and in your home.

2. You know what your mortgage will be. - Whether you're getting a fixed rate loan or an A.R.M., you are still aware of what your payments are going to be for the coming years. In renting, your landlord can raise your rent just about anytime outside of your lease term.

3. It's a GREAT investment. - Buying a home is like investing in the stock market. You will (in most cases) gain equity on your home. That being said, you should use the old investing adage of "Buy low, sell high".

So as you can see there are arguments for both side of the debate. What this really comes down to is your preference and your particular situation. I always enjoy sitting down with people to discuss their situation and help them analyze which is best... to rent or to buy.

Jason Korn
The Korn Team
RE/MAX Real Estate Concepts

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