For some people, having a house they can call their own is a dream come true. For others, owning a home may not be within their reach just yet. This is why it is always a good idea to ask yourself the question “should I buy or rent my next home?”.
There are endless factors to consider before making this decision, and some of them can be seen as good or bad depending on your current living situation and where you see yourself in the future. You’ll need to ask yourself some difficult questions about your life and make sure that the next place you move to can accommodate your lifestyle. Things like how long you plan on staying in your new space, if you’re ready for the responsibility of homeownership, or if your job may require you to relocate again in the near future should all be taken into consideration..
Before you make this important decision, let’s take a look at the pros and cons of renting and buying a home.
- Easier to relocate: If you have a job that requires you to relocate often, renting is most likely your best choice. Many lease agreements are for 12 months, which makes it easy for you to move quickly. If you need to move before your lease ends, you can sublet your place to someone else to help offset the price till your lease is up.
- Maintenance and repairs: Your landlord will be responsible for most, if not all, maintenance and repairs on your property since you do not own the building. Check your lease to find out exactly what you’ll be responsible for
- Utilities: Some rentals include utilities in the rent price, which can help save you money on bills.
- Laundry: Some apartment buildings don’t have on-site washers and dryers, so you’ll have to take into account that you may have to travel and pay for your laundry.
- Deposits: Some of these may be refundable, like your security deposit. Others may be nonrefundable, such as a pet deposit if you want to keep your furry friend with you.
- No federal tax benefits: Since you do not own the place you are living in and have no mortgage or property tax, you won’t be able to claim any deduction on your tax returns.
- Tax benefits: Your property tax and mortgage can be used as a deduction on your federal tax return.
- Potential rental income: Since you own your home, you are free to do what you please with the space. This gives you the opportunity to rent out any extra space you have to potential renters to bring in another source of revenue.
- Equity and house pricing: Depending on how long you plan on staying in your new home, you have the potential to gain equity thanks to an appreciating house price. To reap the benefits from this, however, it is suggested that you stay in your new home for at least 7 years.
- Creative freedom: Again, since you own your home, you can do whatever you would like with the space. There are limits to how much you can alter with many rental homes because it will eventually be rented out to other people. However, if you own your home, you will be creating your home from scratch. You can repaint, and since your home will not come furnished like some rental homes, you must be ready to buy couches, tables, curtains, etc.
- Upfront costs: There are upfront costs involved with both buying and renting a home, but buying a home has a much higher price tag. Just a few of the upfront costs of buying a home include appraisals if you’re selling your current home, inspections, down payments, and dozens more. Before you buy a home, you should be prepared to pay at least 5.5% of the home’s total purchase value upfront, and potentially as high as 20%.
- Potential for financial loss: While there is an opportunity to gain equity on your home, there is also the chance that your home will depreciate in value. If other properties in your area decrease, yours will decrease as well.
- Maintenance: You will be responsible for all maintenance and repair needs for your home. This could be something simple like calling the plumber to fix a drain to something drastic like replacing a water heater, which can be difficult and pricey.
There are pros and cons to both renting and buying, so it is extremely important to do your research and keep these factors in mind before deciding to rent or purchase your new home. If you are moving in with a significant other or roommate, talk to them about all the options and make sure you are both on the same page. For some people, renting works better for their lifestyle, while others will find owning a home more beneficial.
Whether you are looking to become a buyer or renter for your next home, TSI can help get you there with our extensive list of top-notch carriers across the country. Make your next move as smooth as possible and call or chat with us for a quote in minutes.