Whether you are looking into renting or buying a property, you’ve got a big decision ahead of you. The choice you make won’t only affect your lifestyle quality but your overall budget at the end of each month and year. So, before you decide to buy or rent, consider the following list of pros and cons:
Stability vs. Flexibility
Owning a home gives you a sense of belonging, security, and pride of ownership. It also puts you in the driver’s seat regarding decisions on your house upgrades when you want them, and managing your home repairs according to your budget as opposed to the “musts” agreed by the lease. Further, owning a piece of property is also a great investment because you can either sell when the market’s right or rent and have a stable income from renting.
However, if you are a nomadic type, the stability that comes with house ownership doesn’t score points for you, does it? On that note, renting might be a better option for you. Plus, renting allows you to change homes pretty much as often as you’d like so you don’t have to renounce that nomadic excitement you love. The downside of renting though is that the landlord can surprise you with a rent bump you can’t afford, turning your apartment complex into condos, selling the property you live in, and plenty of similar unfortunate situations. Oh, and the money you spend on renting; it’s pretty much money flushed down the toilet.
A (Not So) Wise An Investment
Ownership is fantastic for many reasons but whoever’s buying a property with the sole purpose of flipping it later and a speedy sale, might want to think twice before doing so. Depending on the neighborhood and the state of the market at the time of buying (and later,) your property can significantly drop in value, even lose it altogether. What could easily happen with your property is that you buy it today for $100,000 and learn that in 20 years from now it’s still worth that amount. Practically, you’ve lost tons of money after inflation.
An even worse scenario is to buy a home today for a significant amount of money and learn that the property you’ve purchased has decreased in value tomorrow due to something unfavorable opening up near, a road being built in a quiet neighborhood, or any other similar reason.
When you rent, you never face problems like these. The worst thing that can happen is that you’ll move to another location.
Financial Predictability vs. Financial Variableness
A considerable advantage of renting is that you always know how much money you’ll be spending on your housing per month. When you own, you’re never sure what might come up. One month it could be just your utility bills and the mortgage payment while the other an additional of $10,000 on a new roof or other maintenance concerns.
On the other hand, unpredictable rent increases can be a problem for everyone who rents (well, unless you live in a rent-controlled apartment) putting you in a very vulnerable position every time your lease is up for renewal.
Improved vs. Weak Credit Score
Renting a home puts you in a very vulnerable position, credit-wise. While you may have a wonderfully flexible landlord who works with you on everything and anything you need, the truth is – without a piece of property in your name, you are pretty much homeless. So, in case you need credit for business or similar, chances you’ll get it are slim as you don’t have anything in your name to back you up.
On the other hand, being a homeowner can improve your credit profile. Apart from it being a significant investment to your name, a home increases your credit score and makes you a favorable candidate for credits and other benefits offered by the state.
Whether you’ll decide to rent or buy pretty much depends on your end-goal and lifestyle. Don’t rush into things; be smart about the choice you make. If you’re looking to buy or sell in Southern CA, let’s talk.