14 July 2016, 14:34

Scenario 1: You will be marrying the love of your life in a few months, you are scouting for a home to live with her, both of you and her are working, hence will be needing a place that is easy to commute to and fro to and not that much to manage.

 

Scenario 2: You just got a new job at a new place you don’t really know, but you are happy anyway, Boss said that this job fixture might be semi-permanent for at least 2 years.

 

Scenario 3: You are approaching mid-20s, just moved out of your parents’ house in an effort to find “independence” , want to have more space to create as your own and you want to have cats instead of humans as your housemates.

 

In all of the three situations mentioned above, one of the most FAQ would be “to rent or buy” a house? It may look trivial; but it actually plays a huge part in your life later on. Both in terms of lifestyle choices and the amount of money you save every year.

 

To be honest, there is no right or wrong answer when answering the “rent or buy” question since every person needs and demands are different; but it is vital that you know what you are getting yourselves into by studying the pros and cons of the two. Sidenote, buying is not all the time the generally safer choice and renting is not always low maintenance.

 

 

RENTING

 

PROS

 

• Offers more flexibility than owning a house, especially if you are prone to be relocate for your job or for family matters. It requires no long term commitments from tenants if you do not fancy staying long in a place in one time.
• Renting allows you to live in an area that is much too expensive to buy
• Moving out is hassle-free, literally speaking. If you move a lot, it is much easier to go for month-to-month lease or sublease your house than selling it
• Insurance that needs to be covered by tenants are only for the house’s needs, while the maintenance for the property is fully the owner’s.
• Monies can be saved and can be used instead for other ventures or to be invested elsewhere.
• You can avoid owning any undervalued property because there is no guarantee that a property will stand the test of time and increase in value along the way.

 

CONS

 

• No freedom to make the house (fully) YOUR home. While some owners are kind enough to let you play around the decor of the house (with their permission, of course), some may not be so lenient. Tenants can be confined by the rules of the lease agreement which may include articles like not painting the house in lilac purple or making your house a mini-zoo with a bunch of animals running around.
• Renting does not grow your wealth in return or act as an investment of sorts but only provide you with a place to live. You also do not get to receive tax benefits like homeowners do.
• You monthly payment can increase. The external reason like the surrounding area and available facilities can be a factor for a hike in the rent’s value as soon as your lease ends.

 

BUYING

 

PROS

 

• The house can be bought for rent- the rent can pay your leftover loans (and more!). If you are the type of owners who collects the rent on time and pay your monthly bond repayment shortly after, it will not only improve your credit profile but also increases your credit score!
• Buying a house made it into a legal property of yours. Making you the person in charge of its creative department that includes the landscapes, renovation, paint color, lightings and many more. More freedom, more fun! Of course the exterior of your house is subjected to the rulings of the homeowners’ association, but there is nothing stopping you from making your house a cat’s haven if you’d like.
• You can build wealth in the form of equity. More often than not, the value of a house will rise up anywhere from 4% to 6% per year. If ever you decide to sell, you will earn a mighty profit off that sale.
• Tax breaks. There is a chance to save money from tax deductions from income-generated properties.
• Be a part of a community. More than anything people want to feel like they belonged. And being a part of a community do just that (and many more!). You will be more involved in activities and are always present in homeowners’ meeting a you know you are going to be there for long.

 

CONS

 

• It will have financial toll on your bank account. You have to spend a good waking moment ensuring that your house is always in its great condition to avoid any accidents. Maintenance is entirely on your two shoulders from that point onward.
• Less mobile than renters. Homeowners are likely have to wait until their home is bought to be able to buy a new one and move out, this will take some time thus will lengthen the process.
• Pay property taxes. ‘nuff said
• Losing home value. With the fluctuating market, there is a chance that your house may not be increasing in value like it should.
• Buying a house these days requires a lot of money from the house price to the lawyer’s bill, and up to the real estate agent fee (and counting!) has to be paid. Fair warning: might crack your bank a little. Your savings will be gone so quickly that you cannot use it for other ventures.

 

Study your needs long and hard, then decide on whether you should buy or rent a house. Can you afford it is the main question here. Consult with your family or friends even a real estate company to weigh in on your decisions. Good luck!

 

Written By : Nawal Sharif.

 

 

 

 

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