One of the largest decisions that most people make revolves around real estate. Should you rent an apartment or should you purchase a home? It may sound incredibly simple at first glance, but once you begin to dissect and analyze the question, it becomes very clear as to just how complicated the situation truly is.
As an experienced real estate professional with years of experience, I figured that I could offer some assistance to those looking for a new home. Here are some of the biggest differences between renting and owning.
Owning
Pro – Customization Is King
If you’re the type of person who likes to customize your belongings, then owning a home might be the best possible option for you. When you own a home, in most cases, you are allowed to renovate the house as you see fit. The additional benefit of this is the potential increase of your home’s value. When you rent a home or apartment, you are usually stuck with the building’s design. In most cases, you aren’t allowed to renovate or add anything new. If you see yourself settling in for the long haul, and you have some great ideas for how to make your home your own, you might want to consider owning.
Pro – Equity
For those that are unaware, equity is the difference between how much a home is worth and how much is owed on the house. If you sold your house for what it was worth today and paid back the mortgage company for the loan, equity is what is left over. Equity is a fantastic way to increase your personal wealth, if done prudently. If you can maintain your home’s quality, and even renovate and improve the home, the value will increase over time. When and if you decide to sell the house, depending on its value after deductions of what you owe, you stand to make a hefty profit. Again, this is fantastic for those who are looking for a long-term plan to increase your personal wealth.
Con – Price Upfront
One of the largest downsides to owning a home is that it can require a hefty down payment. If you are not financially ready to scrape together a large down payment, you may want to consider renting.
Renting
Pro – Relocating
One of the greatest benefits of renting is that you typically have the ability to relocate fairly quickly; there’s usually no fuss involved. This is beneficial for those that have jobs that require a great deal of flexibility.
Pro – Cost
While you will typically be required to pay first and last month’s rent, as well as a security deposit, before moving in to your new rental, this is usually far less expensive than a down payment for owning a home.
Con – Rent May Increase
Just because you have a comfortable rent at the moment doesn’t mean that it won’t rise in the future. A rent for an apartment can certainly change at a moment’s notice, and may become impossible for you, depending on your financial situation.
Both renting and owning clearly have their ups and downs. However, the bottom line comes down to personal preference and your current situation. What can you comfortably afford? Again, this is a major decision in a person’s life, so make sure that you think about it long and hard. Good luck!