Should You Buy a House or Rent?

Should You Buy a House or Rent?

(14 Ways Owning an Affordable Pensacola Home Provides Financial Security)

1. You begin managing yourself as an investor. YOU DO need to invest, and so you need to gather some investment money,  at least $2,000 for a low priced home.  This state of mind alone leads you toward financial security.  Think like an investor, just as if you were buying a mutual fund or shares of stock. You won’t be cashing it in because you need a home, and because it provides so many subtle advantages that it makes really good sense to STAY INVESTED.    And because you are making this investment (a commitment) you need a personal emergency fund too-- $1,000 – if you don’t have that, start building it up now -- critical things do come up. 

2. You stabilize yourself and take on the position of being responsible – you control your needs -- keep your  income coming in EVEN if you lose a job. Mow lawns, walk dogs, care of kids, detail cars – You mature and find a way to make income and pay your bills,  Cut them to the bone, but PAY THEM..  This could mean you end up distributing cards offering to mow lawns, and walk dogs or do whatever it is that you are good at. Find a way to make income.

3. Now, about paying rent:  Over time, rents increase.  For example: If you moved every 2 years because of job or life changes – you might pay a slightly higher rent simply because property values go up and landlords must charge higher rates for what seems like a similar rental (so no upgrade for you, just a higher payment). So over 6 years, if your rent increase went something like this for each move:   You take an apartment for $700 per month. Then 2 years later you move and find something similar for $800, then in 2 years you move again and find something very much like the first apartment you paid $700 for, only now this one costs $900 per month. By the end of another 2 years when it is time to move, you find that you need to pay $1,000 per month to avoid going into a worse neighborhood than you have had so far. 

4. You are now realizing a 40% increase in the cost of rent since your $700 apartment 6 years ago.  If you had purchased a home, your fixed $700 payment would not have increased – now saving you $300 per month – AND the value of your home would be up, a similar percentage amount to the rent rates –  40%.  

5. If you had paid $100k for a house 6 years ago, it could be worth approximately $140,000. now..

6. And with some effort and good planning, you could have a 30-year mortgage paid off in 15 years, easily.  You could be mortgage free sooner than you might have imagined.

7. Over those years you would make any changes or updates you like to your own home – keeping it well maintained, clean and fresh – thereby preserving your investment.

8. You will take advantage of tax benefits for homeowners to help reduce the overall cost.

9. There’s a benefit that doesn’t translate to dollars … it is a feeling of pride of ownership, it translates to happiness which helps you maintain health and well being.

10. When you own a home, you can redecorate or remodel as much as you like.  There may be some restrictions on what you do to the outside (maybe local ordinances or a Homeowner’s Association) but for the most part you can do with it what you like.  This also translates to happiness,  health and well being.

11. Every single dollar that you pay in mortgage interest for your primary residence is tax deductible if you itemize your tax return. This money may work out to be a tradeoff for the amount you need for repairs and maintenance.  (Your investment is feeding itself.)

12. There are very few or no investment opportunities that allow you to leverage your money the way real estate does.   Even though your initial investment is very small compared to the price of the home, you gain the appreciation on the whole price of the property when the market value increases.

13.  You ultimately have an asset, free and clear,  that will allow you to age in place.

14.  You can make an awesome gift of it to someone in your will as you choose.

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