Rent VS Own Part I
Should I rent? Does it make sense to OWN? What are the upsides and downsides to each scenario?
I hear these types of questions and discussions all the time. Not just at work, but whenever anyone sees me out and about at a party or where ever.
The answer on whether someone should RENT or OWN is easy.
It depends. It depends on many factors that ONLY the potential tenant or home owner can decide for themselves. NAR, the National Association of Realtors says: "When you have a family, it's always a good time to buy a home." I don't really subscribe to that theory. YES, it makes sense from the stand point of putting your family into a home where you are going to "put down roots", but it may make so sense at all from many other standpoints. So here is a brief synopsis of what you get when you buy vs rent a home in two parts.
Remember that a real estate agent can help you with renting a home OR with buying a home and the fees usually work the same. So you can still have the benefit of an agent who works for you, even if you rent!
Renting:
UPSIDE:
1.No property maintenance--most maintenance is done by the actual owner, your landlord. Sure you may have a "repair deductible" meaning that you have to pay the first $50 or $100 of a repair, but that's nothing compared with the cost of replacing a roof...or siding...or an A/C unit.
2. No Property taxes--once again, this is paid by the owner. Now it's an integral part of your rent, but it's still up to the owner to pay for it and ultimately their responsibility.
3. No HOA issues-- Home Owner Association dues and pool fees and letters from the association all fall on the owner, not the tenant.
4. Out of pocket to get into a home is minimal. You put up a security deposit and the first months rent and you're good to go. Then as long as you keep the property up, you get that deposit back.
DOWNSIDES:
1. In a lease, you are not building equity or value. You put your money in and when you walk away, you are done. It's like leasing a car or having TERM life insurance.
2. No tax benefit to leasing. There are tax advantages to owning a property that you do not get when you rent.
3. Property condition--pretty much you are either living in the property like it is or any improvements you do end up being an improvement to someone else's property.
4. You're not making the payment, so even though you are paying rent, if the landlord you are paying is not keeping up with the mortgage payments, then you will be booted out, just as if they had foreclosed on YOU!
5. Repairs are dependent on the owner. If you have a good landlord, they take care of things. If not....well.
6. PETS. If you are a pet lover, owners have become increasingly stringent with pets. Pets do damage to property, even well behaved pets, and so owners will often charge large pet deposits that may or may not be refundable and some even charge extra "pet" rent.
So there you have a brief overview of RENTING. Next time we'll look at OWNING a home.
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