Member Insights by John Buys Houses
The rent–buy debate has been raging for decades. When it comes down to making a decision, it’s important to know all the facts and weigh them carefully. Remember, one is not fundamentally better than the other, it all depends on your particular situation. Here are some things to consider on both sides of the rent–own debate.
Sometimes, renting versus buying is a simple matter of practicality. In a market bare of houses for sale in your price range, renting may be the only available choice. Same if you simply don’t have the funds for a down payment or know you won’t qualify for a home loan.
This also has to do with the current housing trends in your particular area of Columbus. Market pricing fluctuates for both buying houses and renting houses or apartments. Use a rent versus buy calculator to help determine what would constitute a practical savings favoring one over the other.
One of the most cited arguments in favor of home buying is the idea of property as investment. While buying a home is an investment, the majority of homes don’t yield a huge return upon selling. Renters often counter this argument by explaining they could invest what would have been a down payment into other ventures and yield a higher return.
What you’re really investing in is a permanent place to live. Eventually your payments will be complete, and your cost of living will go down. This is a downside to renting. Lack of long-term investment could lead to higher living costs in the future.
Investment properties are a whole other story. If you are purchasing a home or building in Columbus for the purpose of flipping and/or renting for profit, the house can definitely be classified as an investment.
If you need a place to live fast, buying a home may not be an option. The house hunting, negotiating, and closing processes take time and can experience may setbacks. Leases can take just weeks or days to approve before you move in.
Timing also has to do with your job and family. Mortgages are commonly arranged for 30 years. If you plan to move within just a few years or your job may relocate you in the future, purchasing may not be your best option. If you plan on settling down and growing your family, then it might be the perfect time to find a permanent home base.
Often overlooked are the additional fees that come with home ownership. In addition to paying closing costs and realtor fees, the homeowner needs to budget for maintenance and repairs as well as property taxes and insurance. If you rent a home or apartment, repairs are as easy as calling a landlord or approved services company. However, there are beneficial tax credits available to homeowners that are not available for renters.
There is an enormous amount of grey area when it comes to declaring a winner in the rent–buy debate. Every person and situation is different and what works for you may not be best for someone else. The important thing is to understand the differences between renting and buying, their pros and cons, and then make the best decision for yourself.