If you have been fortunate to have selected a slump time in the market to buy a house, and then sell when the curve swung upward, you are likely a fan of buying a house. If, on the other hand, you bought at a high and were forced to take a loss, you might regret not having just rented for all your trouble.
Real estate is a chancy investment, risky and often disappointing if your timing is off. That is because houses depreciate; they wear out, lose their charm as trends change, and require regular investments of capital. Buyers take into account the cash down payment and real estate taxes when they buy, as well as major capital repairs, like old plumbing and leaky roofs, but they may not concentrate on the other regular expenses like gardening, utilities and the like, nor figure in the cost to prepare a house for sale and to actually sell it. If all this was fully contemplated, many more buyers might pass on the experience.
On the other side, of course, a house is not just an investment. It is often part of our identity, and we enjoy having complete sway over how we decorate it and make it ours; this is not always possible in a rental. To many as well, the idea of having a landlord, just does not sit well.
Looking at the question from just a dollars and cents point of view, there are some good questions you can ask yourself in weighing this decision.
1. Do you have a stable job? If you might look for a new one soon, renting would be wise.
2. Are there other changes on the horizon, like starting a family? You don’t want to be hit by the huge outlay a new home purchase requires, with other big costs looming.
3. Do you love the community you’re looking in and what’s the state of the market there? This is a biggie. Buying may be just the thing to do if the neighborhood is on the way up and you’ve tried it out and like it. On the contrary, if prices are inflated, you might think about looking elsewhere, or renting, if fairly affordable rentals are available.
4. How’s your credit? If it’s not the greatest, it might be wise to rent and improve your credit score so you can take advantage of the best interest rates when you do decide to buy.
5. Do you have the time and disposable income a home purchase requires? If you are so busy, there’s no way you can mow the lawn on Saturdays and if you’re not inclined to pay for a landscaper, owning a home may not be for you. Owning a home is supposed to be fun, but your fun may be renting a great apartment and calling the maintenance department when you need a repair.
The decision to rent is predicated on the availability of suitable units in your chosen community, of course, but rentals afford many pluses. Most significant of these is your freedom to change your mind and move if you are not entirely happy, or have other opportunities elsewhere. How you invest the money you are not putting into a down payment, of course, is an entirely different question. We will compare investments in a subsequent article. The question of whether to own or rent is a complex one, and a very personal decision. What’s right for you is totally wrong for your neighbor, and each real estate market tells a different story. Wish I could give you a solid answer, but this question will not allow. Stay tuned.
