Buying Vs Renting A Home: 4 Smart Ways To Simplify Your Decision
Rohan got engaged last year and is now planning to get settled and live a secured life. He is doing well in his career and is busy planning his post-marriage life. His father wants him to buy a lovely 2 BHK house, but his thoughts are quite the opposite.
However, he sometimes thinks of owning a garden for his dogs and an extra space for his office, but he is unsure if he can afford it or if it’s the right time or the smart move? So, Rahul is stuck to deciding between buying vs renting a home.
Homeownership has been the one’s life dream for almost every Indian. But every major decision comes with various reality checks. With the changing housing policies in India, it’s essential to do the math’s keeping in mind the multiple costs of investing in a property.
Whether you plan to buy or rent a house, such decisions will not only affect your lifestyle but can also drastically impact your financial health.
There are pros and cons to both choices, and there isn’t any perfect answer to this. So, please continue to read to understand better what might be the best option for you before you go for it.
Disadvantage And Advantages Of Renting A House
|Move and settle anywhere you want||Limited rights to customize your space|
|Monthly costs are fixed and predictable||Rent money will go up year after year|
|The landlord pays for maintenance||The landlord can throw tantrums|
|No such closing costs involved||Your landlord can anytime decide to sell or stop renting his property|
|Short-term commitments||You won’t be building any equity|
|No pressure of house tax and other legal issues, unlike property ownership|
Disadvantage And Advantages Of Buying A House
|You can do whatever you want||The home value may decrease|
|A higher sense of security and stability||Relocation will not be a piece of cake|
|Tax advantages||Overall maintenance and repair of the house|
|The home value may increase over time||It’s going to be a long-term commitment|
|Pride of ownership||Unavoidable costs like property tax, water and sewer services, etc.|
|Build equity over time|
4 Factors Before Making That Ultimate Decision Of Buying Or Renting A House
It’s not about how heavy your wallet is but whether buying or renting aligns with your goals and visions. Whether or not the ultimate truth is if you’re willing to take risks and agree to accept the T&C that’s involved in buying or renting.
Below are some of the most important factors to consider before you make the most significant decision of your life-
Inspect Your Current Financial Situation
It goes without saying if your finances are in good shape, you can start doing all the necessary calculations to know what’s best for you.
First, check if you’re ready and willing to pay the upfront costs like repair, shifting, new furniture, maintenance and especially the enormous down payment.
You do not want to empty your bank account and call for troubles in the future because there will be a few expenses you can’t avoid, like the closing costs and recurring costs, etc.
Estimate the cost of buying or renting and decide because though home buying is expensive than renting, it also comes with a more excellent sense of satisfaction and security.
Real Estate Market Research
Imagine you found your dream apartment, and you’re all set to give in everything to buy it, but then it’s not advisable to rush with home-buying decisions. Besides that, don’t underestimate the power of life’s uncertainty.
What if tomorrow the real estate market gets hit by a recession or you lose your job, or you’re unable able to make your mortgage payments? I know all this might sound negative, but these are real-life possibilities that you might want to consider before you hit the YES button.
Like nothing is always 100 safe and secure, you want to think as an intelligent renter if you can bear the risks of renting. And do think of plan B if you get an impromptu notice of vacating the house by the landlord.
Yes, renting might not seem as big of a deal as buying, and the max you will lose out will be your security deposit and precious time.
Whatever you decide, don’t forget to do the proper research and accurate budgeting.
Choose The Life You Want
Money is significant consideration but is not the only factor that will make you take the right decision. First, you need to know what kind of a life you wish to have.
Does your work require you to travel more often, or let’s say you don’t want to own a thousand responsibilities that come with homeownership?
However, renting apartments is a better option if you want to live a nomadic life and crave to work from different locations. It will simply eliminate all the hassle of going through extensive legal formalities like closing, selling costs, etc.
If you know, you will be sticking to one place for a long and wants to customize everything as per your taste and likes. Having your own home will give you a great sense of stability and freedom to live on your terms.
“91% of respondents wanted to buy a home when asked to choose between buying and renting,” according to JLL’s Homebuyer Preference Survey.
There can be several reasons but go with the one that will satisfy you emotionally, mentally, and financially.
Cost Of Buying A House Vs Renting
Just because you’re financially ready to invest doesn’t mean owning a house is the most appropriate decision. Renting can be cheaper than buying in most cases because it doesn’t include down payment, maintenance, closing costs, moving costs, repair or any renovations.
As per various studies of top metropolitan areas, it’s cheaper to own a house than renting and vice versa. Therefore, constantly evaluate the economic policies prevailing, the anticipated growth or fall of the housing market in India, the cost of buying vs renting in various neighbourhood areas, etc.
And if the mortgage isn’t a problem for you, still think of the other expenses that will add up, like property taxes, homeowner’s insurance, etc.
That said, buying a home can be inexpensive in the long run, and you can build equity over time. For example, assume that after several years, mortgage payment goes lower than that of a renter. Let’s take the rent values up by 5% – 7% each year, whereas the homeowner doesn’t have to bear the fluctuations and is happily paying a fixed monthly payment.
Understand that it’s OK to either rent or buy if you’re fully aware of what you’re signing up for. You can even rent for some time, save some money and then plan to own property if that’s your dream.
It can be very subjective to one’s life situations and long-term goals regarding rent vs buy. However, such decisions can be life-changing and are even very personal, depending on other essential criteria.
Pay close attention to all the risks involved, lifestyle and cost; you might want to reconsider your decisions once you clear all the mentioned factors.
Think of all the factors for a peaceful life, and keep a check on your goals. Remember, when it comes to making real estate decisions, always choose not to rush because buying the right thing at the right time will be the smartest choice.
Are you still confused as to what’s the best step for you? Then, get in touch with us for further assistance.
Picture Credits: Canva
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