There are several differences between owning a home & renting. The main difference is in the level of responsibility & level of investment. Buying a home is not always better than renting & renting is not always as easy as it seems. Here are the key differences to help you navigate:
Renting a Property
You are not building your equity. You are building the landlords equity. Not all your monthly payments associated with homeownership goes towards your equity though.
You know exactly how much your monthly payment is during the established lease term. After the set lease term though, you may experience rental increases, especially now with hefty inflation. Rent increases can also be steeper year-over-year, depending on the area in which you live.
Renting = Flexibility. You’re able to move whenever your lease ends. On the flip side though, it could mean you have to move sooner than later, if your landlord decides to sell the property (also dependent on your leases terms).
Owning a Home
There are tangible & intangible benefits when owning a home. Not only are you able to build your own equity with owning a home as an asset, but you’re also able to decide how the property looks & the design.
With homeownership, there is not as much flexibility as renting. When owning, changing your mind about where you’re living can be costly since real estate is an illiquid asset. You may not always be able to sell when you want or at the price that you want, depending on the housing market conditions.
Overall, the cost of homeownership is typically higher than renting, even if your mortgage payment is lower than comparable rent properties. For example, you will be responsible for repairs & maintenance costs, despite your monthly mortgage payment. Other Pros & Cons to Consider:
Like any other investment, your home’s value can fluctuate based on multiple factors. The same factors can affect rental rates too.
Homeowners can benefit from certain tax benefits. Renters cannot utilize these benefits.
Owning a property, such as a condo or townhome, may come with the cost of an HOA. The HOA may cover some maintenance, repairs, utilities, insurance, etc. Tip: take this into consideration when weighing whether to purchase a single-family home or townhome/condo.
The time commitment with renting v. owning is different. With renting, you shouldn’t have to worry about home projects, repairs, or maintenance. When owning a home, you will need time to maintain it, handle projects, and repairs.
Overall, there is no definitive answer as to whether renting or buying is better. The best thing to do when weighing your options is to reach out to your trusted Realtor and your trusted Lender. They can aide you when taking a deep dive into making the best decision for your lifestyle, financial health, and personal goals (in regard to renting or owning).
If you’re looking to buy, sell and/or invest, we have you covered. Bean Realty Group specializes in real estate across Houston, Spring, The Woodlands, Conroe, and surrounding areas!
Todd West, RealtorTodd@yourbeanrealtygroup.com
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