Happy Money Monday! I went to an open house that Austin was holding this past weekend, as I'm seriously contemplating buying a home. It's a daunting endeavor to most people, but after renting in NYC for 10 years, I think I may want to take the plunge. But is owning a home for everyone? Austin explores the pros and cons of Renting Vs. Buying.
As a realtor, I get this question quite often from prospective new buyers, friends and colleagues. Which is better? Is there a right answer? Yes, there is. But the right answer for you may not be the right answer for someone else. Everyone’s situation is different, so there isn’t a general right or wrong answer.
I am an advocate of both. As a home buyer, you have the liberty of making changes to your home as you see fit. In a one family home, you don’t have to deal with upstairs or downstairs neighbors. Then there are the tax benefits. As a renter, you don’t have the hassles of worrying about large repairs needed. The maintenance of the home is the responsibility of the landlord. Renting is usually cheaper than owning in regard to your monthly expenses.
"Rich Dad, Poor Dad” by Robert Kiyosaki has an interesting way of viewing home ownership. Traditionally, the American Dream is to own your own home. It’s viewed as the largest investment of your life...your greatest asset. Kiyosaki views this as just the opposite. When you take out a mortgage, this will probably be the largest loan you ever take. Therefore, it’s more of a liability than an asset. Yet, a profit can be made in the right market, so it's not a total loss.
The key is if you are renting and then you purchase a home and your monthly expenses go up without an increase in income, this may be more of a detriment. To take the leap from renting to owning takes planning and a very close look at your finances. You may have a surplus each month that can sustain the increase. Many want to own a home just to say they own a home and will make sacrifices to achieve it. Own for the right reasons and not just to keep up with the Joneses. Proper planning will make the transition much easier. This may include renting a little longer to build up your savings. Buy when YOU are ready, not when others think you are. PLUS do your research!
What are your thoughts?
-Austin