Just as hard to crack as the chicken and egg debate, many people get confused about whether they should rent their dream home or buy it. Perhaps you’re in this boat too and wondering which would be the best choice for you. Both of them come with their own merits and demerits, so the final decision can only be made by you. However, to get there, you must know how they differ from each other. Experts from residential property development companies are here to help you with that.
Key differences between renting a home and owning one
It may be your lifelong dream, but the truth is – renting or buying a home is entirely dependent on one factor alone. And that factor is your financial situation. With that being said, here are the key differences between renting and owning –
Flexibility
If you move around a lot – switching cities because of your job – renting offers you the flexibility to do so. With an owned property, you may feel tied down.
Stability
Owning your home can provide you with greater stability along with a sense of community, which can in turn lead to a more wholesome life.
Monthly payments
Though you have to make monthly payments for both, with renting you aren’t adding to your investments as you do with owning.
That said, the monthly expense of renting might be cheaper than owning.
Maintenance Cost
One of the key differentiating factors between the two – when you rent, you aren’t responsible for the costs of repairs and other similar expenses. When you own a property though, any maintenance costs are entirely your responsibility.
Financial Leverage
According to experts ofreal estate development firms, you don’t need a great amount of financial leverage to rent a property. But you do need it for owning one.
Besides, with renting, you don’t lose money in case house prices rise or fall. But you can be in that position if you own a house and wish to sell it.
Security
As you already know, no one can evict you from a house you own. However, if you rent a house, there’s always the risk of eviction for a number of reasons. Your landlord may even increase the rent, thus forcing you to look for a new home.
Value of Property
If you plan to buy your home, the value of your property can influence its price. A lot of factors can play a major role in determining its value – ranging from location to the size of the property, the amenities available, and the reputation of the builder among others. If all of these check out, the price of your chosen property might be higher.
The same factors apply to renting too. Say, for example, if neither the location nor the condition of the house is good, the landlord may charge you a very low rent. However, you should conduct an inspection of the property on your own before deciding to pay any amount.
Tax Benefits
According to real estate builders, if you’re a homeowner, you’re in luck! Why? Because you stand to enjoy certain tax benefits with your purchase. If you take out a home loan to buy your property, you can get a deduction on your mortgage tax. Or in certain cases, even save income tax. This is not applicable if you rent a property.
Commitment In Terms Of Time
Closely related to the maintenance aspect, you may find committing yourself to take care of your home to be a very time-consuming prospect. All the more so if you have a hectic lifestyle or a crazy work schedule. In that case, renting can seem like a much wiser option due to its more easy-going time commitment.
You’re Goals & Plans
Though it’s clear to see that your finances play a huge role in your decision to rent or buy, the ultimate decision depends on something a little more intangible. And that is your vision and goals for your future.
It’s easy to get influenced by the million opinions and advice people around you offer, but it’s vital you do not get swayed. Your decision of buying or renting has to make the most sense to you. It has to fit into your plan. So make sure you take that into account, weighing the pros and cons of renting and owning in relation to your situation.
Benefits of renting
All said and done, there are a few benefits to renting you should know about –
- You don’t have to go through the headache of paying house tax, EMI, and other related expenses that come with owning a house
- Your liability inevitably reduces when you rent a property as opposed to owning on
- With renting, you can get the same house for much more affordable as compared to owning
- Renting gives you the flexibility to be close to wherever your work or school is. With owning, you are tied down to a place
Benefits of owning
Being a homeowner has its own set of perks. Check them out below –
- When you own, you get both the benefits of stability and security as you can be sure you will never be without a roof over your head
- Unlike renting, home ownership payments help you create a valuable asset in your own name
- With owning a house, you never have to worry about spending too much time, money, and energy in moving to a different space
- Owning a house is equivalent to investing in real estate, which is a stable asset that comes with tax benefits and the possibility of value appreciation
Choosing between renting and owning can seem like a very difficult choice. However, the above points can make your journey toward a sound decision easier. If you’re still confused, you can talk to a financial advisor who would be able to help you out. In any case, whether you rent or own, make sure to always choose from reliable residential property development companies.