When you are looking into investing in a property, you might question whether it is smart to buy a house or rent it. Both have certain advantages and disadvantages that they extend.
Pros of buying:
- Buying entails that you can have long term benefits like equity, stability and some financial security.
- Depending on the market, the value of your house will increase overtime which means that there is potential profit to be earned.
- Your house will become a legal asset through which you can do things like secure loans.
- If you are the owner of the house, you can change it, renovate it and redecorate it without any repercussions.
- You can give your home off for rent which would secure you monthly payments.
Cons of buying:
- You would have to be twice as responsible in regards to mortgage payments, house maintenance and upkeep.
- You may find that it is more expensive due to interest rates of mortgages, taxes, repairs and insurance.
- You may potential lose a giant portion of the money you invested in the house if the real estate markets dips.
- If you have decided to rent your house to individuals, then your options are limited, you cannot move in, sell the house or make changes without a notice.
Pros of renting:
- When you live in a house on rent, you are granted increased mobility. You can switch homes depending on your location, your job and the like. You are not tied down.
- You can also live in an area you would not have been able to afford to live in otherwise.
- The process of switching homes is easier since you don’t have to worry about selling a house, paying off a mortgage or renovation.
- Renters insurance is cheaper since it only covers the contents of the house. You will not have to worry about the additional cost of homeowner insurance.
- Rent only takes away a certain percentage of your finances on a monthly basis. You don’t have to worry about interest or mortgage payments.
Cons of renting:
- You will not have full control over the house and will have to live carefully.
- Every time you want to make changes to the house, you will have to ask the homeowner.
- Renting involves the interference of a renter agent which can prolong the process.
- There are no opportunities to raise money through property value. You can’t call it an asset thus limiting benefits further.
- Renting is subject to inflation. This would mean that the rent would fluctuate.
- Once you have stayed the time stated on your lease, there is no guarantee that the home owner will let you stay longer. Thus, you will have to ensure that you have preparations made before the lease expires.
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