Renting vs. Buying a Home

Simple Math

There are few privileged people in the world who can just cash out a home. What most people have to deal with are either bank loans or years (and decades) of saving money. Because of this, it might be a good idea to try and answer this question with a simple math. For instance, you will have to pay for your rent every month, but you will have to pay back the loan in the same manner, as well. Even though a bank loan is something you can pay off, it usually takes a lot of time to do so and you might end up paying much more than you originally borrowed.

On the other hand, paying a monthly rent is no better since a) it lasts indefinitely and b) you pay only for the privilege of vacating the place which will never be yours. People with low to moderate income can try and compare the monthly payment they would have to make and then go for the lower one. Still, paying back the loan for 20 years and paying the rent for 40 can never be the same thing. It would also be foolish to compare the price of the shack in the suburbs with the monthly rent of the downtown penthouse. The only way to be fair is to compare equivalents.

One last thing, the home that you buy may not be move-in ready which means that there may be some additional expenses to take into consideration. The price of the makeover depends on the work that needs to be done, but this is something that the potential owner should have to check with the remodeling team they hire.

Local Comparison

Furthermore, one more thing that adds to the complexity of this whole situation is that this comparison varies from town to town. For example, if you were interested in living in Sydney, you would have to check the prices of a particular Sydney property for sale and compare it to rental properties in the vicinity. In some places, the differences in prices are so great that making a decision becomes a no brainer.

Living on the Move vs. Settling Down

As we already mentioned, some people like to have a place they can call their own. This gives them certainty of knowing that no landlord can ask them to leave. Of course, even in a rental place you have a contract with your landlord and they must give you a minimum amount of notice, which depends on one’s duration of the tenancy. This, however, is no consolation when you are forced to leave behind a place that was your home for the last 10 years or so.

Still, there is also a plus side of not being tied down. A lot of things can happen over the course of years. For example, your neighborhood might go bad or even an entire city (take Detroit, for example). If you are a homeowner, all you can do is either continue living there or try to sell the place. Unfortunately, in this situation, you will never come even close to the original price. To the contrary, people who are living in a rental property can simply move away. No remorse, no regrets.

Dealing with Landlords

Another thing that plays a huge role here is the case of dealing with a landlord. Here, one mostly depends on luck. Some people find good landlords and have the luxury of forgetting that they are not living in their own home. However, some people are more controlling, or have bad previous experiences with tenants, which results in landlords who check out on tenants several times a week. Needless to say, this is not the most pleasant atmosphere to live in. Their luck can go either way, but the fact that they are depending on luck is quite unsettling on its own.

As a final point, it all comes down to personal preference. Some people would pay literally any price to live in a place of their own, while there are those who consider this to be an unnecessary expense. Be as it may, it is on you to decide.