Renting vs. Buying…a Philosophical Conversation

Westcoe Realtors, Riverside Ca…In most articles or blogs about renting vs. buying, there are lots of numbers and statistics…tax rates, interest rates, tax savings, monthly payments…you get the picture. Yes, information such as this is important to many when considering renting or buying, but today’s blog is not about stats…it’s a philosophical approach to this age old real estate conundrum. Is it better to rent, or is it better to buy?

Well, like so many issues in life, the answer is….it depends.

For many people, it is far better for them to rent. If you are early in your job career and money is tight, but will be better with advancements, then perhaps you have no choice but to rent for the moment.

Perhaps your job will involve transfers on a regular basis…then maybe renting makes more sense…or you are expecting a promotion soon, which might also require a transfer. These scenarios make renting a better option than owning.

Or, perhaps your life situation will be changing soon (getting ready to marry…or “un-marry”) and renting is better for the moment.

Our point here is that unlike most real estate companies, we don’t assume it is better for everyone to purchase a home. One size does not necessarily fit all.

HOWEVER…if none of the above describe you, and you are simply renting because it’s all that you have ever known, then please consider the two following points that should tilt the scales in favor of buying a home.

FIRST…if you own you own home, your lender (assuming you have a fixed rate loan…which you should) cannot raise your payment. This is huge. As a tenant, every smart landlord will usually give you a rent increase about every 12-18 months. In most cases, it will be what is called a nuisance rent…big enough to hurt a little, but small enough to keep you from moving. Landlords do not lower rents…they raise them, and yours is no different. So…if you like having your monthly payment go up on a regular basis, then stay where you are. Otherwise, you can eliminate the raise by getting a fixed rate mortgage.

SECONDLY…if you are renting a house, eventually you will be told to move. Sooner or later, your landlord will want to move you out. Could be they want to move back in, or sell the home, or they have a child they want to have move in…who knows? But the bottom line here is that YOU do not control your living space…the landlord does…and moving is a hassle, expensive, and a pain. Schools may need to be changed, longer drive times to work or shopping, and in most cases, the new rent is higher than what you are paying, because when a home is vacant and up for rent, then the landlord will shoot for the moon to establish a new base rent for their future nuisance rent increases.

The moral of this story is that owning a home is not for everyone. In fact, in the United States, the percentage of renters has historically been around 37-40%. However, if you are one of the many who has a stable job, can afford a home, and are simply letting the inertia of what you have always known keep you from making the leap, think of what we have said here the next time you get your rent increase notice, or worse yet, your notice to move out.

Our guess is that you will wish you owned your own home so no one could ever do this to you again.

Good luck, and as always, we are available to answer any questions you may have about real estate.

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