Getting Started

Buying versus Renting

Most people do not start out buying the first place they live after moving out of their childhood home. They rent. Whether it is an apartment, townhome, condo, or small house, a rental property is the most affordable option and the logical first step along the path to home ownership. Eventually, however, most people do start to think about buying their first home, but how do you know when the time is truly right?

Before getting into the pros and cons of buying versus renting it is important to state that the discussion is mute if you do not have the income and credit history/score to qualify for a mortgage (unless of course you have and are paying cash). If you want to eventually buy a home save your money and maintain good credit so you have the option.

As stated above most people’s first home is a rental property. While it may be unusual and unexpected for a contactor to discuss the advantages of renting over buying or building the fact is they need to be considered. First, renting is by far the least expensive option. Buying a home is expensive, not to mention the improvements that will almost certainly be required when you move in. Second, renters do not have to worry about or face the financial consequences of eroding equity, but neither do they benefit if the value of the property appreciates (increases). Third, renting offers more flexibility when you want or need to move because the lease period is finite and in some instances can be broken. When you own a home it is pretty difficult to move somewhere else unless you sell or turn your house into a rental property. Fourth, renters are not usually responsible for the cost of maintaining the property meaning when something breaks due to normal wear and tear the property owner bears the cost to fix it.

Renting does have some major draw backs which are the benefits of buying a home. First, there is no tax benefit to the renter. The tax benefit that comes from buying a home can not be under stated. The IRS allows an owner(s) to deduct the interest they pay on the mortgage on their primary home from the calculation of their income taxes, which can really add up to a lot of money. Second, as stated previously renters get no benefit if the property’s value appreciates over time. Third, renting does not provide the sense of pride and security of owning your own home. This concept is difficult to articulate and quantify, but the fact is most homeowners will tell you that the sense of pride and security they get from owning their home is very important and a very real and tangible advantage of buying versus renting.