Should I Buy or Rent?

The age old question that plagues millenials and middle-aged couples alike. Should I buy or rent? I can assure you this is not one of those articles that makes you siphon through a long drawn out narrative to arrive at no real conclusion. I’ll give you the facts plainly. What you decide in the end may surprise you.

First how quickly do you want to move? Renting a house or smaller apartment can be accomplished fairly easily within 30 days or so. Buying your very own piece of Real Estate on the other hand… 6 months to a year, that is, if you EVER get to the closing table. When time is of the essence you will certainly fare better renting. Plus you can always sign a month to month lease and get into a home at your own pace.

Second why do you want to move? Is it to better your quality of life, avoid giving away money to your landlord, or just for a change of scennery. In other words how motivated are you to get out of the dump you are currently living in? If you are moving for personal reasons and would like to prioritize your mental health by means of a new environment, then by all means the answer is RENT! You do not want to stay in an unhealthy situation any longer than you need to. Getting into a happier more peaceful environment will lead to better job performance, higher compensation, etc. So if you will fare better mentally by moving, RENT and do it now. The added mental capacity will surely be able to make up for any money lost renting in the long run.

Third, if your only reason for considering the purchase of a home is a financial one then this paragraph is for you. There is no question that owning a home is dollar for dollar more beneficial then renting. However how big a financial gain you will receive is debatable, espicially when those gains hardly outpace inflation over time. So I will give you some pointers to consider in support of renters.

Take for example the business model of most corporations. Why does almost every major corporation with the exception of McDonalds lease their retail spaces. Do you think that a company like Tesla can’t afford to purchase the building where they service their vehicles. Of course they can afford to, but they are not in the Real Estate business. That capital can be better put to use to accomplish their mission. Using human capital, capital capital, or any other resource on something other than their explicit mission, would only hinder their progress and serve as a distraction. In the same way would owning a home serve as a distraction to you? Constantly worrying about when the boiler is going to need to be replaced or what to do when the toilet starts overflowing. For some the thought of being responsible fot these sorts of repairs is daunting. Renting does have its own set of distractions as well. Producing anxiety over the repeating concern that your landlord may not renew your lease or that you may have your rent raised.

So what should you do? Well the answer depends largely on what you value most and what you ultimately seek to accomplish in life. Renting generally makes for a simpler life in the short term, where as owning can prove to be less hectic and a good investment over the long the term. Hopefully this article gave you some points to consider before you jump in to likely the purchase in your life.

Financial benefits to home ownership:

1. Home Equity
2. More payment options for rainy days
3. Will eventually own your property
4. Tax benefits
5. Value typically increases over time

Financial benefits to renting:

1. No unexpected expenses
2. Smaller down payment = more cash on hand
3. Savy investors can get a ROI that outweighs that which ownership can provide