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Should I Rent or Buy?

Should I Rent or Buy?

There is a lot of talk about which is better, renting or buying. Each has its disadvantages and advantages and neither solution is ideal for all situations. In general, renting is cheaper in the short-term, and buying is cheaper in the long-term. Though a buyer may pay twice as much for a home in the short-term, when the house is paid off, a buyer will pay nothing more aside from maintenance and taxes. The renter has to continue paying for the rest of their lives. Here are the reasons a person may buy, rent, or refrain from one or the other:

Benefits of Renting

Greater Flexibility

Renting allows greater flexibility than owning a home. If the right apartment is chosen, more money can be deposited in a savings account during the early years. Renting can help a person save to invest into a business or even to save for a down payment on a home. Renting also usually appeals to the transient community because the commitment is typically shorter than the commitment of buying a home.

Maintenance-Free

Maintenance is usually covered through the rental company. There is no need to invest into maintenance for the home because it is included. This saves the renter money and time. A person who is not ready for the responsibility of home ownership will appreciate a rental home.

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No Agents’ Fees or Stamp Duty Fees

Agents’ fees and stamp duty fees can be considerable if the home has to be sold at any point of home ownership. These fees do not exist with renting. Renters typically pay no fees if the home is left in the same condition that it was found when first occupied.

Not Tied to a Particular Location

If a particular location is not preferred, the rental agreement is typically only a year. Rental contracts do not have to be renewed if the renter doesn’t like the location or if the renter doesn’t like the property itself. Renting is preferable to people who want to try out a community before buying in it.

Benefits of Buying

Own an Appreciable Asset

Appreciable assets can be used for leverage or inheritance later in the future. Ownership is preferable because it is easier to obtain loans and build credit when buying a home than it is by renting.

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Discounted Variable Mortgage Rates

In the USA, Variable mortgage rates are now 1.25 percent lower than they were in 2011. The fixed mortgage rates have been discounted by as much as 2.1 percent.

Disadvantages of Renting

Rent is Becoming More Expensive Than Buying

In some regions, such as 388 suburbs, renting can cost more than buying. Rental rates for houses have risen by up to 4.2 percent over the past year. Rental rates for apartments are 2.9 percent higher for units in capital cities. The rental market has become quite competitive, and the costs are more expensive. When the rental costs exceed the mortgage costs, there are few advantages to renting.

No Appreciable Asset to Leverage

At the end of the rental agreement, the apartment will be returned to its rightful owner. Renting does not provide an appreciable asset that can be used to borrow against nor does it typically serve as a tax deduction. Furthermore, when the house is paid off in the future, buyers can rest knowing that they own an asset that can offer financial flexibility.

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Disadvantages of Buying

Long-Term Commitment

Home buying requires a long-term commitment. Some loans require up to 30 years. A person entering into a long-term contract must ensure that they like the home and the area. Selling a home before the mortgage is paid can result in losses if the economy is not good. Buyers must ensure they are prepared to incur losses before entering into a long-term contract.

Maintenance

Whether the home is new or old, the buyer is responsible for maintenance. These costs can add up over the ownership of the home. Every home owner must have money in reserve to cover the costs related to maintenance on a home, which could vary from year to year. If repairs to the plumbing or roof are needed, the costs could be considerable.

Rent or Buy: The Choice is Up Each Individual

Whether people rent or buy, the choice is entirely up to them. A home should only be purchased if it is within the budget. Saving for a down payment on a mortgage can significantly impede a person’s lifestyle. Save for a home only when life can be sustained and enjoyed during savings.

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LWP Property Group offer house and land packages for first homes buyers. Just be patient and perform the research necessary to find an affordable home whether renting or buying. This will prevent any problems in the future.

Featured photo credit:  A key in a lock with house icon via Shutterstock

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Last Updated on January 21, 2020

How to Develop a Millionaire Mindset in 6 Simple Steps

How to Develop a Millionaire Mindset in 6 Simple Steps

We all like to dream about being financially wealthy. For most people though, it remains a dream and nothing more. Why is that?

It’s because most people don’t set their mind to achieving that goal. They might not be happy in their current situation but they’re comfortable – and comfort is one of the biggest enemies of growth.

How do you go about developing that millionaire mindset? By following these simple steps:

1. Focus On What You Want – And Take It!

So many people are too timid to admit they want something and go for it. When there is something that you want to accomplish don’t think “I could never actually do that”, think “I could do that and I WILL do that”.

Millionaires play to win, not to avoid defeat.

This doesn’t mean to have to become a selfish jerk. What it means is becoming more assertive and honest with yourself. You don’t have to grab off other people. There is a big pot of unclaimed gold in the middle of the table — why shouldn’t you be the one to claim it? You deserve it!

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2. Become Goal-Orientated

It’s almost impossible to achieve anything if you don’t set firm goals. Only lottery winners become millionaires overnight. By setting yourself attainable goals, you will get there eventually. Don’t try to get rich quickly — get rich slowly.

Let’s take the idea of making your first million dollars and expand on what kind of goals you might set to get there. Let’s also say you’re starting at a break-even position – you’re making enough to get by with a few luxuries, but nothing more.

Your goal for the first year can be having $10,000 in the bank within a year. It won’t be easy but it is doable. Next, you need to figure out the steps you need to take to achieve that goal.

Always look at ways to make growth before cutbacks. With that in mind, you might want to see if you can negotiate a pay rise with your boss, or if there’s another job out there that will pay better. You might be comfortable in your old job but remember, comfort stunts growth.

You may also have other skills outside of your workplace that you can monetize to boost your bank balance. Maybe you can design websites for people, at a fee of course, or make alterations to clothes.

If this is still not enough to make the money you need to save $10,000 in a year, then it’s time to look at cutbacks. Do you have a bunch of old junk that someone else might love? Sell it! Do you really need to spend $10 on your lunch everyday when you could make your own for a fraction of the cost?

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If you are to become a millionaire, you need to start accumulating money.

Here’re some tips to help you: How to Become Goal Oriented and Achieve More in Life

3. Don’t Spend Your Money – Invest It

The reason you need to accumulate money is for step three. Millionaires tend to be frugal people, and that’s because they know the true value of money is in investing. Being your own boss goes hand-in-hand with becoming a millionaire. You’ll want to quit your regular job at some point.

Stop working for your money and make your money work for you.

Rather than buying yourself a new iPad, that $500 could be used to invest in the stock market. Find the right shares (more on that later), and that money could easily double within a year.

There’s not just the stock market — there’s also property, and your own education.

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4. Never Stop Learning

The best thing you can invest in is yourself.

Once most people leave the education system, they think their learning days are over. Well theirs might be, but yours shouldn’t be. Successful people continually learn and adapt.

Billionaire Warren Buffet estimates that he read at least 100 books on investing before he turned twenty. Most people never read another book after they’ve left school. Who would you rather be?

Learn everything you can about how economics works, how the stocks markets work, how they trend.

Learn new skills. If you have an interest in it, learn everything you can about it. You’d be surprised at how often, seemingly useless skills, can become extremely useful in the right situation.

Start developing the habit of learning continuously: How to Create a Habit of Continuous Learning for a Better You

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5. Think Big

While I advise to start off with small goals, you absolutely should have a big goal in mind. If you have a business idea, then that is your ultimate goal – to start that business and make a success of it. If you want to invest your way to millions of dollars and do little work other than research, then that is your big goal.

There is no shame in not achieving a big goal. If you run a business and aim to make $1 million profit in a year and “only” make $200,000, then you’re still significantly ahead of most people.

Aim for the stars, if you fail you’ll still be over the moon.

6. Enjoy the Attention

To be successful, you have to be willing to promote yourself and enjoy the attention to a certain extent. Now the attention doesn’t need to be on yourself, it could be on your brand, but attention definitely attracts money.

Never be embarrassed to get your name out there. That means finding a spotlight and being brave enough to step right up underneath it.

If you run a business, try contacting the local papers. You’d be surprised at how amenable they often are to running a story about you and your business, and it’s all free publicity.

Above all, remember: You control your own destiny. Push hard enough for anything and you’ll get it.

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Featured photo credit: Austin Distel via unsplash.com

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