Why renting a vacation home is better than buying?
In the long run, almost everyone wants to own personal property. Although many people now own a holiday home, the situation has not always been the same, but renting has always been popular. At present, the cost of buying real estate is on a steep rise, especially in cities, so either you rent or buy an apartment, both of them have their own financial advantages, as leasing appears to be an overwhelming burden when the economy is weak. Renting a holiday home has tremendous financial benefits. In this article we look at the reasons why tenants may have financially better value for their money than holiday homeowners.
Maintenance or repair costs paid by the owner and access to amenities
The landlord is responsible for all costs in regard to the property, that means he pays for maintenance and repairs. If the roof starts to leak, you have no financial responsibility for repairing these things as a tenant. Apartment owners are responsible for all of the repairs, maintenance, and costs that come with it all. Depending on what needs to be fixed, these prices can be quite high.
Another economic benefit of renting is access to amenities. Luxury amenities such as gyms or a pool come as a standard in many medium-sized high-rise apartment buildings or holiday apartments without additional fees to tenants. Even basic amenities such as dishwashers, ovens, fridges, freezers and other appliances will save you a pretty penny in the long run, since buying, renewing and servicing can cost a lot over the years. There are many home appliances worth hundreds or thousands of euros and as a tenant, you only need to call the landlord and notify them if any equipment is out of order and the landlord arranges for either a repair or a replacement. The only thing that may cause a renter to be irritated is if the landlord is poorly reachable or does not handle things promptly.
Real estate taxes paid by the owner
The most obvious benefit for a renter is that they don’t need to pay real estate taxes. Property tax can be a heavy burden on the homeowner and varies by region. While real estate tax calculations may be complicated, they are determined based on your estimated real estate value. When houses are made bigger and bigger, additional costs can be a considerable financial burden. Unless you are planning to build or acquire a minimalist mini-house that is now gaining popularity and is not a bad idea because of their environmental and economic benefits, making a bigger home is economically heavier than renting.
No big advance payments
Another thing where tenants have a better financial situation is when signing the contract. Once you have purchased a house with a mortgage, a substantial advance is required, usually 20 – 30% of the purchase price. However, you do not have to have a huge amount of savings when renting a holiday home. Although the exact amount of rental you need, varying on a case-by-case basis, the total amount is considerably lower than when buying a house.
According to a chart published by the New York Times, many landlords call for a long-term tenancy lease as much as one- or two-months’ rent, while the house advance is much higher. For example, setting a 5% deposit on a house with a market value of 175,000 euros will cost you $ 8,750, which is much more than the average one-month rental value. As a buyer of an apartment, you also want to save more than 5% for your cash payment as the bigger advance is better in the long run, because the more the buyer has, the less they need to borrow, and the lender will repay for a shorter time which will reduce the loan interest payment. In other words, the higher the down payment, the more savings in interest payments. In general, it is saving thousands of euros.