Before you decide to rent or to buy a property, you have to answer a couple questions to yourself: what are my plans, and how much am I willing to commit? This financial choice should be built on timing. Are you planning to work and live at the same place for 10 years and create a family or a business, or just study, have a couple of years in a stable job and move on?
To better imagine the situation, here is an example based on figures from Zillow, the number 1 marketplace for real estate. In Washington, the average rent price is 2500 USD and a two-bedroom house is around 700,000 dollars. Let’s assume that the down payment is 20% or 5% increase in rent price per year.
In this case, you need to own a house for at least 2 years for its price to go up. Don’t forget that the real estate market is not booming so much at this current time. After the financial crisis, 2/3 of the United states real estate still has not returned to the price that it was at before the recession. Analytics says that people will have to wait until 2025 to secure even a little bit of profit. Just a small part of our society has millions in their pockets to go and buy a house in a second. For all others, buying a property means debt for their whole life. It is a very high risk if you lose your job or recession comes again. You can lose your investment and home at the same time. Do your research before buying or renting by comparing prices, areas and consulting professionals.
Do you know what are you paying for?
To compare prices of rent and mortgage is a good start. But there are always hidden costs that nobody tells you about, that you will have to pay in the future, because you should be and adult and understand that.
- You must protect your property from any kind of damage and that requires you to insure your home. Rates may vary from the country, or place you live in. If there are hurricanes you will be paying more than you would when living in a big city or in a country where climate is usually the same some or only slight seasonal changes. It may vary from a hundred to thousand dollars. Renters sometimes just pay around 20 dollars to insure them for any damage they may cause.
- Property taxes. As an owner, you have to pay the land property tax.
- If you own a property, you are going to spend a couple of hundred dollars per month just on simple maintenance, the rate will also vary based on the location.
About renting, there are just a couple of things to say. It is an easier, cheaper short-term perspective, no risk or huge responsibility regarding the maintenance of the property. These are just the advantages and may sound better, but everyone is different, you need to check your financial possibilities, wishes and timing.
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