JP& Associates Realtors
At some point in our nation, owning a home became the American Dream, but buying real estate can make financial sense as well. The comparison of renting over buying can change depending on the area you want to live in, and of course the expense of your property. Here are a few thinks to consider if you are debating between playing the renting game and buying a home.
Property taxes. In larger cities most renters do not have to pay property taxes, which definitely shifts the scale in the favor for leasing. In U.S. cities there has been an increase in the number of foreign investors buying expensive properties and renting them out. This has helped to make leasing more affordable at the upper end of the market.
Mortgage interest. Another factor to consider when looking at homes is the tax treatment. Most homebuyers can deduct the full amount of their mortgage interest payments from their income taxes. But that’s not necessarily the case with pricier homes. There are a few reasons why renting a high-end home may make sense. For one, tenants don’t have to worry about maintenance costs, which can be substantial on a larger home. And for another, leasing provides greater flexibility if you’re not certain where you’ll be living in a couple of years.
The biggest myth about renting is that you’re "throwing away money” which is not necessarily true. The overall cost of home ownership tends to be higher than the overall cost of renting, even if the monthly mortgage payment is similar to (or lower than) the monthly cost to rent. Here are some expenses you’ll be “throwing away money” on as a homeowner that you don’t have to pay as a renter
Home ownership is often touted as a way to build wealth, but your home can lose value. Scenarios such as the acceptable neighborhood you moved in could decline. A major employer can leave the area, causing a significant population decline and a surplus of housing, or there could be a residential construction boom. Another bit of misleading conventional wisdom: Get a mortgage to get the tax deduction. But tax deductions are not a reason to buy a house.
*For more information about the buying or renting debate please visit The Sharp Group page or contact one of our Sharp Buyers Agents. The Sharp Real Estate Group is devoted to proving sharp service towards all your real estate needs.*
The most known drawback is that you won’t be able to build equity to tap for future financial needs. Also, in some cases you won’t have as much freedom to personalize your space with the paint colors or landscaping of your choice. Essentially, if you rent a home it still does not belong to you, and therefore you are responsible for the landlord’s property. Another case is if you are renting a much smaller space, such as an apartment, you often share walls with others, which causes a noise and sometimes a privacy issue, and you are subject to rent fluctuations.
Buying is still more advantageous than renting for low- and moderately-priced homes. When you throw historically low interest rates into the mix, owning tends to make sense for those who can afford it. However, leasing is still the better bet in cities where the potential gain from renting at a lower price allows you to investing the money you don't sink into housing into stocks and bonds. In this case renting exceeds the advantage of buying a home and developing equity.
Choosing between renting a house and renting an apartment is not the easiest task, but shouldn’t be the hardest one either. There are a few consistent pros and cons that will make the selection easy.
Typically, a house is going to provide you with more room inside as well as outdoor space like a yard for your pets, and children.
While most apartments in the DFW area come with a parking spot, a large number of urban apartments, particularly older buildings, do not. If you have a vehicle or two, you may want to look at renting a home with a garage or private drive. Parking lots also open up the possibility of risk of damage or theft to your car.
With no neighbors listening through the walls or complaining about your footsteps in the morning, you have a lot more freedom in a home.
Houses tend to be rented by individual owners and while you may know your rights as a tenant, they may not, and that’s where a real estate professional can help.
A house comes additional maintenance. There aren’t only more windows to clean, more floors to vacuum, but there’s also a lawn to mow and a flower bed to tent. Sometimes the renter is required to pay for the HOA fees if it is mandatory, but if you’re lucky the landlord will cover this for you.