One of the biggest initial decisions someone looking for a new home has to make is whether or not they would like to rent or buy a new property. A lot of different factors are at play when making this kind of decision, and each option has a set of strengths and weaknesses that might influence your decision when looking for a place to live. We will outline some of the most important strengths and weaknesses of both options so that you can better understand which option might be best for you.
Renting allows you to make regular payments to afford you the right to live in a specific property owned by another party. Renting a home is typically more flexible than owning a home, as renters have the opportunity to move out of their current home without penalty once a lease expires. Other important strengths to keep in mind include:
- Monthly cost is consistent and predictable during the term of a lease, as the price cannot be raised until after your current lease ends.
- You do not have to worry about affording a significantly larger initial down payment that you might have to pay for when purchasing a home.
- Renters have landlords who will handle repair and maintenance commitments that would usually give a homeowner a headache.
Renting also has its fair share of weaknesses, many of which are in the form of missing out on opportunities afforded to actual homeowners such as tax relief and building equity. Some of the more important weaknesses to take not of include:
- Being forced to move in the event that the landlord decides to sell the property or turn it into condos.
- An increase in rent price should you choose to renew your lease.
- Landlords may not make repairs as soon as you would like or do yourself.
If you want something a little more permanent than renting a home you may want to buy a new home instead. Owning a home offers a greater sense of stability than renting does and has a lot of strengths such as:
- Building equity over time by spending money to improve your home.
- Intangible benefits of belonging to a community and the pride of owning a home.
- Making repairs and improvements as you please rather than waiting for a landlord to make them for your home.
Owning a home feels great and offers a wonderful sense of pride for those who accomplish it, but it is important to consider all of the extra costs and problems associated with owning a home. Some of these weaknesses associated with owning a home include:
- External costs outside of basic mortgage loan payments such as property tax, repairs and maintenance, homeowners insurance, etc.
- The risk of your home losing value over time as your neighborhood changes and not being able to sell it.
- Renovation projects may not have as large of return as desired, and often fail to increase your home’s value by more than you spent on it.