When Renting Is Better Than Buying
Dan The Roommate Man
If possible, it is ALWAYS better to buy than to rent. Right Perhaps Not.
No one will deny that owning your home is a big part of the American Dream. It is also a goal that most people, rightfully, strive to attain. Home ownership can provide substantial financial rewards, afford tremendous peace of mind, be the source of immense personal pride, and greatly add to a persons general well-being and quality of life.
Having said all that, there are still certain times, and certain situations, where renting may be a far more viable option than buying.
You Should Consider Renting Instead Of Buying A Home When:
You Know Your Time In An Area Is Very Short.
If you know, for a fact, that you going to leave an area in two years or less, than the costs associated with buying and selling real estate might not only eat up any profits gained by appreciation, but may even cause you to lose money. Having said that, a viable option might be to purchase a house you would want to hold as an investment property. When doing this, buy a house that makes economic sense for you as a future landlord, not as a home owner. This may mean purchasing a townhouse or condo instead of a single home , or it could signify buying a smaller, less expensive home.
Your Financial Situation Means You Will Be Totally Strapped For Cash.
Stretching your qualifying limits can be a good thing for some buyers, in certain situations and markets. However, generally you should avoid any scenario that places you in jeopardy of finding yourself under serious financial strain. The bottom line is this: while some buyers can qualify for a loan by moving heaven and earth, conventional wisdom shows that they probably should not. A better option would be to test the waters. Spend at least a few months living as if you had already taken on the more strenuous financial obligations a mortgage payment would create. If you can do this without a lot of stress, than you have a win-win situation. You will have saved extra money for your down payment, or your "cushion", and you will have gained an added measure of confidence in your ability to handle increased obligations.
Your Relationship With A Co-Buyer Is Not On Steady Ground.
Heres a word to the wise. If a couple is experiencing marital problems, buying a house is probably not going to solve their issues. What it will do is complicate the divorce process, should this be the unfortunate outcome. A better option for a couple might be to use the occasion of a mutual desire to buy a house as an opportunity to sit down and work out their problems, if possible, first.
Buying a home is or should be one of those high points in life. It should be exciting and wonderful and full of promise. With a little advance planning and forethought, it can be all that and more.
Published: October 1, 1998
About The Author
Since 1989 Dan The Roommate Man has helped 1000s of people find roommates. Need help Contact him at 800-487-8050 or www.roommateexpress.com
info@roommateexpress.com
High-income Earners Consider Renting Chic Again
Dan The Roommate Man
Over the past two years, households that earned $50,000 or more annually and had the means to join the ranks of home owners or continue owning the roofs over their heads represented the fastest growing segment of the rental market, according to the National Multi-Housing Council.
"These are people who could have bought but choose not to," NMHCs Kim Duty reported at the National Association of Real Estate Editors annual conference late last month in New Orleans. "Their older, more affluent and better educated, but they choose renting for the lifestyle, not economic reasons."
As Duty sees it, "the pendulum is swinging back" to the early 1900s when apartment living was considered chic. "Changing demographics, evolving lifestyles, new public policy initiatives and changes in the apartment industry are all working together to increase apartment demand," she told the meeting.
Over the next decade, according to NMHCs research, the two fastest growing age groups are two of the most likely to select apartment housing people in their mid 20s and empty-nesters in their 50s.
After more than 20 years of declining numbers, the population in the traditional renting years age 20-29 is expected to increase by 11 percent over the next decade. During the same period, moreover, the number of people in the 45 to 74-year-old age bracket will swell by 20 million, and these are folks who exhibit a much greater proclivity to rent than the counterparts in previous generations.
Duty, the apartment groups vice president of communications, also said the fastest growing portion of newly formed households going forward will be childless couples, singles living alone and unrelated households, all of whom have a higher propensity to rent than to buy.
She cited "three key reasons" these and other households choose to rent:
A desire for hassle-free living People want to simplify their lives by shortening their commutes, shedding household-related chores and living closer to entertainment, restaurants and shopping.
Financial incentives Many households want the ability to pick up and move from one job and/or place to another at will without incurring the costs of buying a new place and selling the old one, "financial penalties" few purchasers consider. Others opt to rent so they can invest their money in the stock market as opposed to their homes.
Superior amenities The evolving apartment sector now offers a package of services and features that cannot be replicated in a single-family house, at least not affordably. These include high-speed internet access, security, built-in social opportunities, on-site concierge, fitness centers business centers and even movie theaters.
In addition, Duty said, many of todays apartments "look and feel more like single-family homes. They are larger, and they include finishes such as attached garages, built-in, pre-wired entertainment centers, private alarm systems, granite counter tops, oversized whirlpool tubs, gas fireplaces and more."
The NMHC also believes the 1997 Tax Act tilted the rent-versus-buy decision in favor of apartments. Now that the first $250,000 of capital gains $500,000 for married couples filing jointly is tax-free, more home owners are able to consider renting without being encumbered by a huge tax liability.
Indeed, the groups analysis indicates that apartment demand could increase by as much as 10 percent over the next several years due to this change in the tax law alone.
On the supply side, meanwhile, new interest in smart growth and infill development is "making it easier to get new apartment construction approved," Duty said, maintaining that apartments utilize existing infrastructure more efficiently that detached housing.
"Urban areas also realize that the lifestyle rental market is a key market to target in trying to recruit middle and upper-income households to return downtown," the industry spokesperson added.
Finally, in contrast to mom-and-pop apartment owners of yesteryear, most of todays landlords are large firms that are invested in the long-haul, not short-term tax benefits. And as a result, they have made obtaining and retaining residents "a highly professional endeavor."
About The Author
Since 1989 Dan The Roommate Man has helped 1000s of people find roommates. Need help Contact him at 800-487-8050 or www.roommateexpress.com
info@roommateexpress.com
Renting Versus Buying: Pros and Cons
Dan The Roommate Man
Realtors have benefited from a new variety of homebuyer in todays market: the young, single professional. It used to be that most single men and women resigned themselves to a somewhat transient, short-term renters lifestyle until Mr. or Ms. Right came along. Thats not the case anymore. With more and more people delaying marriage until their careers have assumed the direction they wish to take -- and due to the fact that a greater percentage of young people are financially independent and quite successful -- single professionals are changing from renters to buyers.
At the same time, however, many renters are content to stay that way. Although buyers will talk your ears off about the advantages of permanency and ownership, diehard renters enjoy the freedom their lifestyles provide. From hassle-free maintenance to the record number of luxury amenities present in new properties, many renters are perfectly content to stay that way.
However, the majority of people, whether single or married, will at some point ask themselves, "Am I ready to buy" Buying ones first home is a major step for anyone. Is there a "perfect" time in ones life to make that transition What are the advantages and disadvantages associated with renting and buying Each one has its pros and cons. The following list can help you consider the inherent hassles and positives of both.
Renters ...
Dont gain equity; nor do they lose it. Regardless of what improvements renters make to their homes -- and regardless of any outside influences that would cause the property value to increase -- renters will never gain equity.
Dont have to put down as much money up front.
Reap no tax advantages. Any and all tax breaks and other tax-associated advantages are enjoyed by landlords.
Enjoy the assurance of fixed costs that wont fluctuate during the term of a lease. The lease is a contract -- an insurance policy, so to speak.
Often cannot personalize their homes as they see fit. This includes such modifications as painting walls some landlords will allow renters to paint their walls only if they paint them white again before they vacate their homes.
Can merely pack up and leave upon the expiration of their leases. They dont face the hassle of finding a buyer and waiting until a sale takes place.
Face much less work in maintaining their homes, inside and out. In many multifamily properties, they enjoy the convenience of a full-time maintenance staff to handle appliance repairs and other minor repairs.
Buyers ...
Often gain equity. However, they can also lose it. Their equity can also remain static.
Must go through the process of selling their homes and finding a buyer, either with a Realtors help or not, if they elect to move out of their homes.
Must put down a greater amount of money a substantial downpayment than a renter, who merely pays a security deposit and first/last months rent.
Are subject to variable costs in the absence of documentation that keeps costs fixed.
Must either perform maintenance/repairs on their own or using the services of a professional whom they hire and pay themselves. Buyers are fully responsible for any and all repairs. Note: One exception would be some planned or gated communities, in which residents pay a maintenance fee for the convenience of having yardwork and general maintenance performed by a full-time staff of servicepeople.
Are free to paint, redecorate and remodel their homes as often as they wish.
Enjoy the tax breaks and other tax advantages associated with homeownership.
Build equity regardless of whether the value of their homes increases over time.
Eventually own their homes and are free of a monthly mortgage payment.
This direct comparison clearly shows that neither buying nor renting is the "perfect" choice. Depending upon your lifestyle -- including such factors as the stability of your career, how often you travel for business and whether or not you plan to reside in your current hometown for a long period of time -- either choice has plenty of valid advantages. The multifamily housing market has exploded nationwide during the last decade, offering renters more advantages and more amenities and more flexibility in housing styles than ever before. And yet, the dream of homeownership is firmly implanted in the minds of most Americans. Its a worthwhile and significant achievement to be sure. Thanks to the success of the multifamily housing industry, however, renters no longer have to resign themselves to cookie-cutter accommodations until the dream of homeownership is within their reach -- that is, if they ever choose to reach for it.
About The Author
Since 1989 Dan The Roommate Man has helped 1000s of people find roommates. Need help Contact him at 800-487-8050 or www.roommateexpress.com
info@roommateexpress.com