When faced with a tough choice, there’s an age-old method to help you decide what’s best for you — and no, we’re not talking about eeny-meeny-miny-moe! We’re referring to something not based so much on chance, but rather on logical reasons for why or why not. We’re talking about a good ol’ pros and cons list!
The pros and cons list comes in handy for big decisions with lots to consider, and there’s nothing that fits that category more than deciding whether you should take the plunge and buy a home, or opt to rent instead.
To buy or not to buy — that is the question! But the best answer can depend on various factors.
Contrary to popular belief, buying isn’t always the clear-cut winner here. There are some downsides to purchasing a home, just as there are some upsides to renting. To help you choose, we’ve started a generic pros and cons list for you, and we’ve included some other considerations to keep in mind when determining what’s right for you, specifically.
Buying Pros and Cons
To many, purchasing a home of their own fulfills the “American dream.” It’s just what you do when you’re a grownup, isn’t it?
Well, not necessarily. From your stage in life and personal lifestyle, to your financial stability and future goals, there is much that factors into whether buying is best for you.
Let’s start by considering the pros and cons:
Pros of Purchasing a Home
- You will build equity over time.
- It’s an investment that can increase in value.
- You have more privacy. Finally — no loud tenants upstairs or anyone yelling at you to turn your TV down!
- You can receive special tax benefits.
- You can enjoy more freedom. As your own landlord, you can decorate and customize any way you want, so go right ahead, paint that wall black, and hang that velvet, Elvis!
- You typically have more space, including outdoor space.
- You gain a sense of pride and community.
- You can put down roots to establish a sense of permanence and stability.
Cons of Homeownership:
- Increased responsibilities. You have to maintain and repair everything from a leaky faucet to a leaky roof. There’s a lawn to mow, a driveway to shovel…you get the idea!
- Added expenses. Not only do you have to make the repairs, but you have to pay for them too. You also have to consider the upfront costs when closing on a house, as well as things like property taxes, HOA fees, furnishings, and home insurance.
- Long-term commitment, less flexibility. If something changes in life, such as your job location, it’s much more complicated and difficult to move from a home than pack up and leave from a rental.
Renting Pros and Cons
The bad rap renting typically gets is that you’re “throwing your money away”, but that’s not necessarily the case. It’s giving you a place to live, isn’t it? And maybe that’s just what you need right now. The fact is, there are times when renting may actually make the most sense for you.
Not sure? Hopefully these pros and cons can help:
Pros of Renting a Place:
- You typically have less expenses. Utilities are often included in rent, you don’t have to pay for any upkeep or property taxes, and there are no closing costs or HOA fees. You might be throwing some money toward rent, but there should be plenty left over in your pockets!
- Short-term commitment. Leases are more flexible, making it easier if things in your life change and you wish to move.
- No maintenance responsibilities. Just call the landlord, and call it good — a big plus in anyone’s book!
Cons of Renting
- You don’t build equity.
- You have limited control and ability to customize your living space.
- You’ll have no tax deductions.
- It’s less stable. Landlords can raise rent or even decide to stop renting.
- It’s more difficult to have pets.
- You tend to have less or no outdoor space.
- You don’t have much sense of permanence.
Renting vs. Buying Key Factors to Consider
While keeping all the pros and cons of renting and buying in mind, it’s also important to consider several aspects of your life to determine which living arrangement best fits your needs, at least for now.
This is a biggie! It’s crucial that you are realistic about what you can afford. While purchasing a home offers more stability and freedom, that’s not so if you can’t afford to keep up with your payments or you put so much of your money into your home that you’re too strapped and “house poor” to do anything or go anywhere — or worse, have enough money to cover popup or emergency expenses like car repairs or hospitalization.
While your mortgage payment may seem doable on paper, be sure to take into consideration all your other monthly expenses such as food, utilities, gas, car payments, and any other bills or loans you may have (and don’t forget those maintenance, repair, and other costs of homeownership we mentioned!) You can then compare how much money you’re left to live on if you buy a home versus if you rented instead. There are handy-dandy rent vs. buy calculators online that can help with this.
Lastly, take the real estate market into consideration. If it’s a seller’s market, you may want to rent for the time being until things come around to favor buyers in order to get more bang for your buck.
Lifestyle and Life Changes
Getting married? Switching jobs? Having a baby? The stage you are at in life can have a big effect on whether you decide to rent or buy. Typically, your financial situation changes with these various stages of life too, and as we mentioned above, that matters!
Your lifestyle also differs in each stage, and that can impact whether the timing is right to buy or rent as well. For instance, a young and active couple or someone who travels a great deal may be likely to benefit from a temporary living space, while a family who’s more apt to stay home may be ready for more room and a sense of permanence.
It’s also important to consider that if you’re in the middle of a complicated life change, such as a divorce or serious health issues, you may want to wait to take on the added stress and complications involved in purchasing a home. As they say, timing really is everything!
Which is more important to you right now, ease and flexibility or permanence and stability? How long do you plan on living in the same place? Are you ready to settle in and put down roots or are you looking to travel or try your hand at a new career?
Once you’ve considered all the rent vs. buy pros and cons, it’s a good idea to prioritize that list in the order of what matters to you most at this time or in the near future. This will help put your current needs into perspective, which will in turn help you make the decision that best fits those needs.
Looking to Rent or Buy (or Both!) in West Michigan?
Sometimes you can find the best of both worlds in a “rent to buy” property, where you can start out as tenants and have the option to purchase if you decide to officially stay put. Whether that’s something that interests you, or you need help finding a rental while searching for your forever home, or you’re ready to take the plunge into homeownership, BlueWest Properties is here to help!