When looking for a house, there is always the doubt if buying or renting is the best choice. This has become a very common discussion due to higher selling prices in some areas, as well as of high interest rates offered by banks that often translate in a significant percentage increase in the total sale price. Before you start searching and decide whether you should rent or buy, you must consider the following important factors that are part of this debate:
If houses in an area are more accessible than you expected, one might be tempted to rush out and buy. However, there is no guarantee that the property will increase in value. Before you buy, you must perform an analysis on the lifeline of the city or neighborhood. Some things to consider are: Are there new restaurants and shopping centers opening in the area? Are there any schools or colleges nearby with a growing number of students? In general, does commerce tends to increase or decrease in the neighborhood? It may not be apparent at first, but sometimes the properties listed in trending towns or neighborhoods may tend in the long run to lose its value. Many times it may be recommended to initially rent in locations that are expanding, so you can understand the area of interest and decide if it is what you are looking for. With this you can be more certain if the property will increase in value in the future or not. If the area is not what you expected, you can keep renting the property while looking for a better location.
Compare costs: Buy vs Rent
Even in an expanding city, it can take years for buying to be cheaper than renting. For example, if you want to buy a house for $ 190,000 with 4.34%, 30 year fixed rate mortgage, it would take about seven years before buying becomes cheaper than paying an average rent of $ 923. (You can click here to access the calculator sales vs income) Calculate how long you are willing to stay in the area, and use the Rent vs. Buy Calculator to find the most economical and practical option for your situation.
Additional costs for housing
Don’t let a low rent or purchase price be the only determining factor for the decision. Properties in areas prone to flooding or complicated climate may require a higher insurance premium and a higher price of maintenance in case of any incident. Take in consideration also the transportation costs, income and property taxes to reflect the real cost of living in the area.
What is available?
The availability of homes for sale can influence the debate. If you are looking for a house, but in the area of interest you can mostly find apartments for sale, it may make more sense to rent. Some areas in expansion tend to offer many apartment towers, however getting a home may require a little more patience. In these cases, consider seeking a short term rental. You can get a low cost rental looking for a place outside the city or in areas where the price of rent is not too high.
Where you see yourself in three, five, or ten years? Are you willing to stay long enough to create a patrimony and see if the area will continue to rise in value? House prices rise gradually. If you’re not willing to risk in this regard, it may be a better option to rent. If you’re new in town, it may make sense to rent for six months or more, as you get installed. After this time you may have a better judgment of the area and its surroundings, without the excitement of living in a new place affecting your judgment. Whatever your final decision is, try always to get support from a professional who will advise on the best areas to invest, as well as of other investment opportunities in nearby neighborhoods. Real Estate companies often identify trends in the value of the different areas, as well as whether this areas will rise or loose value in the future.
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