Renting and buying property both have their own sets of pros and cons, but it seems that most people these days are merely interested in renting. Buying property rather than renting provides a sense of freedom and security, but it can also be extremely expensive. Why are most people more likely to rent rather than buy?
Renting Doesn’t Bind You to Anything
When you rent, you aren’t bound to a large investment. Renting typically entails short-term contracts or even month-to-month agreements that are extremely easy to get out of if need be. Buying can cost anywhere from five to seven figures, which is nowhere near what you’d be looking to pay if you just merely rented. If you don’t like the property, you are free to move without many negative financial repercussions. If you wished to move while owning property, selling it off would be more time-consuming and stressful. You’d have to more than likely contact a real estate agency, make the necessary repairs to get the property up to code and “sell-able,” and hope that it sells in time for you to make the move.
Repairs Are Not an Issue
Say you are renting an apartment and the toilet happens to clog. If you owned the property, it would be your responsibility to call a plumbing company and foot the bill for the repair. In your case, repairs on the rental property are not your responsibility. Any repairs or maintenance that need to be done would be left for the landlord to take care of because it is essentially their property. This immediately makes living a lot cheaper on the tenant.
Forget Property Tax
Not only are tenants not responsible for repairs or maintenance on the property, but they’re not responsible for expenses such as the property tax either. In some cases, the landlord works compensation for these types of expenses right into the rent.
Much Cheaper Over a Short Term
If you plan to rent over a short term (3-10 years), renting is generally the much cheaper route to go. Buying property requires a humongous down payment, while renting only takes a couple thousand dollars in extreme cases to get everything set up and going. However, someone looking to settle into a property over a long period of time would probably financially benefit more if they just bought a property. Compare making minimal rent payments for a few years to trying to stay up on your mortgage payments over the course of 30 years or so. This is a big part of why people do not want to rent property.
The Market Will Dictate the Value of Your Investment
Buying also comes with the risk of the market plummeting. In the current market climate, it is more risky to purchase property because people simply aren’t buying right now. If the real estate market takes a huge hit, you could lose your investment without many options for saving it.
Overall, renting is great for those who are not working with lots of money and don’t wish to commit to a property over a long period of time. Buying is more suitable for those who want to make a long-term commitment to a property, but it also requires lots more money to make the investment.