Did you know that you will buy a house in your lifetime? That’s right! You are going to buy a house! You will either buy your home or you will buy your landlord's home. These are just the simple facts of life, like death and taxes.
I’m not saying that all rentals are bad because I own a 52-unit apartment complex, North Gate Apartments, but I can certainly make the case for purchasing a home in the long term.
There are certainly times to rent, so when should you rent? If you move to a community for a job and you have no association with that community and don’t know how long you want to stay, then renting is probably the best option. Renting is certainly the best solution for a transient stay in a community. The second best option for renting would be if you want to save up a down payment to purchase a home or repair your credit. Keep in mind that today, the credit requirements for a rental are sometimes higher than those for a house. Why is this? Because when you purchase a home, the bank or financial institution uses the house as collateral for your debt, not so with an apartment rental. Apartment companies have to make sure that you are not a tremendous risk. I see so many young people ruin their credit or rental history only to find out it follows them for years or decades to come!
Why should you buy a home when you rent? When renting, that money goes down the drain, never to be seen again! However, when you purchase a home, your payments essentially stay in your pocket, just like if you were putting it in any type of investment. Statistically, your home will sell for more than you paid for it, so even though you are making the house payment to the bank with interest, that money still remains yours because it’s part of your home.
A house is the largest investment most people own, but it’s also an investment that, statistically, if held for a reasonably long time, will generally go up in value. In addition, payments made to your bank for your primary residence can be taken off your taxes; this is not so with rent. In addition, you are building equity that can be borrowed against in the form of a home equity loan. So, the choice is really this: you can either pay for someone else’s house or you can pay for yours! If you’re not in a position to become more financially stable, or I think that you will not live in a community very long, then renting may be the best choice, but generally, purchasing a home will secure a better future for you long term.
Another reason to consider renting versus buying might be that you wish to downsize and no longer wish to care for a yard. I would still encourage purchasing a condo instead of an apartment, because this still allows you to retain equity and invest money rather than see it go down the drain, or certainly talk with a certified financial planner about wealth retention.
Our family has run rental businesses since the 1950's and we have seen so many people who have rented their entire life and then, as they age, have nothing of consequence to pass down to the future and have no assets. Then, when life suddenly changes due to declining health or the death of a spouse or parent, those renters have little security or options. Make sure your housing is working toward fulfilling the goals of financial security.
If you’re ready to transition from renting to owning a home, call Realtor David Locke with Locke and Key Associates at Keller Williams Upstate, serving Anderson and Greenville, South Carolina. David believes real estate investing can be a sound path to security and financial freedom if executed correctly.
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