Advantages of Buying
OWNING VS. RENTING
Our goals are simple -- to ensure that you're happy with the home you buy and that you get the best deal you can. This describes why owning should be less expensive than renting.
OWNING SHOULD BE LESS EXPENSIVE THAN RENTING
Here's a guideline that may change the way you view your seemingly cheap monthly rent. In order for you to see how expensive a home you could afford to buy while having the same approximate monthly cost as your current rent, simply do the following calculation:
Take your monthly rent, multiply by 200 = purchase price of home
Example: $ 750 x 200 = $150,000
So, in the preceding example, if you were paying rent of $750 per month, you would pay approximately the same amount per month to own a $150,000 home (factoring in tax savings). Now your monthly rent doesn't sound quite so cheap compared to the cost of buying a home, does it?
Even more important than the cost today of buying versus renting, what about the cost in the future? As a renter, your rent is fully exposed to increases in the cost of living, also known as inflation. A reasonable expectation for annual increases in your rent is 4 percent per year.
Take your monthly rent, multiply by 200 = purchase price of home
Example: $ 750 x 200 = $150,000
So, in the preceding example, if you were paying rent of $750 per month, you would pay approximately the same amount per month to own a $150,000 home (factoring in tax savings). Now your monthly rent doesn't sound quite so cheap compared to the cost of buying a home, does it?
Even more important than the cost today of buying versus renting, what about the cost in the future? As a renter, your rent is fully exposed to increases in the cost of living, also known as inflation. A reasonable expectation for annual increases in your rent is 4 percent per year.
NO MORE LANDLORDS
A final (and not inconsequential) benefit of owning your own home is that you don't have to subject yourself to the whims of a landlord. When you own your home, the good news is that you're generally in control.
The fundamental problem with some landlords is that they are slow to fix problems and make improvements. The best (and smartest) landlords realize that being responsive and keeping the building ship-shape help attract and keep good tenants and maximize rents and profits. But to some landlords maximizing profits means being stingy with repairs and improvements.
When you own your home, the good news is that you're generally in control -- you can get your stopped-up toilet fixed or your walls painted whenever and however you like. No more hassling with unresponsive, obnoxious landlords. The bad news is that you're responsible for paying for and ensuring completion of the work. Even if you hire someone else to do it, you still must find competent contractors and oversee their work, neither of which is an easy responsibility.
Another risk of renting is that landlords may decide to sell the building and put you out on the street. You should ask your prospective landlords whether they have plans to sell. Some landlords won't give you a truthful answer, but the question is worth asking, if this issue is a concern to you.
When you own your home, the good news is that you're generally in control -- you can get your stopped-up toilet fixed or your walls painted whenever and however you like. No more hassling with unresponsive, obnoxious landlords. The bad news is that you're responsible for paying for and ensuring completion of the work. Even if you hire someone else to do it, you still must find competent contractors and oversee their work, neither of which is an easy responsibility.
Another risk of renting is that landlords may decide to sell the building and put you out on the street. You should ask your prospective landlords whether they have plans to sell. Some landlords won't give you a truthful answer, but the question is worth asking, if this issue is a concern to you.
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