This is a hotly contested area. Many people will swear it’s much better to buy, and others will swear it’s better to rent. What it really comes down to is what you are planning and where you are. For example, in Los Angeles California, you will be lucky to find a home in a decent area for less than a million dollars. If we take all of Los Angeles into account the median price is $677,000 and that includes areas you really don’t want to live in. That million dollar house, you might be able to rent for $3000 a month, less than half what a bank payment would be. Roughly half the countries in the United States it is better to rent than own, but here are a few reasons we think make it important.
Not where you want to end up
If the area you are in is not where you want to spend the rest of your life, it is better to rent than own. If you buy a house there you will find you’re pretty much stuck there longer than you expect. If you want to live somewhere near the beach, don’t buy a house in the mountains, just rent until you know what you are doing.
If you are only staying somewhere for a job or for a year or two, then rent. You have not decided, as per point one, where do you want to live? You are only there for the job. If the job ends, where will you go? So rent instead.
This doesn’t work everywhere, so you have to judge by your own county, but generally, it will cost you less money to rent than own. In high prices real estate areas, it can be considerably less. One way to save money is to rent a place that is smaller than you want, as inexpensive as you can get. As you aren’t living there for life, you can suffer a little to save the money to buy later.
If you have never owned a house, it is a good idea to rent a few before you own. You will get a better idea of what is important to you and what is not. Shopping for a rental is almost the same as buying a house. You can see what you like and don’t like, so when you buy, you will be much more comfortable.
Ok, not to be cynical, and this can be a gf/bf or wife/husband. Don’t buy a house together for at least a year or two after you are together. Unfortunately, most relationships don’t last, as much as we might want them to, so suddenly dealing with a breakup and having a house together, can be a nightmare.
Hard to sell
Houses always seem like a seller’s market when you are trying to buy and a buyer’s market when you are trying to sell. If you buy a house you need to make sure that the area will allow you to sell and for a profit hopefully when you are ready. We don’t mean 20 years for now, but you have to use your head a bit. If you can sell a house easily, and the expense isn’t much different than renting, then buying comes out on top. But that isn’t usually the case.
If you are renting, the owner or landlord is responsible for repairs, not you. If you own it and the roof leaks, then you are the one that’s paying for that. It takes a lot of pressure off you for finding money for repairs when renting.
You don’t have enough for a deposit on a house. This alone pretty much puts you in the renter’s world. So rent as cheap as you can and save money until you have a deposit that you can use sometime in the future.
If you can do the numbers and buy a house and it’s cheaper than renting, then definitely buy. Make sure you add in the tax breaks and the possible appreciation on the house. Half the time it works out better to buy, the other half it’s better to rent. We would like to say that one way is best, but we can’t as it all depends on the area and your circumstances. If you are moving into a house and want to spend the rest of your life living there? Then buy. If you are making money flipping houses? Then why are you reading this? Really though, renting is less headache than buying, but buying is a better future.