When it comes to buying or renting a house, there will always be 2 factions that will do more or less like this:
- Homeowners: Renting is just throwing money away!
- Renters: A home is by no means an investment. Or is it a terrible investment!
Today we will see the pros and cons of buying or renting a house in practice.
Let’s dispel a myth the indirect costs of the real estate market are also paid with the rent. All of this is taken into account in the rent! Thus, you will pay the cost of real estate transactions, illiquidity, real estate taxes, repairs, maintenance, etc. one way or another. As a homeowner, you’ll pay for it directly, and as a renter, you’ll pay for it indirectly through higher rental costs.
Renting or buying depends a lot on everyone’s needs.
Broadly speaking, the argument is:
- Want to be more comfortable? Rent.
- Do you want to save? Buy
But we see that there are also some other details to take into consideration.
Having said that, let’s see them.
- You don’t think you’ll be changing jobs any time soon (or even that you’ll be relocated)
- You don’t like negotiating your rent or being afraid that a change of ownership will worry you.
- You already have a house, perhaps an inheritance, and selling it and renting it would cost you more.
- In your country, mortgage costs are deductible. Maybe even restructuring costs.
- You travel a lot and don’t believe you can or want to AirBnB your place while you travel
- In your country, rent costs are deductible.
- Not sure if you want to stay in your current position for at least 5 years
- Rental yields are low in your area.
- You want predictable cashflows.
The choice is therefore personal.
In my case, I think I’ll stay on the lease as long as I have chances to make a career and then look for a place to relax in my retirement.
I hope by that time I’ll be already financially independent 😅