The question of whether to buy or rent has been a topic of conversation, heavily debated among family and friend groups for years. You’ve probably heard the age-old words of advice that “renting is just throwing money out the window” or “buying a home isn’t a good investment decision.” And while both may be true in some cases, the question of which is a better decision is much more nuanced than these generalizations make it out to be.
The answer to this question is entirely dependent on your financial goals, available capital, and your future plans.
To Rent Or To Buy?
First, you want to assess what your financial goals are. Do you want to settle down for 5-10 years in a home that you love? Maybe you want to make an investment purchase through real estate? Or perhaps you’d like to spend less money now and have more money to put towards savings and other personal endeavors?
If your desire is to settle down in a home, in a location where you see yourself living for a prolonged period of time, then it may be worth it to purchase a home. Consider purchasing in a location where the property in that area is expected to appreciate over time. Losing thousands of dollars on a home is a real estate nightmare, so choosing your home wisely can help save you (or make you) a lot of money.
The interest rate on a 30 or 15-year mortgage is at a record-breaking low, with both sitting at less than 3%. This news has made many Americans consider taking the plunge towards purchasing a home.
Although, while low-interest rates may seem enticing, it’s important to consider how much capital you have available. Make sure your savings can cover a 20% down payment and that your monthly income can cover the mortgage on the house, yearly tax, any neighborhood association fees, as well as possible repairs that your house will inevitably need.
If purchasing a home doesn’t seem like an appropriate financial decision then maybe renting is the route for you.
What are your financial goals for the future? If you’d rather spend your money on a wedding, traveling the world, paying off student loans, or starting a business, then putting down 20-50k on a home may not be the best decision. Again, this all depends on your individual goals and what your priorities are going forward.
With renting, you do not need to worry about all the additional expenses of homeownership and you have the flexibility to pack up and leave whenever need be. This is a great option for those who travel a lot, are planning to move to a new area in the future, or desire the freedom to choose to move. Renting isn’t necessarily throwing money out the window if it allows you to save more money in the meantime to eventually purchase your dream house in the long run.
Investing In Real Estate
A 2019 survey from Bankrate asked 1,000 Americans what the best investment option is for money that you would not need for 10 years. The most popular answer, chosen by 31% of respondents, was real estate.
Real estate can be a great investment when considering factors such as appreciation and potential cash flow.
For an easy way to get started in investing in real estate, try searching through online marketplaces, such as Roofstock.
Roofstock is an online platform that lists carefully-vetted, single-family rental properties in multiple states across the U.S.
Roofstock’s platform also works to take some of the risks out of investing in real estate by providing a 30-day money-back guarantee. They will even pay 75% of the market rate rent if no tenant has moved in within 45 days. And only 15% of the properties that apply for a listing on Roofstock get approved.
Choosing to become a landlord and rent out a rental property can be a great source of passive income, just make sure you have the time, energy and money to handle repairs, talk to tenants, and possibly renovate the property.
Figuring out whether to buy or rent a home is a big decision, but with enough careful consideration and research you will eventually figure out what the right answer to this question is for you.
Browse Roofstock’s active listings here.
Read more about Roofstock here:
How To Buy Rental Properties In Up-And-Coming Areas Regardless Of Your Location