There can be downsides to both renting and buying, but if you’re leaning towards purchasing a home it can have added benefits for your bank account that renting does not. While renting can certainly alleviate many of the costs that go along with property ownership, here’s why purchasing a home can have positive monetary affects in the long run.
While inflation is often seen as a dirty word, a real estate purchase can see the positive side of inflation with how your home purchase investment will grow over the years. Putting money into rent will mean that money is gone and out the window once you’ve paid for the month, but investing into a property will come back to you in future gains that are made in the real estate market. While buying a home will be more expensive in the short term, it can also provide you with greater financial flexibility and equity in the future.
As a renter you’re still paying a mortgage… your landlord’s mortgage. And it’s your landlord who will reap the financial benefits and enjoy the equity. If it’s a fixed rate mortgage, the home owner also has the added benefit of a locked-in monthly rate for the entire length of the loan; whereas rents can potentially be increased every single year.
While changing up the bathroom or the paint on the wall in your apartment isn’t going to add any extra lining to your wallet when you move out (and may even cause you to loose your security deposit), making upgrades to a home that you own will have the very opposite effect! Renovations, both small and large, can mean an easier sell and a higher profit when the home finally goes on the market.
An apartment you rent won’t offer opportunity for investment if you’re away from your home for an extended period of time, but a home you own may serve as an ideal investment property at some point in the future. With the success of Airbnb and unique modern housing needs that may only require a home rental for a short period of time, being able to use your house as a rental property can be a significant boon for earning money you would have otherwise been without.
Buying a home can require some number crunching to make sure it’s the right choice for your lifestyle, but it can also provide significant financial benefits down the road. If you’re considering purchasing a home in the near future, contact your local real estate professional for more information and to discuss your options.
