There are nearly 44.1 million households that rent across the United States. When seeking financial security through buying a home, many people feel overextended between monthly finances that saving up for a large downpayment may seem impossible. Because the number of renters has grown in recent years, many people ask should I buy a house or rent and invest?
Depending on your financial situation, renting may be the smarter financial choice. Keep reading to see should you rent or buy a house.
Reasons to Rent a House
Many people cite renting as a waste of money because you aren't building equity. In reality, renting often gives residents a "trial run" in a specific area in an affordable way. Here are some of the best reasons to rent a home.
Fewer Upfront Expenses
Is renting more expensive than buying? In terms of upfront expenses, it is not. When you rent, your security deposit and first and last month's rent do not equate to a downpayment and closing costs.
Your monthly rent may be higher or comparable to someone's mortgage payments. However, you can have the assurance of a stable bill every month of your lease.
As a tenant, you are not responsible for paying the property taxes of your home. By cutting down these expenses, tenants have the opportunity to invest their savings and eventually purchase a property.
Renters are granted a lot of freedom. When you rent a home, you are only tethered to that property for the duration of your lease. Renting gives a lot of flexibility to move around.
If a pipe bursts or the dishwasher breaks, you don't have to foot the bill. Landlords and property managers are liable for ensuring the house is in good condition. They will be the ones you call for routine maintenance and repairs.
Reasons to Buy a House
If you have ample seed money, buying a house can be a financially conscious choice. When you buy a house, you can earn equity, build your credit, and have total control.
Equity represents the money you have paid into an asset. Consistently paying your mortgage on time can help you earn equity to leverage for future large investments. For example, if your home is worth $300,000 and you paid $50,000 so far, you can leverage $50,000 in equity.
Your credit score is impacted by your ability to pay back different loans, such as your mortgage. By making consistent payments on your home mortgage, you can boost your credit score.
When you are a homeowner, you have a lot more freedom. You can add value to your home by doing renovations or painting the walls. These alterations to a house can make it appreciate.
If you wonder, should I buy a duplex, the answer is: yes if you have the means. A duplex would allow you to be a traditional homeowner and landlord to make a steady second stream of income.
You could use a unit just as a home for you and your family, or you can become a landlord and rent out the rooms to tenants. Buying a house can also become a money-making solution.
Should You Rent or Buy a House?
As you try to determine should you rent or buy a house, you need to consider your current financial assets. Being able to build up a savings account and make sound investments should not be neglected by your desire to become a homeowner.
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