Rent Or Not?

Most folks interested in real estate have been led to believe that BUYING property is the only way to go; building equity and reaping tax benefits appear to be the only considerations in many cases.

The truth is there are advantages to both buying AND renting.

According to an article in The San Jose Mercury News (February 14 th , 2004 sec. G), buying a home makes sense for people who:

Plan to stay in there homes for at least two to four years
Can afford the monthly mortgage payments, insurance and property tax fees
Are reasonably sure their income and/or employment are secure
Are ready to accept/absorb repair and maintenance costs
Are aware that home ownership may mean compromise, in that the home you can afford may not be as big as you want or its' location may not be where you want

In general, renting is a good idea for those who:

Think they may want to leave the area in less that two years
Like the flexibility of being able to move easily (think frequent job relocation)
Like the lack of responsibility for major upkeep and maintenance
Don't have the cash flow for mortgage payments, insurance and property taxes
Don't want to or can't reduce other high cost monthly obligations, like frequent travel or private school tuition

Note the lack of “No Down Payment” as a reason to rent; with all the lender programs available to individuals in all types of income brackets, virtually anybody can “get in the door” of a home purchase.

People site various concerns for trying to buy over renting, including the ongoing knowledge that SOMEONE ELSE owns your living space.

Another obvious concern is the fact that, as a renter, you receive nothing when you leave a dwelling.

These concerns, say financial planners, must be put in prospective: think about WHY you are choosing to live in a particular place and weigh the financial benefits of both renting AND buying before you decide which route to take.

Several “rent vs. buy” calculators [ www.mortgage-calc.com ] are available online to help you get ballpark figures with regard to your best individual financial options. However, it is always best to talk with a qualified accountant or financial planner before you decide on the best course of action for you and your family.

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