Rent or Buy?
One of the biggest decisions most people will make in their life is whether to rent or buy a home. Now you might think that a real estate agent would automatically say that it is better to buy a home, rental property owner clients may feel differently about that. While it is a generally accepted principle that owning is better, there is still a need and even an advantage in some cases for people to rent a home. There are many factors to consider before making this decision, including finances, lifestyle, and personal goals. In this blog, we will explore the advantages and disadvantages of each option to help you make an informed decision.
Buying a Home
Owning a home is the dream of many people, and it comes with several advantages. In our Lethbridge market we have the advantage of relatively affordable real estate prices unlike some other markets in Canada where the prospect of home ownership can be out of reach for many. First, when you buy a home, you have the freedom to make any changes or renovations you wish. You can paint the walls, add a deck, or even build an addition to the house. When you rent, you are limited in what you can do to the property.
Another advantage of owning a home is that it is an investment. Over time, your home will appreciate in value, meaning that as you pay off your mortgage, your equity will grow. Eventually, you will own the property outright, which can provide a source of income in retirement if you choose to sell or rent it out.
When you own a home, you also have a greater sense of stability. You know where you will be living for the foreseeable future, which can be especially appealing if you have children or plan to start a family. Additionally, if you choose a fixed-rate mortgage, you will never have to worry about fluctuating rent prices.
However, there are also disadvantages to buying a home. First, the upfront costs can be significant, including a down payment, closing costs, and other fees. You will also be responsible for the ongoing maintenance and repair costs, which can add up quickly. If you need to move within a few years of purchasing the property, you may not have enough time to build enough equity to recoup these costs.
Another potential drawback of owning a home is that you are responsible for all repairs and maintenance. If something goes wrong, you cannot simply call your landlord to take care of it. While there are advantages to being able to make changes and renovations, it also means you are responsible for any mistakes or missteps. Annual property taxes and property insurance costs can add up too.
Renting a Home
Renting a home also comes with its own set of advantages and disadvantages. First, renting is often cheaper upfront, as you typically only need to pay a security deposit and first month’s rent. This can be especially appealing if you do not have a lot of savings or if you are not sure how long you will be staying in the area.
Another advantage of renting is that you do not have to worry about maintenance or repair costs. If something goes wrong, you simply call the landlord or property manager, and they will take care of it. This can be a significant advantage if you are not handy or do not have the time or resources to manage repairs and maintenance. Although it should be noted that a landlord may not be readily available to respond to service calls, and may not agree with what repairs are “necessary”.
Furthermore, renting is often more flexible than owning a home. You can move more easily if your job or personal circumstances change, and you do not have to worry about the hassle of selling a property. Additionally, if you do not like the property or the area, you can move when your lease is up. Furthermore, you typically do not have to qualify for a rental agreement like you do for a mortgage. So if you are coming out of a “rough patch” in your life credit scores, and bad debt are not typically factored in when you are being chosen as a potential tenant.
However, there are also disadvantages to renting. First, you do not build equity in the property, meaning that the money you are paying each month is essentially going down the drain. Additionally, you are limited in what changes or renovations you can make to the property, so you may not feel as invested in the space.
Another potential disadvantage of renting is that you are subject to the whims of the landlord or property manager. They can raise the rent, refuse to renew your lease, or even decide to sell the property at any time, leaving you with limited options.
In conclusion, whether to rent or buy a home is a complex decision that involves many factors. There are advantages and disadvantages to both options, and it ultimately depends on your own personal circumstances, lifestyle, the nature of the local market, and financial goals. By carefully considering these factors, you can make an informed decision that is right for you!
Keith Pushor has been a licensed Realtor since 1994 servicing the Lethbridge and area market. He publishes a semi-regular BLOG about adventures in his real estate, cycling, and our outdoor environments in general. The information presented in this BLOG, while being reliable, is ultimately only the perspectives and opinions of Keith Pushor, may or may have been assisted by ChatGPT Technology, and do not necessarily reflect those of LDAR or Royal LePage South Country.
