Should You Rent or Buy?
The age-old debate rages on: Should I buy, or should I rent? The answer is not so simple. As a matter of fact, the correct answer has more layers than deep-dish lasagna.
- How’s your credit?
- How much do you have saved?
- Do you plan to put down roots?
- Do the tax breaks of owning trump the relative freedom of renting?
- What are the costs vs. saving differences in your given market?
- What’s available in each market?
Taking all emotion out of the equation, I turned to the Realtor.com rent or buy calculator and found that someone in a fairly typical situation would need four years to break even if they choose to buy over rent. This is based on purchasing a $300,000 home (with $72,000 downpayment and other initial costs) versus a $1,750 a month rental.
The calculator takes “lost opportunity costs” into account, assuming you were to rent and put the down payment money into a half-decent investment (like you’ll actually do that). Everyone’s situation is different, but this gives us a jumping off point.
If you choose to rent, you’ll be (within the rules law) at the whim of a landlord regarding expedience of repairs and maintenance, as well as paint colors, flooring and improvements. There are two types of landlords—good ones and bad ones. You usually don’t find out until after the disposal clogs. There is no return on investment with a rental, duh.
Buying means every repair is on you. So are property taxes and insurance, as well as HOA fees, if applicable. If your neighbors brew cabbage kombucha in their hot tub, you may just have to live with it for the duration. The same goes if Pig Snout Amalgamated builds a processing plant upwind. An unexpected relocation could mean a hefty hit to your wallet.
No one answer or situation fits any one person or family. But who doesn’t love deep-dish?
