The Rent Or Buy Dilemma – Important Factors And Benefits

 

Purchasing a home is one of the most important financial decisions that people make in their lifetime.

 

Renting offers the flexibility to move on quickly when life circumstances or career plans change but homeowners build equity and wealth and enjoy the future financial benefits.

 

There are many financial implications and lifestyle factors potential renters and homeowners need to consider before making a decision.

 

Why is this relevant for real estate investors and how can they potentially benefit in this process?

Flexibility

Renting is a more flexible option when it comes to moving to a new location. If your job or life circumstances change and you want to move to a new place, you only need to submit a notice to your landlord based on your lease requirements and you are ready to move on.

While homeowners have financial advantages and enjoy the privilege of making changes to their existing home, they do not have the flexibility of renters when it comes to future relocation.

Wealth

Renters may receive their security deposit back, but they will not financially benefit from any of the past rent payments.

Homeowners can build wealth and equity in their home that adds to their new worth.

Responsibility

In the case of renting, the landlord will handle the of the maintenance and repairs unless the renter is the one who caused the damage directly.

Homeowners have full responsibility for their homes. If something needs to be fixed, then the homeowner will need to cover the repair costs.

Financial stability

Buying a home will be one of the biggest financial commitments that people will make in their lifetime. Before buying a home, future homeowners should have stable income, reasonable down payment, savings for home repairs, good credit score and manageable amount of debt.

Commitment to a single location

Are you willing to make a mid-term or long-term commitment to a single location? The purchase of your own home comes with substantial amount of upfront expenses. You will not have the renting flexibility but homeownership will provide an excellent opportunity to build wealth and equity.

Key points people need to consider when it comes to homeownership are the mortgage length, mortgage rate and down payment as well as your mortgage-interest tax deduction.

Long-term or short term stay

Buying might be better if you plan to stay committed for a longer period of time to a single home because the upfront fees are spread out over many years.

Taxes

Property taxes and mortgage-interest costs are deductible. Higher personal marginal tax rate will translate into bigger deduction for homeowners.

Costs

The overall cost of homeownership customarily exceeds the overall cost of renting. Expenses that are covered by homeowners that renters generally do not pay include property taxes, maintenance and repairs, pest control, tree trimming, homeowner`s insurance, pool cleaning. Mortgage interest and the application fee and security deposit is generally lower than the total amount homeowners pay in the process of a home purchase.

What Is Most Important To You?

Are you ready to commit to one location for longer period of time and take responsibility for the property maintenance in exchange for equity in your home? Or is the flexibility to move when you want and where you want more important to you? Another lucrative alternative would be to acquire a fixer upper and hire a trusted general contractor to renovate your property according to your preferences and enjoy the benefits of future property appreciation.

The choice to purchase a home provides a stable place for building equity, wealth, and creating your own nest.

Finally, the decision to rent or to own a home is equally emotional as it is financial. When it comes to the choice between renting or buying, potential renters and buyers should carefully consider their finances, goals, and needs as an individual or family before deciding which option will be the best fit for their future success and prosperity.

Why is this relevant for real estate investors and how can they benefit?

Multifamily housing is a very popular option among baby boomers that downsize and millennials that like the flexibility that comes with renting. With growing number of remote working opportunities secondary and tertiary markets are gaining popularity. Properties that are positioned according to the needs of these target groups and offer amenities that best match their lifestyle will be at the forefront to benefit from this trend.

With few attractive opportunities in primary markets and A-class properties at the moment, real estate investors may take advantage of the current attractive financing opportunities to increase their return on investment by renovating and upgrading B, C, and D class properties with attractive amenities that will match the shifting modern customer preferences and put real estate investors in a prime position to benefit from the future potential attractive cash flow and long-term property appreciation from such potentially lucrative investments.

Ready to start your next investment project?

Please contact us to learn how we can best help you to turn your next investment project into a success.

Email: [email protected]

Telephone: (954) 570-0300

Address: 850 SE 7th Street, Deerfield Beach FL 33441

About Adivo Construction

We are a national general contractor with over 50 years of combined construction expertise specializing in the value-add improvements of apartment communities.

Our mission is to assist our clients in finding the right balance between capital expenditure and appreciation potential by designing and executing customized renovation programs that are focused on increasing cash flow return and overall return on investment.

We have completed over 100 repositioning projects for publicly traded and privately held domestic and foreign companies in states such as Florida, Texas, Kentucky, Oklahoma, Georgia, South Carolina, Utah, North Carolina, Tennessee, Indiana, Michigan, Missouri, Arkansas, Ohio, Arizona, Nebraska, and Kansas.