Most people will have to decide whether to rent or own a property in the future. Both renting and owning have specific advantages and disadvantages. In Buy vs. Rent Part 1 we presented the advantages and disadvantages of renting. But there are significant advantages and disadvantages of owning over renting.
[note note_color=”#efefef”]To buy or not to buy?
[/note]Advantages of owning over renting
- You can make any changes you desire
- You own property to pass along to your children
- You can leverage your money
- Claim it for your taxes
- Make a profit on your real estate investment
If you own the property, you can make any type of renovations or changes to the property, as long as there are no residential or city ordinances against the changes. Also you will receive a significant tax credit for owning the property every tax season. Owning a home or apartment gives you a valuable asset to leverage in case you need a loan for another venture. It also is a precious commodity that can be passed on to your family.
Disadvantages of owning over renting
- Maintenance and repairs are your responsibility
- Monthly costs can be higher
- It is a long term commitment
- Being late on mortgage payments may damage your credit
- There might be substantial upfront costs
As the owner, you are responsible for the costs and labor of making repairs to the property. A second disadvantage of owning over renting is that you are making a long term commitment that will range from 15 to 30 years. There are also down payment and closing costs to consider during contract negotiations. Also all costs of living are separate.
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