Top 12 most overlooked considerations when comparing homebuying vs. renting
There isn't ONE golden answer for what the most important considerations are when deciding whether to rent or buy. However, it can be a mistake to overlook some of the less obvious factors. Like many really big decisions, it's never that simple. Most important life issues are not one Instagram-worthy quote. Everyone's circumstances are different with different nuances, challenges, complexities, ambitions, etc. Here are my TOP 12 I see:
1. Yes real estate is hyper-localized, but everything about real estate decision making is hyper-specific, not just markets, inventory, pricing, etc. Be hyper-localized on all the above as well as individual circumstances, finances, income, health, etc. There is a LONG list.
2. Rents rise. Almost always. Yes, there are periods when they come down, but over time they rise, usually closely linked.
3. Few people stay in a home for more than 13 years. The 30-year-fixed-rate mortgage has us believing people stay in a home for 30 years. Not so!
4. Interest rates go up and down. Refinancing is always an option.
5. Real estate taxes, insurance, maintenance costs rise over time. But these increases are always passed on to rental tenants too.
6. The vast majority of first home buyers don't buy their DREAM home. Many who get their DREAM home buy it after a lifetime of savings and earnings often in their 60's and later.
7. Seek professional help. Impulse buying - or not fully educated buying - can be very expensive. A rental impulse is usually curable within a year. While not free - never forget moving costs and fees - buying mistakes can be costly. You must do your homework. And if you are not a real estate guru, tap into the knowledge and insights of a professional agent. There is a big cost - whether paid for by the buyer or seller - but that pales compared to much costlier mistakes many who 'go it alone' experience.
8. Seek opportunity at the time of purchase: yes, that somewhat tired-looking home can be made much better with some paint and good taste. Lower your 'needs' a wee bit and you may be pleasantly surprised.
9. The compounding equity building of ownership - and associated tax savings - has its greatest value when started EARLY. The sooner the better.
10. There is a cost to waiting. Almost always. Why? Because housing is an essential need and you will have to pay to live somewhere.
11. Cutting back a few 'extra expenses' to afford a purchase is a form of forced savings. While some may see this as pleasure deprivation, most would simply see it as wise.
12. While the world tells you to focus on ROI (return on investment) PPSF (price per square foot), DOM (Days on Market ) and numerous other real estate investment measures, never forget the EPSF (ENJOYMENT per square foot). It may be the most important of all measures.
All the above further messages the critical work professional agents do besides facilitating transactions. Often the more important work is helping clients take accurate inventory of their needs and offering insights on dozens of topics with multiple options, helping them see the 'big picture'.
Have a WONDERFUL day, and please reach out to me, Tamara Z, if you would like to discuss your ideas with an experienced real estate broker.
Article Compliments of Leonard Steinberg