16 Aug 2011Blog

Which is better: renting or buying?

by Global Estate Agency Inc.

You’ve probably heard this statement and similar ones numerous times through different marketing mediums…

The reality is it doesn’t just come down to figures, rather many personal situations need to be factored in when such a major decision is being made including your job, family, future plans and finances, of course.

Generally, debates revolve around the best way to achieve a return on your investment and many factor in that renting a property means you’re spending money you will never see again. It is popular belief that purchasing a home is the way to go, whereby you build equity as the property value continues to appreciate, and your mortgage balance decreases.

Both scenarios have their own benefits and disadvantages:

For example, when renting a home, maintenance costs are much less as most issues are the responsibility of the landlord and fixed costs are only for the duration of the lease; when the lease is up you simply relocate. On the other hand, there is no equity to be gained no matter how much the property value increases, you have limited or no ability to personalize your living area, and the home can’t be used as an asset/security.

Benefits when purchasing include tax advantages, increasing equity and the ability to remodel and redecorate to match your needs and desires. On the other hand, all maintenance costs are now your responsibility, there is generally a larger initial cost pertaining to a deposit and the idea of relocating at a whim is no longer as simple; you will need to rent or sell the property first.

So whether considering to rent or buy in this current market, consider the parameters above, also keeping an eye on whether rental rates and property prices are rising or dropping as this too can determine which option is better for you!