Buying a Condo vs Renting
It’s one of the biggest decisions in your financial outlook but it can be a tough one to figure out – to buy or rent? Buying vs renting has long been a challenging question but what if you plan on living somewhere smaller, like a condo?
Reasons to Rent vs Buy
Reasons to Rent
•Low upfront costs
Reasons to Buy
Renting vs Buying Pros and Cons
The no maintenance requirement is one of the primary reasons people choose to rent vs buy their condo. Let’s imagine a condo’s water heater goes kaput and needs to be replaced. A condo owner will need to research HVAC contractors, schedule, and then pay the contractor out of pocket for the new unit. In an instant, a condo owner has lost a few hundred to even a couple of thousand dollars and their time.
You can think of owning a condo as ‘forced savings.’ When you pay your mortgage, you are one step closer to outright homeownership and a giant increase in your assets and equity. A home like a condo is the number one piece of equity for thousands of Americans and can help them secure their financial future. When you pay rent, you’re paying someone else’s equity and not building toward a solid financial future.
It’s much easier to move in and out of rental condos, making renting a better option if you know you’re going places or if don’t like to stay put too long. If you don’t like your condo or need to move closer to your job, no big deal, just move once your lease runs out.
Can’t Do Anything When Renting
If you own your condo, it’s yours to customize and modify. You can add a larger sink to your kitchen, you can update your siding, or you can install some containers in the back-patio garden. All you need is your own permission. When you rent, the amount of customization and modification is very minimal. You might be able to hire a carpet cleaner or do touch up paint, but anything else will require the condo owner’s approval (and they’re likely going to say no).
When you rent you are at the mercy of your property management company or landlord. Every renter has certain tenant rights but ultimately you have much fewer rights since you don’t own the property. You might plan to rent for five years but your landlord might decide they want to sell the property to developers after your one-year lease runs out.
Homeowners get many tax breaks that simply aren’t available for renters. On the surface renting might seem cheaper per month but once tax breaks are factored in you might be surprised at the minimal difference in average cost.
Though there are numerous public and private funds to help first time home buyers, chances are buying a house will cost much more upfront than securing a rental. You might be expected to pay 10 to 20% of the home’s cost as well as real estate and closing fees upfront when buying a condo. This doesn’t include any renovation or replacing if the home needs it (and most do.) Without some cash in hand or a great program, you simply won’t be able to own a condo.
Both rent and mortgage costs can rise, but rent is rising at a much higher clip while homeownership mortgage interest rates are at the bottom of the barrel. If you’re looking for a long-term living option, renting could end up costing you thousands more over the life of your lease. Forecasts show housing rates middling out and even dropping, but rent rates as continuously rising. According to online resource The Mortgage Reports, the median rent in the U.S. is at $1,445. That’s only a few dollars less than the median mortgage payment of $1,486.
Using a Real Estate Agent for Buying a Condo vs Renting Apartment
If you’re still on the fence about buying vs selling you should make a call to The Storck Team. Our team can look at your financial overview, needs, future plans, and make recommendations on whether renting or buying a condo is a better option for your unique situation.