When it comes to finding a place to call home, there are two main options to consider: renting and buying a property. Renting a house or an apartment provides flexibility and freedom from the responsibilities of homeownership while buying a property offers long-term financial benefits and the potential for building equity.
The decision to rent or buy a home ultimately depends on individual circumstances, including financial situation, lifestyle, and future goals.
Let's explore the pros & cons of renting and buying a property.
It's an argumentative discussion, but both have their pros & cons. Whereas the pros & cons are usually generic to everyone, the decision is more subjective to the person.
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Buying a house
Building equity: Buying a home allows you to build equity over time, which can be a valuable asset for your financial future. Real estate can be an excellent long-term investment.
Sense of stability: Owning a home can provide stability and security, especially for those who plan to settle down in one location longer.
Rental yields: Even if you are not planning to sell the house, renting out the house could possibly be a way of earning passive income besides capital appreciation. It is the case when you are not looking forward to residing on the property.
Upfront costs: Buying a home can be expensive, with upfront costs such as a down payment, closing costs, and inspection fees.
Less flexibility: If the nature of the job requires you to move quickly or unexpectedly, it can be more challenging to sell your home than it is to end a rental agreement.
Maintenance expenses: When you own the property, you have to bear the expenses like regular repair, fixing leakages, and paints, which would become an extra expense for the same.
Extra attention: Besides money, you have to take care of the property on your own as you cannot full-fledged trust someone else; from gardening to cleaning, everything has to be taken care of by yourself or one of your family members.
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Renting a house
Flexibility: Renting provides more flexibility, as you can move to a new home or location more easily and quickly.
Less responsibility: As a tenant, you are not responsible for maintenance costs, which can save you time and money.
Tax deductions: If you are a salaried employee, you can avail of a tax deduction for the rent paid on the occasion of getting a house rent allowance (HRA).
No equity: Renting does not provide the opportunity to build equity or accumulate wealth through homeownership.
Limited customization: Tenants are generally restricted to customizing or changing their living space.
No space for parking: There would always be limited space for parking your own vehicle. If you have one or more vehicles, like a motorcycle or car, it might become difficult to park both vehicles due to a lack of space.
Besides the above-mentioned advantages and disadvantages of buying and renting a house property, it is necessary to understand that everyone has their financial objectives based on their preferences, and it should be satisfied not only at the excel sheets of financial statements but also bring mental peace to your mind.
So, it is always how you are looking forward to maintaining mental peace and what current financial conditions are allowing you to do.
Anushka Trivedi is a freelance financial content writer. She can be reached at anushkatrivedi.com