Should You Rent or Buy?

Your Chicago REALTOR

The great question in real estate is if renting or buying is better. There are many people who will always say that buying is the end all be all because you don't want to throw away money in rent each month. That is simply not true. Every person has different needs so don't get caught up in the idea that you have to buy a home ASAP. Buying a home is one of the best ways to build wealth but you can lose money if done incorrectly. These are the items to consider when deciding to buy or rent:

How long will you live in that area?
This is the biggest question when it comes to deciding whether to buy a house. Buying is great but it is almost always great if you live in the property for at least 5 years or more. There are repair costs, REALTOR commission and the mortgage that you have to pay that can all eat into your profit. If you have a stable job and expect to stay in the area for more than 5 years buying will very often be a better use of money than renting. If you may move in the next few years then renting may be the better option for you. If you do end up needing to move after having purchased, consider renting your home out to cover the mortgage payments while and make your investment profitable. At the end of the day real estate is a long term investment so don't just buy a place for a year or two.

Do you want to pay for repairs?
One great thing about renting is that your landlord pays for the repairs to the unit. When the refrigerator breaks or the microwave stops working the landlord is the one who covers the expenses. On the flip side, if you own and the oven or refrigerator breaks you can chose which new appliances to put in and customize the kitchen to your liking. When you own you can add value to your property by making the right changes and keeping up with trends. If the oven breaks you can use that as a time to update the granite and cabinet color to a more modern style and increase your resale value. 

Do you want fixed costs?
One negative to renting is that the costs can vary. You can have a year where the rent increases by 25% and budgeting becomes quite difficult. When you purchase a home on a fixed rate mortgage you can fix your costs each month and know exactly how to budget. This allows you to be more strict with your budgeting and save for the things you want in life. 

The question of buy vs. rent is not as simple as many make it seem. There are benefits to both so make sure to take these questions into consideration before you decide to buy.