Renting or Buying?

The value of home ownership has been on a roller coaster ride the last few years, and in many ways it’s like looking at the seven stories Tower of Doom TM and wondering whether it will leave you smiling or woozy for the rest of the day. Should you get on the roller coast? Or stay on the teacups? Here are three questions to ask yourself when deciding between buying a home or renting one.

Q: How long do you plan to stay?

Most questions of renting and buying come down to the question of timing. If you plan to stay in an area or a home for a long period of time, you can buy a home knowing you have plenty of time to absorb any market drops. But bringing this to concrete numbers helps most of all—compare the average home price in your area to the average rental price, calculate in a down payment for your home purchase and a 5% increase in rental prices and the numbers should tell you how long you’d need to own a home before making it the more affordable option.

Q. What are your costs?

Both renting and owning carry hidden costs that we tend to overlook when comparing. For renters you need to think of the loss of home equity and home owner tax breaks. The offset is not being responsible for home repairs. For homeowners, you’ll deal with things like homeowner’s insurances, private mortgage insurance, property taxes and maintenance.

Q. Are you “throwing money away”?

We’ve all heard it when discussing the pros and cons of renting—renting is throwing money away. But building home equity isn’t the only way to make money. If you have any doubt about your ability to keep up with the cost of home ownership, or keep up with savings, it’s better to consider renting for the near future.

When having these discussions, remember you can always talk with your agent and walk through the decision together.

 

Photo by Cody Hughes @clhughes21

Renting or Selling

Maybe it was the second glass of wine, but when you had to listen Rob Schmobb talk about how he converted his former home into an income property, it seemed like a tempting idea. Forgo the hassle and risk of selling your current home, use it as an income property and move on while improving your finances. What’s the downside? Well, there’s six things to think about first.

  1. Do you want to be a landlord? Being a landlord is different than being a homeowner. The expectations of a renter are going to be place more demands on your time and finances.
  2. Research the rental market—estimate how much rent you could get with the help of a broker and if it would cover the mortgage, taxes, and expenses.
  3. Ask an accountant about tax implications.
  4. Do you need a property manager? If you are moving out of town, you need to hire someone to take care of the property and tenants.
  5. Crunch the numbers– estimate your rental profit and compare it with cash you would get for selling your home.
  6. Do you really want to be a landlord? It’s a thing.

Using your current home as a rental property can be quite successful and rewarding. Check the numbers and see if it’s a situation that can work for you.

 

Photo by Cody Hughes @clhughes21

The Big Day

Out of all the big days, moving day is definitely one of the most exciting. It’s the end of a long journey, full of ups and downs and finally the house is yours.

You might think the key to a great moving day is having a great selection of donuts and hot coffee, but to truly have a smooth moving experience, do these few things before the big day.

  1. Change the locks before you pop the champagne, celebrate signing those closing papers by making your key the only one that works.
  2. If you plan on it, now is the time to install any home security and get a certificate of installation to send to homeowner insurance to get a discount on your policy.
  3. Schedule an appointment to get your internet, television, and phone set-up before moving day and you can collapse on the couch that night with no hassles.
  4. Hire a cleaning service or schedule a family cleaning day make sure you get inside the light fixtures, windows, closets and cupboards, basement, and attic.
  5. Get ductwork, heating, and cooling systems serviced.
  6. If you can, do any invasive home improvement projects such as replacing floors, ripping up carpets or painting.

Follow these steps and the night you move in you’ll be eating pizza out of a box, buried in your unorganized stuff, happily watching television and procrastinating on your phone with nothing to do but figure out where that other chair is going. Home sweet home.

 

Photo by Cody Hughes @clhughes21