Should I rent or buy a house? This is a question most often asked by young people who have just started their careers and are now making their mark as an independent. But with all the other expenses that they have to take care of, do they really need to purchase a home? And if you are more capable, is it time for you now to buy, or should you just rent out?
There are too many opinions out there that say “it’s best to buy”, “rental money is dead money”, “it’s not good to buy property at this time”, and so on, that everything can get very confusing.
So here are some things to consider which can help you decide whether you should rent or buy a house.
Obviously, this is the first thing that you need to consider. If you can afford to purchase a house without sacrificing much of your income, then you would have less matter to worry about. Take note though that purchasing a house has more costs involved, like deposit, stamp duty, government fees, maintenance costs, etc.
If possible, prioritize savings and family needs first, before investing in real estate. If you are currently paying debts, like student debts, then it is best not to add more to your liability. Rent for now, as there is no such rule that you need to have a house before hitting 35 anyway, so don’t get pressured.
You also need to consider your ability to pay in case you lose your job. If you get laid off today, would you still be able to pay your mortgage with your savings while looking for another job? That is another question to consider.
Is your work location-based, or does it assign you to different far areas that practically buying a home right now doesn’t look so practical? If you are one of those who is always on the go, you might want to put off buying a property for now until you have set your sights in one location.
Why? Because if you buy a property right now let’s say in Darwin, then because of some circumstances you ended in Sydney, selling your house then buying again would be too costly and more tedious.
Related to number 2 above, but this section deals more on long-term goals. If you are the type of person who doesn’t want to live in your current location anymore, then putting off buying would be a better option until you get to decide where you want to spend your retirement days. For example, you currently live in Sydney but you want to migrate to US or Japan in 5 or 10 years, you can instead save and/or invest your money for future housing costs.
If you have already decided, then buying would be a good option. The right timing of buying depends, but as of April 4, 2018, now is the right time to buy before the price of properties goes up again.
Buying a big investment like a house is no joke. It is one of the most significant financial decision that you will make, hence you need to consider different factors and learn a bit about real estate before purchasing a house.
Why do I need to learn, can’t I just pay an agent to do it for me? Here are the reasons why it would be good to learn some things yourself.
- Realtors can cost you a lot of money, instead of you helping you save money. So you need to know how to choose the trusted guy for the job. (Or if you don’t want to use a realtor, you know what to do)
- House purchases involve a contract and lots of papers to sign. You need to know how to negotiate, and what things to negotiate for too. Knowing what items to look out for is a plus. This is where a trusted realtor comes in, but it’s best that you know what you are signing too, instead of blindly signing contracts.
- Knowing what to check in the house you will purchase can save you money as well. Like for example, you might tend to focus more on cabinets and wallpaper without knowing that you should check kitchens, baths, electricals and water pipes first. Researching if the area tends to flood or if there’s history of crime in the neighborhood will be very helpful too.
- The purchase price is not the only thing you need to consider. You need to know the other costs involved as well. Another thing, knowing how to compare properties would help you with making important decisions, like choosing between Condo A which has a large fee but priced lower, against Condo B which has a higher price but lower fees.
If you do not want to spend time doing a bit of research regarding real estate, it is better to put off buying for now until you have known enough. What you don’t know can cost you more in the end. Remember, it will take you 10 years or more to pay this off, so it’s best to learn what you can before parting with your hard-earned money.
This does not refer to commitment in making payments (though that’s one thing as well), but marriage commitment. When you get married, there are state laws that dictate how they treat your assets – and how they get distributed during divorce. If you are not married, the same rules don’t necessarily apply.
In short, if you want to buy a house, you need to think long term. If you buy a house with a partner who is not your spouse, you need to have an exit plan as well if things don’t go your way. It’s a good idea to have everything in place between the two of you, like mortgage payments, liability and maintenance payments.
If your goal is to make this your investment (i.e. you will rent to others), then purchasing can be a good idea. Like no.4 above, you need to know your facts as well before buying.
So these are the 6 factors to consider when deciding whether you should rent or buy a house. In the end, it still boils down to your readiness to commit. For some people, not having enough money doesn’t stop them, as getting a house will motivate them to work harder. For others, they want to feel safe first that they can pay the mortgage on their current situation. Whatever you decide, make sure to be happy with your decision and it should not add more stress to you. After all, aren’t we supposed to live better and happier?
If you want to buy but you still have debts to face on, just contact our numbers below and we will help you get out of debt. Assessment is free! If you know someone who can use the information above, don’t forget to share the knowledge.