When it comes to real estate, the great debate has always been ownership vs. renting, and whether it’s smarter to buy your first home as quickly as possible, or wait to buy after a few years. Renting is obviously what a lot of people do for financial reasons, but what if you’re considering putting down more permanent roots?
Buying a home is a big step, and before you do it, you have to consider whether it’s really going to benefit you, and if you’re ready for everything it comes with. To help you with this decision, you have to get clear on the advantages and disadvantages of home ownership so you can make an informed choice.
Let’s talk about the positives and negatives of buying your own home!
The first advantage of home ownership is probably the most obvious one. You have a place that you totally control, it’s your domain and you have the freedom to do what you want with it. You don’t have to ask a landlord to make any changes, and you’re not limited to what they want. If the home needs renovating, you can do exactly what you want and make the place totally reflect your style.
The amazing thing about buying a home is that it’s an asset that will appreciate and grow in value, unlike something like a car, which depreciates almost immediately. Because a home will grow in value, you can almost always experience huge capital gains.
Better yet, as the home grows in equity, you actually have the opportunity to borrow from it and get some capital with a reverse mortgage. According to All Reverse Mortgage, “you can access the accumulated equity in your home and put it to work for you, in multiple ways, whether you want to reinvest or renovate your home.” This is obviously something you couldn’t do with a rental because ultimately, the owner of the property gets that benefit.
Homeownership gives you the freedom to create extra income streams. Many people have been able to buy a home, and earn money employing a strategy known as house hacking. In this model, you would split the property into separate units and get a tenant who will pay rent which goes towards your mortgage.
It allows the property to cash flow very quickly, and reduces your expenses significantly. Another awesome thing about ownership is that you can keep it for years. Even if you don’t live there, you can get a tenant who can help you pay off the home, and allow you to keep the asset in your family.
The process of buying a home is a lot more involved than the process of getting a lease. There are down payments, mortgage applications, inspections and lawyers involved. That also means that it can be expensive, especially when you need to have that money upfront.
One of the reasons homeownership isn’t very common among millennials is that it’s not affordable for them. Fortunately, there are some programs that are helping people raise the money to buy a home, including rent-to-own and reduced down payments.
Unlike renting where you can quickly pack up and move if you no longer want to live on the property, ownership is semi-permanent. The average owner stays in their house for 7 years, so it’s a long-term decision that cannot be taken lightly. When you decide to buy, you actually have to really like the place and see yourself living there for a while. It’s not just about the home either, it’s about the neighborhood, the surrounding areas and the amenities.
Buying a home, especially if you want to live in it, is a big decision and you have to think about the most important factors to you, and make sure the property you choose ticks those boxes.
At any age, buying a home is a big, adult decision and you have to approach it very carefully so you end up with a house that you are happy to be in every single day. Before you sign on the dotted line, do your research, talk to real estate agents, financial advisors and even friends who are homeowners.
The truth is whether you rent or buy, there are going to be positives and negatives, so you have to choose the sets of advantages and disadvantages you want to have, and minimize regret as much as possible.